It’s bad enough to have to pull an initial public offering once. But a second time? That’s the prospect BC Partners faced on Friday, after the fastest stock-market correction in U.S. history erased almost 13 per cent from the S&P 500.

The private equity firm had started the week hoping to raise about US$1.54 billion for one of its portfolio companies, Canada’s GFL Environmental Inc. Then, as cases of the coronavirus jumped and the illness spread to more than 60 countries, investors began dumping equities at an unprecedented pace.

Paolo Notarnicola, a partner at the firm, surveyed the carnage and considered shelving the IPO again. He knew it would be next to impossible to sell GFL shares at the targeted range of US$20 to US$21 apiece, and he hoped perhaps a weekend statement from President Donald Trump or signs of central-bank action would calm markets enough to keep the deal alive.

“Friday was a bit scary,” he said Monday in a phone interview. “We decided to wait for Monday morning to see how markets traded in Asia and to look at futures.”

Patience Pays

The patience paid off. As stocks rallied to the biggest gain in more than a year, BC Partners went ahead with the sale a day ahead of schedule, pricing about 75 million GFL shares at US$19 each. With an additional US$700 million in transferable equity units, a type of convertible debt, the company raised a total of about US$2.2 billion.

Based in a suburb north of Toronto, GFL is North America’s fourth-largest waste hauler. The company is led by Patrick Dovigi, a former professional hockey player who built it through a string of debt-financed acquisitions. London-based BC Partners acquired its stake in 2018, together with the Ontario Teachers’ Pension Plan.

GFL filed for an IPO in July and by October was targeting a price as high as US$24 a share. But buyers balked at its growth prospects and debt obligations. The company pulled that listing plan in November.

Had BC Partners taken the advice of GFL’s underwriters, Monday’s IPO might not have happened either. Banks led by JPMorgan Chase & Co., Goldman Sachs Group Inc. and Royal Bank of Canada, encouraged the firm to sell at US$18 a share to ensure the deal’s success, according to BC Partners Chairman Raymond Svider. At that price, it wouldn’t have been worth the dilutive impact of issuing new stock to reduce debt, he said.

‘Gesture’ to Market

At about 4:30 p.m. on Monday, with the S&P 500 having closed the day up 4.6 per cent, the parties convened on a conference call. Notarnicola, vacationing with his family, was on the line from Miami. Svider joined from Phoenix, where his flight had just landed. They decided to go ahead with an offering at US$19.

“We could have squeezed it in at US$20 a share, but it would have been a risk,” Svider said. “Ultimately, we decided to make a gesture to the market so that everybody’s happy and trading starts in a positive way.”

The job of stabilizing the stock now falls to JPMorgan and the other underwriters, Bank of Montreal and Bank of Nova Scotia as well as Goldman Sachs and RBC. GFL is set to debut on the New York Stock Exchange Tuesday, before trading on the Toronto Stock Exchange, too.

BC Partners will remain GFL’s largest shareholder, controlling about 40 per cent of its stock after the offering, according to the company’s IPO filings.

Notarnicola is confident GFL can withstand whatever turbulence may lie ahead, even if the coronavirus continues to spread and the outlook for global growth deteriorates further.

“This is just a great industry that has proved itself resilient to volatile environments,” he said. “Waste management doesn’t go away during difficult times.”