Birch Hill Equity is among the country’s largest private equity firms, with stakes in 20 partner companies. It operates on a cycle: it raises new capital, it seeks out opportunities after an acceptable period of ownership looks to reap the rewards.
In 2015, it had been within the harvesting phase, looking to realize value for GDI Integrated Facility Services, Sleep Country Canada and Shred-it International.
Of the 3, the disposition of Shred-it was the most unusual. Rather than selling a part of its stake via $600 million initial public offering – and ending up about a 40 percent interest – Birch Hill and also the other shareholders sold for an industry buyer, Stericycle Inc.
But Birch Hill, which first invested in Shred-it in June 2009, and also the other shareholders went a long way to accept company public.
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Shred-it filed a prospectus for an dpo and secondary offering. Toronto0-Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce and Bank of Nova Scotia were lead managers.
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But the parties were also involved with trying to find a buyer privately. Having two irons within the fire is known as dual track. CIBC had that mandate.
Paul Farrell CIBC’s head of Canadian Investment Banking said the “opening up” from the IPO market in 2015, “presented an opportunity for private equity sponsors to think about it a reasonable exit.” But due to the success Shred-it achieved like a private company,” the equity market and also the M&A market provided an attractive proposition. But Birch Hill, elected, because of its own reasons, to complete the non-public trade.”
John MacIntyre, a Birch Hill partner said “there would be a good reception in the public market and (Shred-it) was a logical candidate to go public. However when a strategic buyer (like Stericycle) arrives, it made sense for us and also the other owners and the business. It had been a superior bid,” he said, adding the sale to a strategic buyer also “de-risks” the investment, because all of the proceeds are received on closing.
Birch Hill’s other two divestitures were more normal: it took Sleep Country Canada Holdings public and executed a reverse takeover between Medwell Capital Corp. and GDI.
Financial Post
bcritchley@nationalpost.com
