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CPPIB to Acquire 49.99% in Grupo Costanera

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CPPIB PensionAccording to the press release, “the Canada Pension Plan Investment Board (CPPIB) announced today that it has entered into an agreement to acquire significant minority stakes in five major Chilean toll roads from the Atlantia Group. The agreement involves CPPIB acquiring a 49.99% interest in Grupo Costanera. CPPIB will commit an equity investment of 560 billion Chilean pesos or approximately C$ 1.14 billion for this transaction.

Andre Bourbonnais, Senior Vice-President, Private Investments for CPPIB, said: “The addition of these five major urban toll roads in Chile is an excellent opportunity to expand our infrastructure portfolio in a developing market. Chile’s strong economic growth prospects and its stable legal and regulatory framework make it an attractive country for investors like CPPIB. As a long-term investor, we seek infrastructure assets that will deliver stable returns over a prolonged period. We look forward to partnering with Atlantia, one of the world’s leading toll road operatiors.”

“With a long-term investment horizon, and the internal expertise to deploy capital in complicated transactions, CPPIB is one of only a few global institutional investors that is able to complete a transaction of this size and complexity,” said Mr. Bourbonnais.

Grupo Costanera is the largest urban toll road operator in Chile and owns a portfolio of five toll roads that span a 188-kilometre network. Four of the toll roads are located in Santiago metropolitan region including two major commuter motorways, Costanera Norte and Vespucio Sur. The fifth toll road is located on the central coast of Chile.

Atlantia Group will continue to own the remaining 50.01% interest in Grupo Costanera.”

Read more: CPPIB Press Release

Cassa Depositi e Prestiti Guides Companies to Find Opportunities in Naples Region

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The Cassa Depositi e Prestiti Group (CDP) and its investee companies, which include Fincantieri, Italgas, Snam, and Terna, have reached an agreement with the Municipality of Naples and the Authority of the Central Tyrrhenian Sea Port System. The entities will cooperate to provide for the development of Naples and its surrounding area. There will be a focus on helping the institutions and the community at large through financial support, real estate, and infrastructure investment, and support for local businesses. Signatories can help to provide technical expertise and planning, loans, and oversee public projects. Further, assistance and consulting will be provided, particularly as they relate to interventions and renegotiation of contract terms for the purposes of freeing up capital. Sustainable mobility will be a priority, with natural gas and biomethane forming the core fuels of the future. The group will be developing the ports, which will include the construction of emission-reducing structures.

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PIVOT: Federal Reserve Signals Zero Rate Hikes in 2019

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The Federal Reserve made a decision to hold interest rates steady and indicated that no more hikes will be coming for 2019. Federal Reserve Chairman Jay Powell addressed the media saying that the Chinese and European economies have slowed ‘substantially’. Despite low U.S. employment, Powell explained to the media that the U.S. has the lowest labor force participation rate among developed nations.

There were four interest rate hikes in 2018.

The Federal Reserve committee intends to conclude the reduction of its aggregate securities holdings in the System Open Market Account (SOMA) at the end of September 2019. Essentially, the Federal Reserve is ending quantitative tightening in September 2019. Furthermore, the committee intends to slow the reduction of its holdings of Treasury securities by reducing the cap on monthly redemptions from the current level of US$ 30 billion to US$ 15 billion beginning in May 2019.

In a March 20, 2019 statement called “Balance Sheet Normalization Principles and Plans”, a portion of it reads, “The Committee intends to continue to allow its holdings of agency debt and agency mortgage-backed securities (MBS) to decline, consistent with the aim of holding primarily Treasury securities in the longer run.

Beginning in October 2019, principal payments received from agency debt and agency MBS will be reinvested in Treasury securities subject to a maximum amount of $20 billion per month; any principal payments in excess of that maximum will continue to be reinvested in agency MBS.

Principal payments from agency debt and agency MBS below the $20 billion maximum will initially be invested in Treasury securities across a range of maturities to roughly match the maturity composition of Treasury securities outstanding; the Committee will revisit this reinvestment plan in connection with its deliberations regarding the longer-run composition of the SOMA portfolio.

It continues to be the Committee’s view that limited sales of agency MBS might be warranted in the longer run to reduce or eliminate residual holdings. The timing and pace of any sales would be communicated to the public well in advance.”

source: Federal Reserve website

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Tencent Contemplates A.S. Watson Investment

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Tencent Holdings Limited is contemplating a bid to acquire Temasek Holdings’s ownership stake in A.S. Watson, an Asian beauty and health retailer. Temasek Holdings has been trying to offload its 10% stake in A.S. Watson. The price tag could be around US$ 3 billion.

Alibaba Group Holding Limited has also expressed interest in the A.S. Watson investment.

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