Canada Pension Plan Investment Board has agreed to invest US$300 million in the acquisition of Virtusa Corp, a Southborough, Massachusetts-based provider of digital strategy, digital engineering, and information technology services and solutions. CPPIB is investing alongside Baring Private Equity Asia, which earlier this month agreed to buy Virtusa for about $2 billion.
CPP Investments Commits US$300mn to BPEA and Virtusa Transaction
TORONTO, Sept. 30, 2020 /CNW/ – Canada Pension Plan Investment Board (CPP Investments) confirms an equity commitment of US$300 million alongside Baring Private Equity Asia (BPEA) in respect of the proposed acquisition of Virtusa Corporation (Virtusa), a global provider of digital strategy, digital engineering, and IT services and solutions that help clients change and disrupt markets through innovation engineering. CPP Investments will hold a stake of approximately 24% in the business.
On September 10, 2020, BPEA and Virtusa announced that the companies have entered into a definitive merger agreement under which funds affiliated with BPEA will acquire all outstanding shares of common stock of Virtusa for US$51.35 per share in an all-cash transaction valued at approximately US$2.0 billion. CPP Investments and BPEA have a longstanding relationship dating back over 10 years.
“We are delighted to announce that CPP Investments will be our partner in this transaction” said Jimmy Mahtani, Managing Director of BPEA. “Technology is continuing to drive marketplace evolution at an unprecedented pace, creating new opportunities as well as complexities. Virtusa’s global team of talented professionals, software engineering heritage, and deep domain expertise position it uniquely to help enterprises across industries accelerate their most strategic digital and cloud transformation initiatives.”
“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,” said Frank Su, Managing Director and Head of Private Equity Asia, CPP Investments. “Virtusa’s ability to partner with a blue-chip client base to rapidly build scale in an industry with strong fundamentals will deliver long-term value for CPP contributors and beneficiaries.”
The transaction is expected to close in the first half of 2021 and is subject to the approval of Virtusa’s shareholders, customary regulatory requirements, including approval from The Committee on Foreign Investment in the United States (CFIUS), and customary closing conditions. The transaction is not subject to a financing condition.
Baring Private Equity Asia (BPEA) is one of the largest and most established private alternative investment firms in Asia, with AUM of approximately US$20 billion. The firm runs a private equity investment program, sponsoring buyouts and providing growth capital to companies for expansion or acquisitions with a particular focus on the Asia Pacific region, as well as investing in companies globally that can benefit from further expansion into the Asia Pacific region. BPEA also manages dedicated funds focused on private real estate and private credit. The firm has a 23-year history and over 190 employees located across offices in Australia, China, Hong Kong, India, Japan, Singapore, and the US. BPEA currently has over 40 portfolio companies active across Asia with a total of 224,000 employees and sales of approximately US$39 billion.
For more information, please visit www.bpeasia.com
About CPP Investments
Canada Pension Plan Investment Board (“CPP Investments™”) is a professional investment management organization that invests around the world in the best interests of the more than 20 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments in public equities, private equities, real estate, infrastructure and fixed income are made by CPP Investments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At June 30, 2020, the Fund totalled $434.4 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.