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CPPIB injects C$200m into PE-backed Premium Brands

Pender West Capital Partners is among existing investors in the TSX-listed collection of food manufacturing and distribution businesses..

The Canada Pension Plan Investment Board invested approximately C$200 million ($148.9 million; €133.5 million) into Premium Brands Holdings, a publicly traded food manufacturing and distribution business that counts Pender West Capital Partners among its investors.

Under the terms of the deal, the C$392 billion pension will pay C$76.02 per share for 2,631,000 common shares of Premium Brands. The fund gains about 7.1 percent of outstanding common shares, purchased at a 1.5 percent discount to the Premium Brands’ five-day volume-weighted average trading price on 17 May.

Premium Brands president George Paleologou said the investment would allow the company to pursue a pipeline of potential acquisition and growth opportunities that has grown “dramatically” in recent years. It will also help the distributor expand beyond North America.

“By partnering with CPPIB, not only do we better position ourselves to execute on these opportunities, but we also secure a long-term focused shareholder who shares our values and vision for the future,” Paleologou said. “Furthermore, we gain access to the insights of a leading global investor, which will become increasingly important as we start to look beyond North America.”

Premium Brands’ existing credit capacity and proceeds from CPPIB’s investment leave the company with C$416 million for organic and acquisition growth, according to the statement.

CPPIB senior managing director and global head of active equities Deborah Orida said the investment into Premium Brands builds on a strategy of the pension’s relationship investments group to provide long-term strategic capital to public companies it can help create greater value.

The company that now operates as Premium Brands Holdings was founded in 1917 and owns 39 specialty food manufacturing and 20 food distribution businesses with operations across Canada and the United States.

In December 2016, Premium Brands acquired Island City Baking and affiliate Conte Foods for $20.3 million before purchasing Toronto-headquartered Diana’s Seafood for an undisclosed price later that month. Financial terms were also undisclosed for Premium Brands’ March 2017 acquisition of Interprovincial Meats, a trader and distributor of beef, poultry and pork headquartered in Nova Scotia.

According to an overview presented at the company’s annual meeting earlier this month, Premium Brands currently derives 63.3 percent of its sales from Canada; 35 percent from the United States and 1.7 percent to export markets. By commodity, proteins account for a slight majority of Premium Brands’ sales, led by a 21.9 percent share for beef; 13.8 percent share for seafood; 11.5 percent for pork and less than 5 percent in poultry.

Pender West and CPPIB representatives did not respond to messages seeking further detail by press time.