GFL Environmental Inc. is relocating its headquarters from Vaughan, Ontario, to Miami Beach, Florida. This strategic move aims to enhance the company’s eligibility for inclusion in U.S. stock indices, while maintaining its status in Canadian equity benchmarks.
Reasons for Relocation
GFL’s founder and CEO, Patrick Dovigi, indicated that this relocation will expand the company’s appeal to U.S. index funds. It is estimated that passive investors, including index funds and ETFs, might purchase between 10% and 15% of GFL’s public float, translating to approximately 35 to 50 million shares.
Continued Dual Eligibility
Despite the U.S. headquarters, GFL will remain incorporated in Ontario. This ensures the company continues to qualify for Canadian benchmarks like the S&P/TSX Composite Index, while also becoming eligible for prominent U.S. indices such as the Russell family.
Operational Impact
The move will affect a small number of employees, with about a dozen transferring to Miami. Dovigi noted that establishing a U.S. head office could enhance the company’s ability to attract skilled talent and expand business relationships with American clients, especially municipal governments.
Financial Overview
GFL is one of North America’s largest waste disposal companies, employing around 15,000 people across Canada and 18 U.S. states. The company has achieved a market capitalization of $21 billion and has experienced significant growth through acquisitions.
Market Positioning
Although GFL is larger than several members of the S&P/TSX 60 Index, it has not been included in this Canadian benchmark. A notable competitor, Waste Connections Inc., is currently a member of the S&P/TSX 60 with a market capitalization of $59 billion.
Effect on Shareholders
The relocation is expected to increase GFL’s shareholder base. Significant shareholders, including BC Partners and the Ontario Teachers’ Pension Plan, are likely to benefit from a broader investor following in the U.S.
Investor Confidence
Notable U.S. funds, such as Fidelity Investments, Capital Group, and Vanguard Group, have invested in GFL. Their support is crucial for attracting further investment following the transition.
Background of GFL
Founded in 2007 by Dovigi, GFL has evolved from traditional waste collection to offer recycling and other environmental services. The company has recently expanded further by selling a majority stake in its environmental services division for $6.2 billion.
This relocation marks a significant step for GFL as it aims to capitalize on its growing presence in the lucrative U.S. market while securing its position within Canadian equity indices.
