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CPPIB to increase stake in Brazilian mall operator

The transaction effectively ends Jaguar Growth’s bid to strike its first deal in in the country since its co-founders’ days at Equity International.

Canada Pension Plan Investment Board has agreed to acquire an additional stake in Aliansce Shopping Centers, a Rio de Janeiro-based mall developer and operator.

Canada’s biggest pension plan is currently the largest single shareholder in Aliansce, directly holding a 29.16 percent stake. CPPIB is now acquiring an additional 11.3 percent interest in the company from GGP, a Chicago-based retail real estate investment trust, boosting the former’s total ownership in Aliansce to nearly 40.5 percent. CPPIB will hold the additional stake indirectly through a vehicle known as GGPBRIII. The stake is valued at around $90 million, according to a JPMorgan research note.

The transaction effectively ends a bid by Jaguar Growth Partners, a New York-based private equity real estate firm, to execute its first investment in Brazil since managing partners Gary Garrabrant and Thomas McDonald left Chicago-based private equity firm Equity International in 2012.

Last week, through its subsidiary Aspiracional, Jaguar had agreed to buy the 11.3 percent stake from GGP in a deal that was reportedly valued at 275 million reais ($87.78 million; €78.58 million). CPPIB, however, had rights of first refusal on the acquisition, which it decided to exercise this week, entering into a purchase and sale agreement with GGP, according to an Aliansce announcement.

GGP founded Aliansce in August 2004 through a joint venture with Brazilian mall owner Renato Rique. In August 2012, GGP acquired an additional 14.1 percent interest in Aliansce from Pershing Square Capital for $195.2 million, increasing its stake in the company to 45.6 percent.

In July 2013, GGP sold a 27.6 percent interest in Aliansce to CPPIB for an equity amount of $480 million and its remaining stake in the company to Rique and two other Aliansce senior executives. However, in June, Aliansce disclosed that GGP and the Aliansce senior executives had agreed to terminate the 2013 stock purchase agreement, with the executives returning their 11.3 percent interest in the company to GGP. The termination of the agreement was finalized on July 29.

PERE understands that CPPIB initially declined when approached about buying the 11.3 percent interest. However, the pension plan is said to have reconsidered after it learned that Jaguar was planning to buy the stake.

The closing of the transaction will be subject to certain conditions, including approval by the Brazilian Antitrust Authority, CADE.