The Canada Pension Plan Investment Board (CPPIB) has continued to flex its muscles around the world, this time with a €200 million investment in Citycon, an owner-operator of shopping centers in the Nordic and Baltic regions. In return for its investment, CPPIB will gain a 15 percent stake in the company, which has a market cap of more than €1 billion.
CPPIB has agreed to become a strategic shareholder in Citycon, with voting rights, as part of a capital-raising exercise initiated by the company in order to bolster its balance sheet. As well as the €200 million invested by CPPIB, the company is looking to raise an additional €200 million through a rights issue to existing shareholders. Citycon said it would use around €300 million in proceeds to pay down debt in the company, giving it some leeway to recycle capital in order to
make “selective” acquisitions in dense, urban locations in the Nordic and Baltic regions.
The corporate transaction comes off a deal Citycon and CPPIB struck back in December 2012, when they jointly invested in the Kista Galleria, one of the biggest malls in Stockholm, in a deal valued at around €530 million. Citycon is one of the largest retail owner-operators in the Nordics, managing assets that total approximately €3.3 billion.
Graeme Eadie, senior vice president of real estate investments at CPPIB, said the investment enabled it to expand its retail platform in the Nordic region, which continued to be an attractive market.
Marcel Kokkeel, Citycon's chief executive, added: “We are pleased to receive another globally recognized real estate investor as one of Citycon's strategic shareholders. This will further enhance our profile as one of the leaders of the shopping center industry and further strengthen our financing position. We appreciate the commitment that our major shareholders, Gazit-Globe and Ilmarinen, have given to the transaction.”
Chaim Katzman, chairman of Citycon and also Gazit-Globe, added that the transaction was “a vote of confidence” in Citycon by CPPIB, one of the world's largest institutional investors with global real estate assets of more than $20 billion.
Citycon was established in 1988 by Finnish insurance company, Sampo Pension Ltd, Imatran Voima Oy, Rakennustoimisto A. Puolimatka Oy and Postipankki and listed on the main Helsinki stock exchange and specialised in retail property from 1999.
The company expanded to Sweden in 2005 and into the Baltics.