All financial information is in Canadian dollars except headline and where noted.
Energy Capital Partners will purchase a significant stake in Canadian company Green Infrastructure Partners, the infrastructure company spun off from GFL Environmental in 2022, the entities announced Thursday. The deal will net GIP $775 million, valuing the business at $4.25 billion, per a release from GFL.
“ECP is a leading investor in critical infrastructure, with deep expertise and a demonstrated track record of value creation for its stakeholders. We look forward to working with ECP on executing GIP's growth strategy," GFL CEO Patrick Dovigi said in a statement.
New Jersey-based Energy Capital Partners has experience investing in the waste and infrastructure services industries. It previously held a controlling stake in Wheelabrator Technologies before selling the company in 2018 to Macquarie Infrastructure Partners. In 2023, ECP acquired Biffa, a leading recycling and waste firm in the United Kingdom.
“We see significant tailwinds for GIP's essential, vertically-integrated infrastructure offerings," Drew Brown, partner at ECP, said in a statement. "This transaction will provide GIP with access to significant capital to execute on a compelling M&A pipeline that we believe is particularly actionable in the near-term.”
GFL will retain a stake in GIP following the deal’s close, which is expected to occur around Sept. 2. This is the second major recapitalization involving GFL this year, after the company spun off and sold a majority stake in its environmental services business to affiliates of asset management fund Apollo and investment firm BC Partners for $8 billion. GFL retains a stake in that business following the deal, which closed in March.
As a major shareholder of GIP, GFL will receive about $200 million through the deal. Dovigi said the proceeds GFL receives from the GIP deal would allow the company to continue to delever its balance sheet. He also said it would be used to support growth strategies, including M&A. The company will retain a 30.1% stake in GIP worth about $895 million after the deal closes.
GIP will return about $585 million to shareholders and use the remaining $175 million for its balance sheet. HPS Investment Partners previously held the controlling stake in GIP following its formation in 2022, and will remain an investor after the deal. Dovigi himself also holds a minority stake in GIP and will continue to do so.
Dovigi has hinted at the GIP deal for months. At GFL's investor day summit in March, he told analysts that GIP had received “a significant amount of reverse inquiry” from potential investors. At that event, Dovigi said GIP's 2024 earnings before income, taxes, depreciation and amortization were in the “low $200 millions.”
GIP was formed in 2022 when GFL sold off its infrastructure services and soil remediation business segments for cash and a 45% equity interest in the new company. Executives viewed the assets as valuable but less related to GFL’s thesis as a solid waste company, especially since it had recently gone public.
GIP also acquired Coco Paving immediately after the spinoff. As part of that deal, the newly formed private company's management team included leaders from both GFL Infrastructure and Coco Paving. Dovigi remained GIP's chairman.
