Caisse de dépôt, CPPIB back another major WSP acquisition – the $366 mln buy of Focus

Montréal professional services consultant WSP Global is in acquisition-based growth mode. And the public company’s two largest investors, the Caisse de dépôt et placement du Québec and Canada Pension Plan Investment Board (CPPIB), are once again stepping up to help fund its deal-making.

WSP has announced plans to buy Focus Corp, a Calgary-based provider of engineering and geomatics services to clients in the oil and gas industry. The price tag: just over $366 million.

To finance the transaction, WSP said it will issue shares as part of a bought deal offering and increase its credit facility. It will also rely on the Caisse de dépôt and CPPIB, which together currently hold approximately 31% of WSP shares, to make a private investment totaling $80 million.

The Caisse de dépôt and CPPIB played a comparable role in August 2012 when the business — then known as Genivar — bought U.K.-based WSP Group Plc for $442 million. In this instance, the two pension fund managers ponied up a $197 million contribution.

The 2012 deal proved to be transformative for Genivar. In one fell swoop, a global multi-disciplinary professional services consultancy was created with a market presence in over 30 countries. Genivar also received a post-acquisition bounce in revenues in 2013, and embarked on a corporate re-organization that resulted in its re-branding as WSP.

WSP continued to acquire over last year, picking up Design Food ServicesDe Curtis Engineering and TECNOAmbiental, according to the company’s website.

The proposed Focus buy is WSP’s first such deal this year. If all goes well, it will close in April. The benefits to WSP will be an earnings per share gain of 10%, growth in its platform competencies into key areas, such as oil and gas engineering services, and new cross-selling opportunities. WSP said it will also advance its goal of reaching $500 million in top-line growth from acquisitions and 20,000 employees by the end of 2015.

Focus is being sold to WSP by Denver-based private equity firm KRG Capital Partners, which acquired the company in a recap deal in 2005.

Like its prospective owner, Focus is no slouch in the acquisitions department. Founded as HDS Focus Surveys in 1977, it began life as a survey business with three employees. In large part due to deal-making, Focus today operates in 21 locations in Canada, employs 1,700 and has revenue of $280 million. Much of this resulted from KRG’s buy-and-build strategy — under the PE investor’s watch, company management partnered in nine add-on acquisitions.

Once the Focus transaction is completed, the Caisse de dépôt‘s and CPPIB’s stakes in WSP will be effectively unchanged. Each pension fund manager is expected to hold around 15.6% of issued and outstanding shares.

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