Mar 3, 2020
GFL slumps in NYSE debut after long-awaited IPO
By Paige Ellis
GFL prices IPO below target
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Shares of Canadian waste removal company GFL Environmental Inc. dropped in their U.S. stock market debut amid a volatile day for broader markets after being priced at US$19, below the initial target range.
Shares closed at US$16.80 on the New York Stock Exchange Tuesday after GFL raised US$1.4 billion in its initial public offering, which BNN Bloomberg learned was 2.7 times oversubscribed and drew strong interest from American investors.
U.S. investors represented 56 per cent of the deal book, according to sources familiar with the matter. Canadian investors represented 35 per cent.
The listing comes amid a lull in Canadian IPOs, and represents one of the country’s largest equity financings ever. Manulife Financial Corp. currently holds the Canadian record for largest IPO, having raised US$1.7 billion in 1999.
GFL on Monday revealed it priced its IPO at US$19 per share, below its initial target range of US$20 to US$21.
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“Given the market backdrop and the fact that the market dropped ... [we] felt it was fair to give the investors a small discount given the volatility the market is experiencing,” Patrick Dovigi, GFL’s founder and CEO, told BNN Bloomberg in an email Tuesday.
This is GFL’s third attempt to become a publicly-listed company.
Its first IPO push, in 2018, was scrapped after the Toronto-based firm landed a deal with BC Partners and the Ontario Teachers’ Pension Plan to recapitalize the business.
A year later, in November 2019, GFL aborted its second go-public deal after investors balked at its heavy debt load. At the time, Dovigi told BNN Bloomberg the IPO undervalued the company and vowed to “revisit the public markets at a later date.”
In its U.S. regulatory filings, the waste management company said it plans to use the proceeds from the initial offering to pay down debt and possibly fund future acquisitions.
“When we launched the transaction, clearly we didn’t think the market would have been as volatile as it was over the course of the week,” Dovigi told BNN Bloomberg Tuesday. “But many smart investors saw through and wanted to support another recession-resilient company with virtually no exposure to [the] coronavirus.”
GFL’s stock also began trading on the Toronto Stock Exchange Tuesday under the symbol GFL.
