Depressed Canadian oil prices are forcing energy companies to use their shares as a currency to fund acquisitions, but investors have been hard to win over to the strategy, Reuters reported. Unusually large price discounts for crude, due to clogged pipelines, and faltering prices have made growth hard to realize. Some producers have reduced output and lower cash flow has left consolidation using stock as the main option. The Canadian oil patch has made 29 deals so far in the second half, worth US$9.5 billion, the busiest half-year period since the first half of 2017. Further deals may have to rely on shares and private equity, said Andy Mah, CEO of Advantage Oil & Gas Ltd.
Colombia’s government has teamed up with Caisse de dépôt et placement du Québec and local pension funds to create a 3 trillion peso (US$926 million) private equity fund to invest in domestic infrastructure, Reuters reported. The fund will focus on energy, including renewable energy, transportation, water, basic sanitation, telecommunications and other infrastructure. The Caisse, one of Canada’s biggest public pension funds, will contribute 1.53 trillion pesos ($627 million) and the remainder will come from the state’s National Development Financer (FDN) and local pension funds Colfondos, Old Mutual, Porvenir and Proteccion.
Emera Inc has agreed to sell three of its natural gas-fired power plants in New England to Carlyle Group for $780 million (US$590 million), as part of its efforts to cut debt, Reuters reported. This transaction is part of the three-year funding plan that the Canadian energy company introduced during its third-quarter earnings results, said Chief Executive Officer Scott Balfour. The three units, Bridgeport Energy, Tiverton Power and Rumford Power, will be sold to Cogentrix, an affiliate of Carlyle. Halifax-based Emera, which invests in energy generation and transmission, had a debt of $13.9 billion in 2017.
In an earlier PE Hub Canada feature article, Larry Kaumeyer, a CEO who grows and oversees businesses for a private equity firm, discussed the interaction between a general partner and the senior leadership of a company in the pre-acquisition period. In a second article, Kaumeyer focuses on what typically happens after a PE firm has made an investment and what he has learned as a chief executive in navigating change from a day-to-day perspective. He discusses issues in three post-acquisition areas that the CEO and senior leadership team must immediately address.
Canadian gaming and entertainment operator Gateway Casinos & Entertainment Ltd has filed for an initial public offering with the U.S. Securities and Exchange Commission to list its shares on the New York Stock Exchange, Reuters reported. The company set a placeholder amount of US$100 million to indicate the size of the IPO. Vancouver-based Gateway, which recorded total revenue of $484.3 million in the first nine months of 2018, said all shares in the IPO will be sold by shareholders and it does not expect to receive any of the net proceeds from the sale. Its biggest investor is Catalyst Capital Group, a Canadian private equity firm, which acquired Gateway in 2010.
Fairfax Financial Holdings, owned by Canadian billionaire Prem Watsa, has acquired an almost 14 percent stake in steelmaker Stelco Holdings for $250.1 million, Reuters reported. The insurer bought the stake in Stelco from Bedrock Industries, a unit of U.S. private equity firm Lindsay Goldberg LLC, which owned 60.1 percent in the company before the sale. Bedrock still holds about 47 percent stake in Stelco. Last year, Hamilton, Ontario-based Stelco went public on the Toronto Stock Exchange, raising $230 million.
The U.S. leveraged loan market is looking forward to its first jumbo buyout loan of 2019 after the US$13.2 billion acquisition of Johnson Controls International Plc’s power solutions business by Canadian private equity firm Brookfield Business Partners, Reuters reported. The deal has more debt and less equity than most of 2018’s buyout loans as private equity firms issue increasingly aggressive deals to take advantage of strong investor demand for floating-rate debt in a rising interest rate environment. JP Morgan is leading the dollar-denominated loan for the business, while Barclays will lead the euro-denominated loan, the banker said. Credit Suisse is leading the bond offering, which is expected to be issued in dollars.
Johnson Controls International Plc said this week it would sell its power solutions business, which makes car batteries, to Canadian investment firm Brookfield Business Partners LP, in a cash deal valued at US$13.2 billion, Reuters reported. Johnson Controls’ power solutions business makes and distributes about 154 million lead-acid batteries for passenger cars and light trucks annually. The transaction, expected to be completed by June 30, 2019, will see Brookfield Business Partners, the listed vehicle of Brookfield's private equity group, partner with Caisse de dépôt et placement du Québec.
Alate Partners, a Toronto startup focused on the property-tech market, launched today with the close of a $40 million seed financing, according to a news release. The round was backed by real estate company Dream Unlimited, the affiliated Dream Office REIT, and mobile venture capital firm Relay Ventures. The seed deal is the largest in Canada in two years, Refinitiv data show. Along with funding it, Dream and Relay incubated Alate. Its creation is intended to drive development of an ecosystem that brings proptech companies together with real estate owners and operators.
BGH Capital, an Australian private equity firm run by three star dealmakers, was rebuffed in its bid to acquire hospital operator Healthscope Ltd, Reuters reported. On Monday, Healthscope said it had picked Brookfield Capital Partners’ sweetened offer that values the business at up to A$4.5 billion (US$3.25 billion). Melbourne-based Healthscope, which had in May snubbed offers from Brookfield and BGH, said Brookfield’s new offer was superior and it would grant the Canadian investment firm exclusive access to due diligence to facilitate a binding offer. Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan were partnering with BGH in its bid, Reuters reported last month.