Caisse, partners bid to buy French engineering firm

Share

The Caisse de dépôt et placement du Québec has joined forces with two partners in a $3-billion bid for French engineering group Spie.

The deal, which is being spearheaded by New York investment firm Clayton, Dubilier & Rice LLC and also includes AXA Private Equity of Paris, is a significant boost to the Caisse's global partnership strategy.

Canada's largest pension fund manager sees a golden opportunity for long-term growth in the plan to acquire the electrical and mechanical engineering firm, which has 28,600 employees in 31 countries. It will also help the Caisse in its continued efforts to diversify its private equity portfolio: At the end of 2010, investments in the United States accounted for 48.9 per cent of the fund's private-equity portfolio, followed by Quebec at 19.8 per cent and Western Europe at 19.6 per cent.

A Caisse spokesman would not say what the fund's share of the investment in Spie would be, but one published report Tuesday said Clayton, Dubilier & Rice will own two-thirds of the majority stake, with the remaining third divided evenly between AXA and the Caisse. Spie bills itself as a leader in providing energy-efficient, environmentally friendly engineering and electrical systems, including building heating and air conditioning.

Both Clayton Dubilier and AXA are well known to the Caisse, which has moved aggressively to boost its global strategy under chief executive officer Michael Sabia. The fund has been involved in other partnerships with Clayton, Dubilier going back to 2005, and with AXA going back to 1997.

Spie, which is owned by French buyout firm PAI Partners, said there remain a few hurdles before the deal can be closed, including ensuring that the sale conforms to French labour laws.

PAI said in March it was exploring different growth options for Spie, including a sale. Spie drew the attention of several suitors, including private equity heavyweights Carlyle Group and Bain Capital LLC.

But the buyout firm said on Tuesday it is now in exclusive talks with the group headed by Clayton, Dubilier to sell its stake in Spie.

"Amongst the indications of interest received by PAI Partners, the project that Clayton, Dubilier & Rice and AXA Private Equity have developed with the management team, has emerged as the most attractive option," PAI said in a news release.

Spie "enjoys strong market positions and has an attractive risk profile," Roberto Quarta, a Clayton, Dubilier partner, said in the release.

Clayton, Dubilier has "a deep knowledge of Spie's market" thanks to its previous investment in Rexel SA, a global leader in electrical products, Mr. Quarta said.