Canada pension funds buy stake in South Korean grocer as part of $6 billion deal

TORONTO – Two Canadian pension plans are part of a consortium that purchased South Korean supermarket chain Homeplus from British retailer Tesco for around US$6 billion on Monday.

The Canadian Pension Plan Investment Board said it spent US$534 million for a 21.5 per cent stake in the company.

The Public Sector Pension Investment Board, which manages investments for the federal public service and the Canadian Forces among others, was also a part of the deal but did not disclose its contribution.

The deal is expected to close in the fourth quarter of 2015, pending approval from the South Korean government and Tesco’s shareholders.

Homeplus is South Korea’s second-largest retailer, with more than 1,000 outlets across the country. It was originally founded as a joint venture between Samsung and Tesco in 1999.

South Korean private equity firm MBK Partners led the deal and said the consortium will invest US$831 million in the business over the next two years.

Canada’s national pension plan makes more than it currently pays out in benefits, and the CPPIB invests the excess money. At the end of June, the fund totalled $268.6 billion.

Homeplus is facing criminal and civil lawsuits in South Korea after company executives including CEO Do Sung-hwan were indicted in February for selling the personal data of millions of customers to insurance companies for marketing purposes.