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PSP Investments buys stake in animal-tag maker Allflex: Reuters

PSP Investments, one of Canada’s biggest pension funds, said on Friday it had acquired a significant minority stake in French company Allflex Group, the world’s biggest maker of electronic tags for animals, from private equity firm BC Partners.

The purchase was overseen by PSP’s new team in London, led by Simon Marc, and is likely to be followed by further deals in Europe as PSP looks to increase its presence in Europe’s private equity market after having opened an office in London last year.

“We do have an increased emphasis on Europe,” said Guthrie Stewart, global head of private investments at PSP, which has $112 billion (US$88 billion) of assets under management.

Stewart said that, although PSP has significant infrastructure investments in the region, operating five airports in Europe and investing in the rail and ports sectors in the United Kingdom, it was under-allocated in the private equity space.

“There’s been a conscious effort to increase our presence in Europe and a key initiative to do that is building out a team in London. That team led this effort together with resources for Montréal,” Stewart said in an interview.

Allflex grew from being a low-tech maker of plastic ear tags for cows to a world leader in high-tech labelling after the European Union tightened food traceability rules in 1998 in the wake of the Bovine Spongiform Encephalopathy (BSE) crisis, known as “Mad Cow disease”.

Subsequent crises, including a 2001 foot and mouth disease outbreak in Britain, led to tighter supervision of how livestock is sourced and tracked in Europe, North America and Australasia.

Electronic animal identification is increasingly regulated, which makes it harder for new players to start a business from scratch, leaving established operators like Allflex with strong growth prospects.

“Allflex is a high-quality, fast-growing industry leader with a unique market position,” Stewart said in a statement.

BC Partners had purchased Allflex from private equity rival Electra Partners for US$1.3 billion in 2013.

Financial details of the transaction were not disclosed.

Update: Buyouts in April profiled PSP’s Stewart and his first months on the job.

(Reporting by Matt Scuffham; Editing by Cynthia Osterman)

(This story has been edited by Kirk Falconer, editor of PE Hub Canada)

Photo courtesy of Reuters/Christinne Muschi