Natural gas
The Canada Pension Plan Investment Board's new relationship investing team is off and running with a $350-million investment in Progress Energy that will enable the natural-gas company to buy new assets and spend money drilling.
Progress is paying $390-million for a package of gas assets in northeast British Columbia that Suncor Energy is selling, and will spend another $350-million developing assets this year.
It's possible because of the cash from CPPIB, and also the money raised in a concurrent $250-million public offering.
The CPPIB team, led by Scott Lawrence, crossed the country last year looking for investment candidates, and made an impression on Progress. Management from the gas producer approached CPPIB about backing the purchase of assets from Suncor late last year, and CPPIB came on board to take a stake that will give it almost 15 per cent of Progress.
Progress is an example of what Mr. Lawrence called a "simple recipe that's hard to find."
CPPIB is looking for "companies with proven mangement teams that are capable of growing, and the companies have superior growth potential, but their growth is impeded by a lack of capital," he said.
The idea is a middle ground between the fund manager's ability to take over whole companies and its other public market investments, where it has smaller stakes.
"We're looking to find other champions in their respective spaces in Canada and abroad," he said, noting that future investments won't necessarily be in Canada, and there's no particular sector that the CPPIB is looking to get involved in.
"We are industry agnostic," Mr. Lawrence said. "We seek out opportunities regardless of the sector."
CPPIB also expects to be a long-term holder in most of the companies it takes big stakes in, which it hopes will be a differentiating factor given that other investors often look to exit soon after they purchase in hopes of a quick profit.