Caisse to earn profit from sale of nearly 10 million CGI shares for $400 million

MONTREAL – The Caisse de depot et placement du Quebec will pocket more than $186 million in profit after agreeing to sell nearly 10 million shares of Montreal-based IT services firm CGI Group.

Quebec’s pension fund manager said Tuesday it will receive $40.15 each for the 9.96 million CGI shares that it’s selling, for a total of about $400 million.

The Caisse is selling only a portion of the shares it acquired last year when it paid $21.41 each to increase its equity stake in CGI, which is currently the fund manager’s largest stock holding.

The Caisse invested $1 billion in CGI in May 2012, helping to finance the Canadian IT company’s purchase of Logica, a $3.1 billion deal when assumed debt is included. The transaction allowed CGI to double its global workforce and revenues.

“CGI’s solid performance and flawless integration of Logica have generated an exceptional return on our investment. The timing is right to capture a small portion of it for our depositors,” stated Caisse president and CEO Michael Sabia.

The Caisse will still own more than 58 million shares or 18.7 per cent of CGI, valued at around $2.3 billion based on recent public prices for the company’s stock.

CGI will acquire about one-quarter of the shares on offer for about $100 million and the rest are being sold to a broker, which the Caisse didn’t identify in its announcement.

CGI chief executive Michael Roach noted that the Caisse has been a partner with the company for more than three decades.

“We are confident that, as a major shareholder and client, our partnership will continue to grow for years to come,” Roach said.

At midday, CGI’s (TSX:GIB.A) shares were at $39.54, down $1.18 or 2.89 per cent from the Monday close.

The Caisse is one of Canada’s second-largest pension fund managers, with $185.9 billion in net assets as of June 30.

CGI is the Caisse’s most valuable stock holding, followed by Enbridge (TSX:ENB) at $1.3 billion, CN Rail (TSX:CNR) at $1 billion, TD Bank (TSX:TD) at $877 million and Suncor Energy (TSX:SU) at $791 million.

Over the last quarter, the Caisse has sold large stakes in Telus (TSX:T) and Potash Corp. of Saskatchewan (TSX:POT), according to a U.S. regulatory filing.

The Caisse sold 10.8 million Telus shares (TSX:T) reducing its holdings of the Vancouver-based telecom company to 12.1 million shares. Its holdings in Potash decreased to 3.6 million from 10.2 million shares in the prior quarter.

The Caisse declined to say what prompted the sales.