Merger and acquisition deals with pension funds as co-investors plummeted nearly 92% in terms of value in the first quarter of the year compared to year earlier, and were down by more than half from the previous quarter, according to S&P Global Market Intelligence data.
During the first quarter of 2024, pension fund-backed deals totaled $1.26 billion, down from $15.27 billion in the same quarter last year, while the number of deals only declined by four to 27 from 31.
It was the second straight quarter the value of M&A transactions with direct pension fund involvement declined, while annual values continued to tumble. In the fourth quarter of 2023, the value of the deals was down nearly 79% from a year earlier, and in the third quarter of 2023, deal values were down almost 17% from the same quarter a year earlier. [
The biggest M&A deal involving a pension fund during the first quarter of 2024 was South Yorkshire Pensions Authority and Royal London Asset Management’s $328.3 million acquisition of 21,000 acres of farmland in the British counties of Cambridgeshire and Lincolnshire. The four next largest deals involved Canadian pension funds, three of which involved the Canada Pension Plan Investment Board.
The CPPIB, along with Longbow Capital and other strategic equity investors, made a $210 million follow-on equity investment in Houston-based energy management and generation company VoltaGrid, which was the second-largest deal during the quarter. CPPIB also backed the third-largest deal, which was a $199.1 million investment in Brazilian basic education network Inspira Rede de Educadores. The next largest deal was a $163.9 million capital increase by Caisse de dépôt et placement du Québec, alongside other shareholders, in French industrial engineering Fives Group.
According to S&P, pension funds invested the most capital in the energy and utility sector during the quarter – $313.1 million, which surpassed the $268.6 million invested in the sector during the first quarter of 2023. The industrial sector accounted for the next largest deal value at $211.4 million, while pension fund-backed M&A deals in the technology, media, and telecom sector fell to $7.6 million from $12.8 million during the year-earlier quarter.
Private equity and venture capital firms were co-investors in eight out of the 10 biggest announced transactions that involved pension funds during the quarter.
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Tags: Caisse de dépôt et placement du Québec (CDPQ), Canada Pension Plan Investment Board, Mergers and Acquisitions, S&P Global Market Intelligence, South Yorkshire Pensions Authority