Activist investors are stepping up campaigns to drive change in Canada’s $67 billion real estate investment trust sector as they see attractive prices and opportunities to unlock value, Reuters reported. Activists are also looking to tackle perceived corporate governance issues such as high management and board compensation, as well as to tap frustrations from institutional investors about under-performing stocks. Canadian REIT activism has been on the rise in recent years, according to figures from Activist Insight, even as activism in the broader Canadian market has dropped after peaking in 2015.
Birch Hill Equity Partners’ recent wrap-up of its buy of CCM Hockey signals the start of a potentially fierce contest between hockey brands acquired this year by private equity firms. Birch Hill agreed in July to purchase CCM, a storied, 118-year old Canadian hockey equipment maker, from Adidas for US$110 million in cash and a secured note. The Toronto investor told PE Hub Canada the deal closed last month. It marks 2017's third PE acquisition of one or more hockey brands in North America.
Private equity funds are increasingly selling minority stakes in investments to pension and sovereign wealth funds as they strive to deliver returns for investors while holding onto prized assets in a hotly competitive market for deals, Reuters reported. Typically, private equity funds hold an investment for several years and then sell most or all of it to another private equity house, a corporate buyer, or list it on the stock market. Now, a growing number are opting just to sell a small part of an investment, enabling them to book some profit without being left with a lot of capital to redeploy. Singaporean sovereign wealth funds and Canadian pension funds have been some of the biggest buyers of minority stakes from private equity firms.
Brookfield Property Partners LP is considering options for its office properties in the Northeastern United States that include the potential sale of a stake that could value the portfolio at as much as US$10 billion, sources told Reuters. The sale, which could attract interest from investment firms and sovereign wealth funds, would allow Brookfield Property to capitalize on the value of its high-end office assets, many of which are in major U.S. cities such as New York and Washington, the sources said. Brookfield Property was created in 2013 when it was spun off by its parent Brookfield Asset Management Inc, a Toronto-based alternative investment firm. Brookfield Asset Management remains the largest shareholder in Brookfield Property.
Canadian apparel company Roots Corp has set a price range of $14 to $16 per share for its planned Toronto initial public offering, seeking to raise about $200 million, according to a term sheet of the deal seen by Reuters. Roots, known for its trademark beaver logo, rustic casual wear and Canadian-made leather goods, is expected to price the IPO in the week of October 16. But investors hoping for Roots to score another high-flying IPO debut like its bigger counterpart Canada Goose Holdings Inc may be in for a disappointment, given the company's more modest growth and broader retail challenges. Roots is a portfolio company of U.S. private equity firm Searchlight Capital Partners, which acquired a controlling stake in 2015.
Asia’s biggest warehouse operator, Global Logistic Properties, agreed to acquire European logistics platform Gazeley for about US$2.8 billion, marking its first push into Europe and underscoring consolidation in the buoyant sector, Reuters reported. GLP said the properties, owned by funds affiliated with Canada's Brookfield Asset Management, were spread across four countries and comprised 32 million square feet (3.0 million square metres) of total gross leasable area. Singapore-listed GLP, which has a US$42 billion portfolio of assets across China, Japan, Brazil and the United States, is benefiting from rising demand for logistics facilities driven by a boom in e-commerce. Toronto-based Brookfield acquired Gazeley in 2013 from an affiliate of Dubai World.
Cia Energética de Minas Gerais SA and a subsidiary plan to exit their controlling stake in Brazilian renewable power company Renova Energia SA as Brookfield Asset Management considers raising a takeover bid more than initially expected, sources told Reuters. According to the sources, Brookfield would offer Cemig and subsidiary Light SA the equivalent of 11.75 reais (US$3.72) per unit of Renova. Getting the nod from both Cemig and Light would enable Canada-based Brookfield to take control of Renova more assertively and expand faster in Brazil’s renewable power industry. If the improved proposal materializes into a formal bid, Brookfield would spend about 1.05 billion reais (US$332.3 million) to win control of Renova. Brookfield could either pump an extra 800 million reais into Renova or take the company private, Reuters reported on September 8.
U.S. private equity firm Carlyle Group is exploring a sale of portfolio company Array Marketing Group, a Canadian provider of retail merchandising displays, that could value it as much as US$1 billion, two sources told Reuters. Carlyle is working with investment banks Jefferies and Robert W. Baird to seek out potential buyers for the Toronto-based company, the sources said. Carlyle acquired Array in 2015 for an undisclosed sum. The seller was Canadian private equity firm TorQuest Partners. TorQuest, which bought the company from Brentwood Associates in 2012, earned a 61 percent internal rate of return from the sale to Carlyle.
Steel producer Stelco Holdings Inc, which emerged from bankruptcy protection three months ago, said this week it has filed a preliminary prospectus with securities regulators in Canada for a proposed initial public offering of its shares, Reuters reported. Stelco, which is owned by U.S. private equity firm Bedrock Industries Group LLC, is seeking to raise about $185 million (US$150 million) in the share sale and could have a market value of about $1.2 billion (US$1 billion), a source said. Hamilton, Ontario-based Stelco emerged from nearly three years of bankruptcy protection on June 30 after it was able to extinguish its debt and sign new agreements with its unions. This was its second time in bankruptcy court after it emerged from protection in 2007 when U.S. Steel Corp bought the company for US$1.1 billion.
France's Airbus SE is in talks to sell a part or all of Premium Aerotec, a subsidiary that makes large plane components, Reuters reported, citing a story by Die Welt newspaper. Airbus has held talks with one possible buyer, the Canadian private equity investor Onex Corp, the German paper said.
Premium Aerotec generates about 2 billion euros (US$2.39 billion) in revenue, according to its website. It specializes in large and complex aircraft components for Airbus, Boeing’s B787 Dreamliner, the Eurofighter Typhoon and military transporter A400M. In 2005, Boeing sold a similar business, later called Spirit Aerosystems, to Onex for about US$950 million.