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Passive investors in U.S. benchmarks, including index funds and ETFs, are expected to acquire between 10 and 15 per cent of GLF’s public float, or 35 to 50 million of the company’s shares, according to a source.Cole Burston/The Globe and Mail
Waste disposal giant GFL Environmental Inc. GFL-T is moving its head office from a suburb of Toronto to Miami Beach to win a greater following from index funds, the latest Canadian company relocating to the United States to build its investor following.
Vaughan, Ont.-based GFL has announced it will shift its headquarters to Florida but remain incorporated in Ontario. The move has minimal implications for the company’s operations, with approximately a dozen employees shifting their base to Miami.
The decision means GFL continues to qualify for membership in domestic stock benchmarks, such as the S&P/TSX Composite Index, while gaining eligibility for widely-followed American standards such as the Russell index family.
Passive investors in U.S. benchmarks, including index funds and exchange traded funds (ETFs), are expected to acquire between 10 and 15 per cent of GFL’s public float, or 35 to 50 million of the company’s shares, as the company joins U.S. stock benchmarks, according to sources familiar with the relocation strategy.
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The Globe and Mail is not naming the sources because they are not permitted to speak for the company.
“The relocation of our executive headquarters broadens our eligibility for participation in U.S. equity indices while preserving our eligibility for inclusion in Canadian equity indices,” GFL founder and chief executive officer Patrick Dovigi said in a news release.
Mr. Dovigi has a residence in Miami, along with a home in Toronto.
GFL’s CEO said a U.S. head office will also help the company recruit and win more business from American clients, including municipal governments.
“The United States has grown to represent over two thirds of our revenue, more than half of which is generated in the fast-growing southeastern region,” Mr. Dovigi said.
“The relocation aligns with our expanding presence in this attractive market and is expected to improve our ability to attract highly-skilled talent,” he said.
GFL is North America’s fourth-largest waste disposal company, with 15,000 employees across Canada and 18 states. The company has grown through a series of acquisitions and has a $21-billion market capitalization.
GFL is larger than several companies in the S&P/TSX 60 Index, which is Canada’s benchmark for large-cap stocks. New York-based S&P Dow Jones Indices, which runs the S&P/TSX indexes, has left GFL out of the S&P/TSX 60.
In Tuesday’s news release, GFL said: “Relocation will not impact GFL’s eligibility for inclusion in Canadian indices, including the TSX 60.”
Rival Waste Connections Inc., based in Woodbridge, Ont., is a member of the S&P/TSX 60. The company has a $59-billion market capitalization.
Toronto Stock Exchange-listed Brookfield Asset Management Ltd. and RB Global Inc. (formerly known as Ritchie Bros. Auctioneers) have made similar moves, in part to attract a larger investor following. Brookfield moved its headquarters to New York while RB Global executives are based in Chicago.
Last March, New York-based S&P Dow Jones Indices, which runs the S&P/TSX indexes, loosened the rules around inclusion to allow domestic companies to remain in the Canadian benchmark after moving their head office to another country.
Institutional investors in Vancouver-based Teck Resources Ltd. and suitor Anglo American PLC are putting pressure on S&P Dow Jones to keep the new mining company in Canadian equity indexes when their merger closes. The combined company will have its head office in British Columbia, but will be incorporated in England. Teck’s merger with Anglo is expected to close later this year.
S&P Dow Jones Indices’ methodology is opaque on selecting companies for benchmarks such as the S&P/TSX 60. Membership in Russell indexes, which are owned by London Stock Exchange Group PLC, is based on publicly disclosed criteria.
GFL has two significant shareholders, London-based private equity fund BC Partners and the Ontario Teachers’ Pension Plan, which acquired stakes in the company in 2018 as part of a recapitalization.
Expanding GFL’s American shareholder base to include more passive and active investors will make it easier for BC Partners and Ontario Teachers’ to sell their holdings.
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GFL’s large shareholders also include U.S. funds such as those run by Boston-based Fidelity Investments, Los Angeles-based Capital Group and Philadelphia-based Vanguard Group, all of which would support a larger American investor following at the company.
Mr. Dovigi, a native of Sault Ste. Marie, Ont., who was drafted as a goalie by the Edmonton Oilers, founded GFL in 2007. The company has moved from picking up garbage with a fleet of bright green trucks into recycling, soil remediation and other environmental services.
In September, 2024, the company faced a campaign of violence that included shots fired at Mr. Dovigi’s home – he was away at the time – and arson at GFL facilities.
Last January, GFL sold a majority stake in its environmental services division to private equity funds Apollo Global Management and BC Partners for $6.2-billion.
