Dive Brief:
- GFL Environmental is planning to sell $125 million in shares to institutional investors ahead of a potential IPO next year, as reported by The Globe and Mail. The funding will be used for additional North American acquisitions and could give the company an estimated enterprise value of $4.2 billion.
- CEO Patrick Dovigi told the Globe and Mail he's particularly interested in acquiring companies that generate between $500,000 and $10 million in annual earnings. The company has reportedly completed 60 acquisitions since it was founded by Dovigi in 2007.
- The company considered going public last year, though opted to continue growing as a private business. GFL is currently owned by Dovigi and private equity funds run by HPS Investment Partners and the Macquarie Group. The two firms invested $225 million last year to support GFL's initial U.S. expansion.
Dive Insight:
The Toronto-based company currently services 2.5 million households and 80,000 commercial, industrial or institutional customers, including one U.S. state and all but one Canadian province. Recent acquisitions include Johnson Waste Management Ltd. in Manitoba, which was the second-largest commercial hauler in Winnipeg, and the organics-focused Envirocan Environmental Services in Alberta. GFL's U.S. entry via the acquisition of Michigan-based Rizzo Environmental Services took an unexpected turn last fall, when corruption allegations about the company's leadership broke shortly after acquisition. Rizzo's CEO resigned abruptly at the time and has since been indicted on fraud charges. Dovigi, who said his company had no idea about the alleged corruption, worked to regain trust by holding meetings with every community they serviced and rebranding their fleet.
At a session during the WasteExpo investor summit in May, Dovigi said GFL hadn't lost any contracts from the Rizzo fallout and had in fact been gaining many new ones in the months since. When asked about expansion plans, he said Canada didn't offer any major opportunities because aside from Waste Management and Waste Connections many competitors had smaller operations. Looking into the U.S., he said Ohio and Indiana would be the next logical markets, and technically the company could expand anywhere along the northern border, but that they were focused on Michigan for the time being.
When asked about potentially going public, Dovigi said that "we would love to stay private as long as we can" but recognized that GFL was getting to a size that it "would make sense" to start considering it. At the time, he projected that wouldn't happen for the next two or three years. Now, with this new accelerated time scale, GFL could start making additional moves in the U.S. market, bringing deep experience with cart-based recycling programs and organics collection influenced by Canadian environmental regulations. While GFL will still have a lot of ground to cover to reach the level of its U.S. competitors, the company might become a larger player in the market sooner than expected.
