British private equity firm BC Partners is no longer the lead investor in a deal to co-purchase Coco Paving Group alongside Canadian waste management company GFL Environmental Inc.
BC Partners originally signed a non-binding term sheet to acquire Coco Paving, the family business run by the controlling shareholders of troubled Bridging Finance Inc., and was set to be the majority owner, with GFL holding a minority position. GFL founder Patrick Dovigi was also expected to personally invest.
Initially, the plan was for BC Partners and GFL to jointly own a new entity chaired by Mr. Dovigi, called Green Infrastructure Partners, that would house the paving company. GFL publicly confirmed these acquisition plans in February, but did not name its investment partner.
On Monday, GFL said the Coco Paving acquisition has closed, and also announced that its co-acquirer is now New York-based HPS Investment Partners Inc. Under the new arrangement, HPS will own 47 per cent of Green Infrastructure Partners (GIP), and GFL will own 45 per cent of the new entity. Mr. Dovigi is the executive chair of GIP’s board and will hold the remaining 8-per-cent stake.
BC Partners, which is GFL’s largest shareholder with a 34-per-cent stake, according to securities filings, and also has two seats on GFL’s board, did not return a request for comment. GFL declined to comment.
Coco Paving is a family business run by siblings Jenny and Rock-Anthony Coco that predominately operates in Ontario, where GFL is also based.
The Coco siblings also own 58 per cent of Bridging Finance, a Toronto-based private lender that was placed under the control of a court-appointed receiver, PricewaterhouseCoopers LLP, in April, 2021, at the request of the Ontario Securities Commission. The regulator has alleged David Sharpe, Bridging’s former chief executive officer, oversaw a number of loans that benefited him and his wife, Natasha Sharpe.
Ms. Sharpe previously worked as Bridging’s chief investment officer, and is a minority shareholder in Bridging alongside the Cocos. Ms. Sharpe has also been a director of Coco Group, the family holding company. PwC has been trying to recover funds to compensate Bridging investors for potential losses, but has not accused the Cocos of any misconduct.
Coco Paving employs about 3,000 people and owns 33 asphalt plants, as well as eight concrete plants.
Green Infrastructure Partners, the new entity that acquired Coco Paving, has also purchased some assets from GFL’s infrastructure services division. In return, GFL received the equity stake in GIP, as well as $224-million in cash.
Limited financial information about the new entity has been disclosed. GFL has said it will use what is known as the equity accounting method to report its stake in the business going forward, which means detailed revenue and income figures will not be disclosed.
Proceeds from the Coco Paving sale will likely draw the attention of Bridging’s receiver, which has pegged investor losses at $1.3-billion – or 62 per cent of assets under management.
Although the Cocos have not been targeted by the OSC to date, they already agreed to help repay investors for $100-million worth of loans Bridging made to a financier named Gary Ng, some of which was used to buy a 50-per-cent stake in Bridging. In late 2019, a financial regulator alleged Mr. Ng had falsified his collateral for these loans and in January he was charged by the RCMP.
Lawyers representing the Coco Group, Ms. Coco and Mr. Coco, who goes by Rocky, did not return a request for comment.
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