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KKR, CPPIB finalize $953m Indian telecom tower deal

by Jody Barhanovich

Bharti Airtel Ltd., India’s largest telecommunications services provider, has completed the secondary sale of more than 190 million shares of its subsidiary Bharti Infratel Ltd. to a consortium of funds advised by KKR and the C$278.9 billion ($208.5 billion) Canada Pension Plan Investment Board.

Bharti Airtel will primarily use the proceeds from the transaction to reduce its debt. Following the closure of this transaction, Bharti Airtel’s equity holding in Bharti Infratel stands at 61.7 percent, and KKR and CPPIB at 10.3 percent combined.

The investment “further reinforces the positive outlook for the telecommunication infrastructure sector,” says Sunil Bharti Mittal, chairman of Bharti Airtel.

This is KKR’s second investment in Bharti Infratel. Funds managed by KKR had invested in Bharti Infratel during the period from 2008 to 2015. After this transaction, the combined stake held by KKR and CPPIB will be the single largest public shareholder block.

CPPIB’s infrastructure portfolio grew to C$21.3 billion ($15.9 billion) by the end of fiscal year 2016, compared with C$15.2 billion ($11.3 billion) in fiscal year 2015, according to an annual investment report. The growth was driven by C$5.0 billion ($3.7 billion) in new investment activities and C$1.5 billion ($1.1 billion) arising from investment revaluations. The infrastructure portfolio remains geographically diversified, with 77.1 percent in developed markets, such as North America, Western Europe and Australia, and 22.9 percent in select developing markets, mainly in Latin America.

CPPIB recently expanded its U.S. infrastructure portfolio with the acquisition of Skyway Concession Co., alongside OMERS and Ontario Teachers’ Pension Plan, for $2.9 billion. CPPIB owns a 33.33 percent interest for an equity investment of approximately $560 million. Skyway Concession manages, operates and maintains the 7.8-mile Chicago Skyway toll road under a concession agreement, which runs for another 88 years.

CPPIB has been an active investor in transportation infrastructure around the world. In March 2016, CPPIB, together with a consortium of global investors, including Global Infrastructure Partners, signed a conditional agreement to acquire the rail business of Asciano Ltd., a leading Australian publicly listed rail and ports logistics company.

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