Value Unleashed

Market Update

In the latter half of last week, the equity markets partially recovered from their tumultuous start to 2016. All major North American equity indices rose with the TSX Composite seeing one of the highest weekly gains. An increase in oil price, strengthening Eurozone economy and expectation of further monetary stimulus stabilized the equity markets. However, the positive sentiment was dampened by the lack of expected Chinese growth. The leveraged loan and high yield markets have several large LBO deals outstanding trying to close next week. The market sentiment for high yield credit will greatly depend on the outcome of these deals. However, the mid-market for credit has been much less volatile through the recent market turmoil.

 

On a broader M&A cyclical context, the U.S. M&A deal count and volume are at their cyclical mid-points (on a three month rolling basis). The Canadian deal count is at its cyclical lows for the three months. However, two large divestitures by GE Capital, totaling $18 billion placed the Canadian deal volume near its cyclical mid-point for the same period. The two transaction accounted for approximately half of the deal volume.

Despite recent market turmoil, there remains ample capital in the system to support M&A activity. The corporate cash balances remain at approximately $7.1 trillion and the equity overhang in private equity and venture funds is estimated at US$535 billion.

Weekly Canadian Private Market M&A Report

Announced Deals

Capstone Infrastructure to sell itself to iCON
Ontario Teachers-backed TierPoint to acquire Cosentry
VC-backed Kraken to buy Canadian bitcoin exchange Cavirtex

Closed Deals

AIMCo sells 50 percent interest in Chile’s Autopista Central
GFL Environmental acquires Anchor Shoring Group
Riverbed Technology buys Germany’s Ocedo
Flywire acquires Toronto’s ScholarFX

Announced Deals

Capstone Infrastructure to sell itself to iCON

Capstone Infrastructure Corp (TSX: CSE), a Canadian infrastructure investment firm, has agreed to be acquired by an affiliate of iCON Infrastructure LLP for $4.90 in cash per share (approximately $480 million in total equity value). Paul Malan, Senior Partner of iCON Infrastructure, said: “The Capstone team has successfully built and managed a high quality portfolio of assets across Canada and Europe over the long term. Capstone’s portfolio of assets is an excellent fit for iCON Infrastructure. We look forward to pursuing the continued growth of the business for many years to come.”

Ontario Teachers-backed TierPoint to acquire Cosentry

TierPoint LLC, a leading national provider of cloud, managed services, and colocation for business performance improvement and risk management, has agreed to buy Cosentry Inc, a provider of cloud, colocation and managed services based in Omaha, Nebraska. No financial terms were released. Upon closing, TierPoint will be able to expand its data center footprint in Midwest markets. Jerry Kent, Chairman and CEO of TierPoint said, “Cosentry is an excellent company with great people and this acquisition gives us a significant, strategic advantage in key Midwest markets, where there is an increasing demand for data center services.”

VC-backed Kraken to buy Canadian bitcoin exchange Cavirtex

San Francisco-based Kraken, the world’s largest bitcoin exchange in euro volume and liquidity, has agreed to buy Cavirtex, a Calgary-based exchange for buying and selling bitcoin in Canadian dollars. No financial terms were disclosed. Cavirtex is Canada’s first bitcoin exchange and was purchased by Coinsetter in April 2015. The acquisition of Cavirtex and Coinsetter allow Kraken, which previously concentrated on developing market share in Europe, to immediately and significantly expand into the North American market. Kraken’s CEO, Jesse Powell said, “The consolidation of these three veteran giants is the largest exchange deal to date. Combined, we represent over thirteen years of bitcoin exchange experience in an industry that is only seven years old. Kraken has big, exciting plans for 2016. This year we will fully leverage what we’ve built as the world’s most trusted and secure bitcoin exchange. This is the year that we make long strides to capture key markets and crank up the volume. This is the year of the Kraken.”

Closed Deals

AIMCo sells 50 percent interest in Chile’s Autopista Central

Alberta Investment Management Corp (AIMCo) has sold its 50 percent interest in Autopista Central de Chile, a Santiago-based toll road infrastructure asset, to Abertis Infraestructuras SA, a subsidiary of Abertis for $1.5 billion. With this acquisition, Abertis will achieve further synergies and benefits through consolidating its interests under the Chilean Road Portfolio. “Autopista Central has one of the best management teams in the industry, and the acquisition will allow Abertis to achieve further synergies and benefits to its portfolio.”

GFL Environmental acquires Anchor Shoring Group

GFL Environmental Inc., an environmental services company backed by Highbridge Principal Strategies and Hawthorn Equity Partners, has acquired Anchor Shoring Group, a Toronto-based specialist in the design and installation of soil retention and engineered foundations. No financial terms were released. Through the transaction, GFL’s would be able to add earth retention and foundation systems to its soil remediation, excavation and demolition capabilities. Patrick Dovigi, Founder and CEO of GFL said: “The combination of Anchor with GFL creates a unique, integrated platform from which we can serve all of our clients’ demolition, excavation, shoring and foundation needs. We are thrilled to welcome Dawn Tattle, Derrick Speakman and all of Anchor’s employees to GFL.”

Riverbed Technology buys Germany’s Ocedo

Riverbed Technology Inc., a San Francisco-based application performance infrastructure company, has acquired Germany’s Ocedo, a provider of software-defined networking and software-defined wide-area-network solutions. No financial terms were disclosed. Ocedo would help accelerate Riverbed’s growth strategy in emerging markets. Jerry M. Kennelly, Chairman and CEO of Riverbed said, “Ocedo is a compelling and strategic acquisition for Riverbed. Their innovative software-defined networking solutions perfectly complement our own strategic investments in R&D, expanding our position to aggressively compete in the emerging markets for software-defined networks and SD-WAN, bringing disruption to the multi-billion dollar branch router market.”

Flywire acquires Toronto’s ScholarFX

Flywire (formerly peerTransfer), a provider of cross-border payment solutions, has acquired ScholarFX, a Toronto-based payments service for international students attending Canadian universities and other educational institutions. No financial terms were released. The acquisition would add scale to Flywire’s cross-border payments platform and bolster its presence in the Canadian market. Mike Massaro, CEO of Flywire said, “The acquisition of ScholarFX expands our ability to attract and service Canadian educational institutions while adding to the scale of our industry-leading cross-border payment platform.”