The Canada Pension Plan Investment Board (CPPIB) confirmed Wednesday that it’s putting up a $300 million equity commitment to join Baring Private Equity Asia (BPEA) in its acquisition of information technology (IT) consultant Virtusa.
The largest Canadian pension fund would hold a 24% stake after BPEA closes the transaction with the Southborough, Massachusetts-based IT services company. Earlier this month, BPEA announced that it would acquire all outstanding shares of Virtusa common stock for $51.35 per share in a $2 billion all-cash transaction.
“This is a significant opportunity to acquire an interest in a highly differentiated player in the fast-growing IT services industry, alongside our long-standing partner BPEA,” Frank Su, managing director and head of private equity in Asia at CPPIB, said in a statement.
Su added that the firm’s strong client base, which includes Adobe, Amazon, and Salesforce, would deliver long-term value for beneficiaries at the $434.4 billion fund.
Investors were lackluster on the news. On Wednesday, Virtusa stock price jumped just 1.25% to about $49 per share during the trading day. On September 10, when the BPEA and Virtusa merger was first announced, investors piled into the company and the price jumped more than 25% to roughly $50 per share. Year to date, the company has returned about 8%. In the past 12 months, Virtusa has hiked up nearly 40%.
“We are delighted to announce that CPP Investments will be our partner in this transaction,” BPEA’s Managing Director Jimmy Mahtani said in a statement.
Should the merger get approval from regulators, including the Committee on Foreign Investment in the United States (CFIUS), the transaction is expected to close in the first half of next year.
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Tags: assets under management, Canada, CPP Investment Board, CPPIB, Investment, Investment Fund, Pension