TPG Capital and CPPIB acquire stake in Viking Cruises for $500 mln

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TPG Capital and CPPIB acquire stake in Viking Cruises for $500 mln

Postby HostDave » Wed Sep 14, 2016 1:58 pm

Viking Cruises today announced a combined minority investment of US$500 million by TPG Capital and Canada Pension Plan Investment Board (CPPIB) for a combined stake of 17% in MISA Investments Limited, the parent company of Viking Cruises. TPG Capital, the private equity platform of leading global alternative investment firm TPG, and CPPIB, a professional investment management organization that manages the funds of the Canada Pension Plan, will each invest US$250 million to support and accelerate Viking Cruises’ growth initiatives and strengthen the company’s balance sheet.

Founded in 1997 by CEO Torstein Hagen, Viking Cruises is a leading provider of worldwide river and ocean cruises, operating more than 61 cruise vessels based in 44 countries. Serving travellers across North America, the U.K., Australia and, starting this year, China, Viking Cruises creates culturally immersive, destination-centric experiences for its customers. The company provides city-to-city itineraries that offer a wider range of cultural locales, with more destinations and time dedicated to shore excursions than traditional cruise lines.

Viking Cruises consists of two businesses: Viking River Cruises, a European-based river cruise line that operates a fleet of 59 vessels, and Viking Ocean Cruises, an ocean cruise line launched in 2015 that currently operates two 930-passenger vessels. The company’s river cruise line has a differentiated track record of success, having won Travel + Leisure’s “World’s Best River Cruise Line” on 11 different occasions. Viking’s more recently launched business, Viking Ocean Cruises, has built upon learnings from the company’s highly successful river offering to introduce a midsize, destination focused ocean offering that has already garnered significant critical acclaim, including earning Travel + Leisure’s “World’s Best Ocean Cruise Line” award in its first year of operation.

“I am delighted that such prestigious institutions as TPG and CPPIB have become investors in Viking. This partnership and infusion of long-term growth equity capital will give us great opportunities to grow further, particularly in destination-focused ocean cruising as well as cruising in Europe for Chinese consumers,” said Tor Hagen, Viking Cruises’ Chairman and CEO.

“Our investment in Viking is an attractive opportunity to invest in a market-leading business with an impressive track record, and substantial room for expansion. Viking’s business is exposed to a number of long-term growth drivers that our Thematic Investing group looks for, and believes will deliver strong risk-adjusted returns for the Fund,” said Pierre Lavallée, Senior Managing Director & Global Head of Investment Partnerships, CPPIB. “We look forward to partnering with Viking’s management and TPG to position the business for further growth.”

“Having been a long-time investor in the cruise industry, we see Viking as a market innovator that has reimagined how people explore the world, with an iconic brand and strong product offering that has significant growth potential,” said Paul Hackwell, Principal at TPG. “Together with CPPIB, as the company’s first institutional equity investors, we look forward to partnering with Tor and the Viking management team to expand the business, both in products offered and regions served.”

CPPIB established its Thematic Investing group in 2014. The group looks to invest in companies that are exposed to long-horizon structural changes and compelling growth drivers. Thematic Investing’s investment process is comprised of in-depth research that begins with a top-down approach to identify the most compelling long-horizon themes such as demographics and disruptive innovations, and selects the best investment opportunities within those themes. The group invests in both public and private equity and is able to hold investments over a longer term.

This investment builds on TPG’s track record of partnering with companies that serve consumers’ unique needs and interests, such as live entertainment company Cirque du Soleil, leading sports and entertainment agency CAA, and fitness and recreation chain Life Time Fitness.

Subject to regulatory approvals, the transaction is expected to close in early Q4-2016.

Credit Suisse acted as exclusive placement agent to MISA Investments in connection with the transaction.

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