Three major Canadian pension funds to sell 10-per-cent stake in TMX Group

Share

Three of Canada's largest pension funds are selling a portion of their stake in TMX Group Ltd. for $310 million, cashing in on a four-year-old investment in the country's dominant stock exchange operator.

The Alberta Investment Management Corp., or AIMCo, the Caisse de Dépôt et Placement du Québec and the Ontario Teachers' Pension Plan Board each sold 1.8 million shares in TMX Group late Monday for $57.70 per share, after acquiring the stake in 2012 for $50 a share. The sale represents a 10 per cent interest in TMX Group, and approximately a third of each fund's investment in the company. The shares were sold in a bought-deal transaction that will see a group of investment banks led by TD Securities Inc. re-sell the TMX Group equity to investors.

Monday's sale by the three pension funds marks the first major disposition of TMX Group equity from the consortium of 13 Canadian financial institutions that took control of the exchange operator in a $3.8-billion takeover. That consortium included five major pension funds, four of the country's big banks, plus insurers and independent investment dealers. The transaction was done in the wake of a failed 2011 takeover bid for TMX Group by the London Stock Exchange.

For most of the past four years, TMX Group stock has traded below $50, and it dipped below $35 in December, 2015. TMX Group shares changed hands at $61 last week, the first time they have reached that level since the 2012 transaction. In contrast, shares in the publicly traded London Stock Exchange have more than doubled.

Following Monday's share sale, AIMCo, the Caisse and the Ontario Teachers will each continue to own approximately 5 per cent of TMX Group, and each pension fund will continue to have a nominee on the TMX Group board of directors.

Sources working on Monday's transaction said one of the three pension funds originally decided to sell some of its TMX shares, and other members of the consortium had the right to join in. Two other pension funds elected to tag along.

An investment banker working on the transaction said: "This sale is just normal course of business for the pension funds. They continue to be significant shareholders."

TMX Group has consolidated Canada's major trading platforms over several decades and operates the Toronto Stock Exchange, the Montreal Exchange, and the Venture and Alpha stock markets, and also serves as the clearinghouse for trades in equity, fixed income and energy markets.