CPPIB Pays $1.6 Billion for Big Stakes in UK Telecommunications Firms

The Canada Pension Plan Investment Board (CPPIB) revealed on Thursday that it has purchased a stake, worth about $1.6 billion, in two U.K. telecommunications companies.

The companies – O2 U.K. and Three U.K. – will merge upon completion of the deal. After the merger, the CPPIB will own a 12 percent stake in the firm.

More from a release:

Canada Pension Plan Investment Board (CPPIB) announced today that it has signed an agreement to acquire an approximate 12% stake, by investing GBP 1.1 billion alongside Hutchison Whampoa (HWL), in the entity that will be created by merging O2 U.K. and Three U.K. CPPIB is among a number of investors including GIC Pte Ltd, Caisse de depot et placement du Quebec, Limpart Holdings Limited, a wholly-owned subsidiary of the Abu Dhabi Investment Authority, and BTG Pactual, who have agreed to invest GBP 3.1 billion in total in the new merged entity, alongside HWL.

[…]

“This is an exceptional opportunity to acquire a meaningful stake in what will become a leading mobile operator in the U.K., giving us immediate scale in an important sector,” said Mark Jenkins, Senior Managing Director & Global Head of Private Investments, CPPIB. “We expect this investment will generate attractive long-term risk-adjusted returns, which is appealing for an investor like CPPIB.”

Mr. Jenkins added, “This is also an excellent opportunity to continue investing in the U.K., an important market for CPPIB, and we look forward to working with Hutchison Whampoa to continue growing this business.”

The deal may not close until 2016.

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