Canada’s top PE deals fetch $32 bln in 2018, driving peak dollar flows

Canada’s private equity market had a banner year in 2018, especially in terms of dollars invested.

As in the past, the lion’s share of deals engaged mid-market companies. Most of the cash, however, was accounted for by a small collection of large caps.

Among them was the $5.1 billion recapitalization of GFL Environmental by a consortium led by BC Partners and Ontario Teachers’ Pension Plan, the biggest PE transaction in four years.

That put GFL at the head of Canada’s top 10 PE deals last year. Taken together, they had disclosed values of more than $32 billion, up 70 percent from the $19 billion the top 10 deals of 2017 drew.

The number is based on PE Hub Canada’s list of the largest deals announced in 2018, supplemented by preliminary data from Refinitiv. It suggests that large caps fueled the most substantial dollar flows in the market’s history.

In all, disclosed values of Canadian PE investing reached $37.2 billion last year, up 31 percent from $28.4 billion in 2017.

If the former total holds in Refinitiv’s final set of statistics, values in 2018 will surpass everything reported before then, including the prior record of $33.7 billion invested in 2007.

Trends were led in a handful of sectors. GFL’s recap and the $4.3 billion acquisition of Enercare helped push dollars going to energy and environmental companies to $12.2 billion.

Oil-and-gas companies followed with $7 billion invested. They included Enbridge’s natural gas assets, slated for purchase for $4.3 billion.

In third spot were manufacturing companies, with $5.3 billion invested, thanks primarily to the $4.9 acquisition of Husky IMS International.

1) GFL Environmental recap

GFL Environmental, a Toronto waste management company, was recapitalized by an investor group led by BC PartnersOntario Teachers’ Pension Plan and others. As part of the $5.1 billion transaction, the group acquired stakes held by HPS Investment Partners, Macquarie Group and Hawthorn Equity Partners.

2) Husky sponsor-to-sponsor

Platinum Equity wrapped up its purchase of Husky IMS International, a Bolton, Ontario, injection-molding equipment and service provider to the plastics industry. The deal was valued at $4.9 billion. The sellers were OMERS Private Equity and Berkshire Partners, which acquired Husky in 2011 from Onex Corp.

3) Enbridge natural gas assets sale

Enbridge agreed to sell its natural gas gathering and processing unit to Brookfield Asset Management for just over $4.3 billion. The sale of the provincially regulated portion of the Alberta and B.C. assets was closed in October. Under Brookfield’s ownership, the business will be called NorthRiver Midstream.

4) Enercare take-private deal

Brookfield Asset Management also paid $4.3 billion to acquire Enercare, a Markham, Ontario, home and commercial services and energy solutions company. As a result, Enercare, formerly Consumers’ Waterheater Income Fund, was delisted from the TSX.

5) Pure acquisition

Pure Industrial Real Estate Trust was bought by Blackstone Group and Ivanhoé Cambridge, the real estate arm of Caisse de dépôt et placement du Québec. The $3.8 billion deal gave Blackstone a 62 percent stake. Based in Vancouver, the previously listed Pure owns and operates industrial properties across North America.

6) GFL Environmental add-on

Several months after being recapitalized, GFL Environmental merged with Waste Industries, a U.S. solid-waste-management business. The $3.6 billion add-on was financed in part by equity from GFL’s new investors, including BC Partners and Ontario Teachers’ Pension Plan.

7) Mitel Networks take-private deal

Mitel Networks ceased trading on the TSX and Nasdaq following the company’s acquisition by an investor group led by Searchlight Capital Partners. The purchase price was about $2.6 billion. Ottawa-based Mitel provides business communications, collaboration and contact-centre solutions.

8) Access Pipeline stake sale

MEG Energy sold a 50 percent interest in the Access Pipeline, operator of an Alberta heavy oil transportation pipeline network, and a 100 percent interest in the Stonefell Terminal. Calgary energy infrastructure company Wolf Midstream bought the assets for $1.6 billion, with Canada Pension Plan Investment Board committing $703 million.

9) Alterra Power acquisition

Innergex Renewable Energy acquired Alterra Power, a Vancouver renewable energy company, for $1.1 billion. Innergex, a Longueuil, Québec, developer and operator of hydro, wind and solar resources, was backed in the deal with a $150 million investment by Caisse de dépôt et placement du Québec.

10) Stella-Jones buyout

Montréal wood products maker Stella-Jones bought the stake held by its main shareholder. The $876 million deal included $533 million of shares sold to British Columbia Investment Management Corp, Caisse de dépôt et placement du Québec, Fonds de solidarité FTQ, GPI Capital, Ontario Municipal Employees Retirement System and others.