CPPIB doubles money on industrial exit

The Canada Pension Plan Investment Board will sell Air Distribution Technologies for $1.6 billion to Johnson Controls, according to a statement.

The exit will generate a return multiple of roughly 2x, according to a spokesperson from CPPIB.

Dallas-based Air Distribution provides ventilation for residential and commercial buildings and air movement and control services for industrial and infrastructure applications. The company works with brands such as heating, ventilation and air conditioning producer Hart & Cooley and air and sound control company Ruskin, according to its website.

CPPIB will receive proceeds from the sale of about $1 billion. The pension plan initially acquired Air Distribution for $1.1 billion from UK engineering company Tomkins in 2012. The acquisition was funded with $500 million of CPPIB equity and $600 million of debt. The amount of debt remained unchanged during the investment period.

Last week, CPPIB and Onex Corporation agreed to sell Denver-based Gates Corporation, a division of Tomkins, to The Blackstone Group for about $5.4 billion, Private Equity International reported. Gates manufactures power transmission belts and fluid power products for the automotive industry. The transaction will result in a 2.2x return multiple and 26 percent internal rate of return for both firms, including prior divestments.

CPPIB invests the unneeded funds by the Canada Pension Plan to pay current benefits. CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income vehicles.

CPPIB is based in Toronto and has offices in Hong Kong, London, New York and São Paulo, which opened Tuesday. The pension is also rolling out plans to open an office in Mumbai, India in the next 18 months, a source familiar with the matter told PEI last month.

The CPP Fund totaled C$201.5 billion (€132.7 billion; $183.25 billion) as of 31 December 2013, according to the statement.