The Canada Pension Plan Investment Board will purchase the Air Distribution division of UK engineering company Tomkins for about $1.1 billion. The division manufactures products used in building heating, ventilation, and air conditioning systems.
The Air Distribution transaction does not change CPPIB or Onex’s ownership stakes in Tomkins. Both groups continue to jointly own the company, with CPPIB owning a 42 percent stake and Onex owning a 56 percent stake.
Tomkins has sold five of its non-core businesses since CPPIB and Onex Corporation took the company private for $4.7 billion in 2010, the largest buyout of the year. The five sales have generated a total of nearly $1 billion in proceeds, the majority of which has been used to reduce Tomkins’ debt load.
“With this acquisition, we will acquire directly a significant majority interest in the Air Distribution division, including the portion that we don’t currently own indirectly through Tomkins,” senior vice president of private investments at CPPIB Andre Bourbonnais said in a statement.
Tomkins now owns three divisions: Gates, which manufactures belts for power transmission for both industrial equipment and automotive products; Dexter, which manufactures axle components for the utility, industrial trailer and recreational vehicle end markets; and a bathware division, which manufactures bathtubs and shower enclosures in the US.
“We can now focus our efforts on building value in the core Gates business with a significantly de-levered capital structure,” Onex managing director Seth Mersky said in a statement.
In March, Onex sold Tomkins division Schrader International to Madison Dearborn Partners for $505 million.
Upon closing, Air Distribution will be a standalone company, not under Tomkins’ ownership. The sale is expected to close during the fourth quarter of 2012.
CPPIB grew its private equity investment portfolio by roughly 6.5 percent during the second quarter of 2012 as it continued to pursue both new investments and add-on acquisitions.
The value of CPPIB’s private equity investments rose by C$1.7 billion (€1.3 billion; $1.7 billion) to C$28 billion during the three month period ending 30 June, comprising about 17 percent of the pension’s $165.8 billion total assets. CPPIB’s private equity portfolio has increased in size in 11 of the past 12 quarters, with its only decrease coming in Q4 2011.