Caisse de dépôt et placement du Québec (CDPQ) has picked up a 1.76% stake in Mahindra & Mahindra Ltd (M&M) for Rs 1,424.56 crore ($205.6 million), marking the first investment by Canada’s second-largest pension fund in India’s automobile sector.
In a stock-exchange filing, Mahindra said that the M&M Benefit Trust had sold 1.92 crore shares at Rs 648 apiece to CDPQ. In addition, the investment firm bought 2.78 million shares from M&M Employees Welfare Fund.
The Trust, which was created in 2008, is part of the company's promoter group. Post the sale, the shareholding of the promoter group has come down from 20.44% to 18.90%. The Trust’s holding will decline to 6.8% from 8.4% earlier. The proceeds would be transferred to M&M and would be used by the company for its various operational requirements, the automaker added.
“Since the Benefit Trust holds M&M shares for the benefit of its shareholders, it has decided to monetise part of the holding by divesting to a long-term, high-quality investor… reposing their faith in the future prospects of the company and Indian economy in general,” said the Mahindra Group’s chief financial officer VS Parthasarathy.
Shares of M&M closed at Rs 654.55 on the BSE on Monday, up 1.15% from the previous close.
Anita George, CDPQ India’s executive vice president (growth markets and strategic partnerships), said that the firm would be scouting for further developments in the strategic deal with M&M as the investment firm continues to grow its portfolio in India and other international geographies.
Set up in 1965 as a para-public organisation, CDPQ at present manages assets worth more than 309.5 billion Canadian dollars across 60 countries.
VCCircle reported in May last year that India’s share in CDPQ portfolio may triple in the next few years.
While larger peer Canada Pension Plan Investment Board (CPPIB) has been more prolific in India, CDPQ is quickly catching up. Besides making direct investments, it is also a limited partner in a fund of homegrown private equity firm Kedaara Capital and Tata Power-ICICI Venture’s Resurgent India fund.
Since it officially set foot in India in 2016, CDPQ has invested over $5 billion across sectors such as infrastructure, real estate, stressed assets and renewable energy among others in partnership with Edelweiss Group, Piramal Enterprises and Kotak Mahindra Bank.
It has also come on board as an anchor investor for several Indian firms -- backing Metropolis Healthcare Ltd and Aster DM Healthcare ahead of their respective initial public offerings (IPO).
In January this year, CDPQ exited its sole Indian thermal power investment, amid efforts to rebalance its energy portfolio in line with a global strategy aimed at addressing climate change.
In October last year, CDPQ partnered with UK’s Generation Investment Management LLP, a firm co-founded by Al Gore, to make long-term bets on sustainable businesses.
Last May, CDPQ agreed to acquire a 40% stake in power producer CLP India Pvt. Ltd for Rs 2,640 crore ($365 million) in cash. Two months before that transaction, CDPQ backed Fundamentum, a technology fund launched by technocrat Nandan Nilekani and investor Sanjeev Aggarwal.
In late-2017, VCCircle reported that the pension fund’s direct India investment portfolio had crossed $500 million (around Rs 3,235 crore) in just one year after beginning to invest in India. It had then picked up a stake in Edelweiss Financial Services Ltd worth Rs 400 crore ($61.5 million then).
CDPQ’s other investments include its debut deal in September 2016 when it invested $75 million in renewable energy company Azure Power Global Ltd. The following month, CDPQ agreed to invest $155 million (more than Rs 1,000 crore) in Chennai-based TVS Logistics Services Ltd by buying the stake held by Goldman Sachs and KKR.