(Reuters) -Waste management company GFL Environmental on Thursday announced a deal with funds managed by Energy Capital Partners to recapitalize its construction subsidiary, Green Infrastructure Partners (GIP), at an enterprise value of $4.25 billion.
GIP will receive gross proceeds of $775 million, of which it will return $585 million to its shareholders and use $175 million to fund future growth, the Canadian company said.
GFL will receive $200 million of the distributed amount and will own a near
30.1% interest in GIP valued at about $895 million, the company said.
The deal allows GFL to partially monetize its investment in GIP, which it co-founded in 2022 alongside HPS Investment Partners and Patrick Dovigi, GFL's CEO. HPS and Dovigi will continue to hold a minority stake in GIP.
GIP was spun off in 2022 with GFL retaining a 45% ownership stake. It was primarily controlled by HPS, which owned 47% of the company, while the remaining 8% was held by companies linked to Dovigi.
The unit provides services such as road building, paving, and site development, and has benefited from a series of acquisitions and growing demand for civil infrastructure services. It operates separately from GFL's core solid waste and environmental business.
During GFL's first-quarter earnings call in May, it told analysts it was exploring a "potential partial sale" of GIP.
Despite being one of North America's largest waste management players, GFL's debt-fueled expansion has raised investor concerns, leading to a strategic review and the sale of underperforming assets.
In January, GFL completed a $5.6 billion sale of its environmental services division to investment firms Apollo and BC Partners.
(Reporting by Abhinav Parmar and Apratim Sarkar in Bengaluru; Editing by Anil D'Silva and Shailesh Kuber)
