Birch Hill eyes public markets with IPOs of Shred-it and Sleep Country

Shred-it International, a document destruction services provider majority owned by Birch Hill Equity Partners, has filed a preliminary prospectus for an initial public offering.

The prospectus, which was filed this week, does not specify the number of common shares to be distributed. Neither does it indicate pricing, though various media reports have suggested the company is seeking to raise about $500 million.

The offering includes a secondary sale of shares by Birch Hill. It is being underwritten by TD Securities, BMO Nesbitt Burns, CIBC World Markets and Scotia Capital.

Birch Hill bought Shred-it in partnership with Westerkirk Capital and other investors in 2009. At the time, the company’s management was in transition. The acquisition deal aimed at reorganizing and recapitalizing the business and giving it greater scale.

Since then, the Oakville, Ontario-based company has grown rapidly, organically and through add-acquisitions. The latter include last year’s buy of Cintas Corp‘s document destruction unit, an event that contributed significantly to Shred-it’s current count of more than 400,000 recurring customers in 18 countries.

The prospectus cites total revenue of more than $575 million in fiscal 2014. Shred-it has the opportunity for further growth in annual revenue to between $1 billion and $1.25 billion over the next five to seven years, the filing said.

Shred-it’s IPO launch comes hard on the heels of an offering made by another Birch Hill portfolio company: Sleep Country Canada.

In early June, Sleep Country, a specialty mattress retailer, also filed to go public. Again, the terms of the IPO were not published, though a recent Bloomberg report cited sources that said the raise is targeted at about $250 million.

The Toronto-based Sleep Country, which in Québec operates under the Dormez-vous brand, is returning to public ownership. In 2008, Birch Hill and Westerkirk took the company private in a deal that valued it about $356 million.

Both IPOs are likely to provide impetus to Birch Hill’s fundraising activity. As reported by peHUB Canada last October, the firm is in the market to raise roughly $1 billion in committed capital for its fifth mid-market private equity fund, Birch Hill Equity Partners V LP.

Along with managing fundraising and prospective exits, the firm has found time this month to close new deals. At the beginning of June, Birch Hill invested in Sigma Systems, a provider of idea-to-install software solutions.

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