GIP has bulked up through acquisitions since it was spun out of GFL in 2022, providing services like demolition, excavation and remediation.Fred Lum/The Globe and Mail
The infrastructure arm of Canadian waste-management company GFL Environmental Inc. GFL-T is bringing on a new private-equity investor in a deal that will return some cash to existing shareholders and also provide funds for more acquisitions.
GIP, which stands for Green Infrastructure Partners, was spun out of the waste-management company in early 2022 and was created with financing from private-equity firm HPS Investment Partners, which took a 47-per-cent stake. GFL kept 45 per cent and GFL founder Patrick Dovigi owned 8 per cent.
GIP is now adding New Jersey-based Energy Capital Partners as a new investor, receiving $775-million in proceeds from the transaction. GIP said Thursday that $585-million will be given to its existing shareholders, and $175-million will be used to fund future growth.
GFL, which is publicly traded, will receive $200-million of the proceeds and continue to own 30 per cent of the infrastructure company. HPS and Mr. Dovigi will also remain minority investors.
GFL in talks to sell stake in infrastructure arm, source says
The deal marks the second major recapitalization of a GFL-affiliated business in 2025. In January, the waste-management company sold a majority stake in its environmental-services division in a complex transaction that involved adding new debt inside the business, but allowing GFL to pay down debt on its own balance sheet.
Since being spun out of GFL in 2022, GIP has bulked up through acquisitions, including purchasing Coco Paving Inc., a family business run by siblings Jenny and Rock-Anthony Coco that predominantly operates in Ontario. The company’s services also include demolition, excavation and remediation. (GIP was created to house the paving company and a few other GFL assets.)
In 2023, GIP also purchased Aecon Group Inc.’s road-building business in Eastern Ontario for $235-million in cash, a deal that added aggregate quarries and asphalt plants to GIP’s business.
Mr. Dovigi has long talked about wanting to monetize GIP, potentially through an initial public offering, but the business faced headwinds in recent years, partly owing to cost inflation on projects. It has also replaced a number of executives, including its chief executive officer.
Although GFL is a significant shareholder in GIP, its minority ownership allows the waste giant to report its investment as a single line item on its balance sheet. That means all cash-flow and financial details are kept private.
GFL’s shares have jumped over the past year after the company pivoted to paying down debt through the sale of its environmental-services division. Since the news of a potential deal for the unit came to light in mid-2024, GFL’s shares are up roughly 60 per cent.
Now that investors are satisfied with its balance sheet, GFL wants to reignite its acquisition streak. From its founding, GFL has been a serial acquirer, borrowing money to fund purchases of smaller rivals. This acquisitive bent is a key reason its operating cash flow grew so quickly over the years – and it’s also been a major driver of GFL‘s persistent losses because substantial interest costs eat into its bottom line.
GFL has also used money from the sale of its environmental-services division to buy back stock from its major shareholders BC Partners and Ontario Teachers’ Pension Plan, which have backed the company since 2018 and remained its largest shareholders through GFL’s initial public offering in March, 2020.
Because Teachers has sold down its stake, it no longer has a representative on GFL’s board of directors. Blake Sumler, Teachers’ senior managing director of industrials, stepped down from the board this year.