CPP Investments Fuels Global Expansion with Landmark €1.5 Billion Boost in Spanish Energy Behemoth Naturgy

In a strategic move set to significantly bolster its global infrastructure portfolio, the Canada Pension Plan Investment Board (CPPIB), known as CPP Investments, has announced a substantial increase in its stake in Spanish energy giant Naturgy. This landmark investment sees CPPIB injecting an additional €1.5 billion (approximately C$2.2 billion or US$1.6 billion) into the prominent utility company, underscoring its commitment to long-term, stable assets within the critical infrastructure sector.

The transaction involves CPPIB acquiring this additional interest from funds managed by CVC Capital Partners, specifically through its investment vehicle, Rioja Bidco.

This latest acquisition will elevate CPPIB's total ownership in Naturgy to approximately 16.5%, solidifying its position as a key institutional investor in one of Spain's leading energy providers.

Naturgy holds a pivotal role in the European and Latin American energy landscape. The company is a diversified energy group, operating across gas and electricity distribution, generation, and commercialization.

It boasts an extensive network and plays a crucial part in the energy supply chains of millions of households and businesses. Furthermore, Naturgy is actively engaged in the broader energy transition, investing in renewable energy projects and sustainable solutions, aligning perfectly with global decarbonization efforts.

For CPP Investments, this enhanced stake in Naturgy is a clear reflection of its overarching investment philosophy.

The pension fund is consistently on the lookout for high-quality, long-duration infrastructure assets that are expected to generate resilient returns to help pay pensions for generations of Canadians. Naturgy, with its regulated asset base, essential services, and strategic position in the energy sector, fits this criteria perfectly, offering predictable cash flows and insulation from certain market volatilities.

This isn't CPPIB's first foray into Naturgy.

The Canadian fund initially invested in the Spanish firm in 2018 as part of a consortium led by IFM Global Infrastructure Fund, a major shareholder that currently holds a 22.7% stake. Other significant investors include Criteria Caixa (26.7%) and Global Infrastructure Partners (GIP) with 20.6%. This complex ownership structure highlights the appeal of Naturgy as a stable, attractive investment target for global institutional capital.

The deal also underscores CPPIB's broader strategy of investing in the energy transition.

As economies worldwide pivot towards greener energy sources, utilities like Naturgy are at the forefront of this transformation. Investing in established players that are adapting to this shift provides CPPIB with exposure to both traditional, stable energy infrastructure and the growth potential of renewables.

Manish Rastogi, Managing Director, Head of Europe, Infrastructure, CPP Investments, often emphasizes the importance of investing in essential, infrastructure assets that provide long-term, stable returns.

This investment in Naturgy directly aligns with that vision, strengthening CPPIB's presence in a key European market and an indispensable global sector.

The transaction is, of course, subject to customary regulatory approvals, a standard procedure for deals of this magnitude and strategic importance within the energy sector.

Once approved, this increased investment will not only enhance CPPIB's exposure to a critical energy asset but also reaffirm its position as a major player in the international infrastructure investment arena, continually seeking opportunities that promise enduring value for its beneficiaries.