A sign hands in the office of the Ontario Teachers' Pension Plan on Wednesday, June 12, 2013.
An investment that the Ontario Teachers' Pension Plan made in Danish cleaning service company ISS Group is turning out big returns after its debut on the public market.
Back in August 2012, Teachers invested 2.61 billion Danish kroner (roughly $427.7-million at the time) in ISS alongside 1.12 billion kroner from KIRKBI Invest, an investment and holding company for the Kirk Kristiansen family, which controls Lego.
That gave Teachers and KIRKBI a combined stake of 26 per cent in ISS, worth $609-million (Canadian) at the time. The investment was made alongside majority positions held by funds run by European equity group EQT Partners as well as Goldman Sachs Capital Partners funds. Goldman and EQT had been involved since 2005, when they participated in a leveraged buyout for the company.
When the investment was made, ISS was looking to expand its developed and emerging market operations. The company, which was founded in 1901, already had 530,000 employees in 50 countries performing global cleaning, catering, security, property services and facility management. The firm had considered going public in 2011, but found the markets too tumultuous. The plan was to wait a few years and try again.
"We see excellent opportunities to continue growing revenues, as ISS is well placed to capture new customers and to provide integrated solutions to them," said Jo Taylor, head of Teachers' Private Capital's London office, at the time of the investment.
In 2011, global revenue at ISS amounted to 78 billion kroner, about the same amount as the company posted in 2013.
But that lack of major revenue growth didn't stop the stock from climbing in its first trading day in Copenhagen. ISS hit Denmark's exchange Thursday in a blockbusting IPO that raised more than 8 billion kroner ($1.6-billion). The company sold 50.2 million new shares, and Goldman Sachs and EQT sold 1 million shares of their stake.
The price of the company's stock had climbed nearly 17 per cent after its first two days on the market to 186.8 kronur, from an initial 160 kronur, according to data from Bloomberg.
That's good for Teachers. Its 18.2 per cent stake in the company is now worth 4.6-billion Danish kroner, or about $950-million Canadian.