Thursday, October 8th14.8°C

Caisse de depot and Bain Capital to share $261M from cutting stakes in BRP

MONTREAL - The Caisse de depot and Bain Capital Luxembourg Investments are reducing their stakes in sports recreational vehicle manufacturer BRP Inc. for the second time in three months.

The investors said Monday that together they would sell 8.7 million shares at $30 per share to underwriters for $261 million in gross proceeds.

Bain Capital will receive $219.3 million from the sale, while the remainder will go to the Caisse.

BRP, formerly known as Bombardier Recreational Products, does not get any money from the transaction, which is expected to close around the end of January.

Under the agreement, Boston-based Bain will reduce its ownership stake to 27.8 per cent from 34 per cent. The Caisse, Quebec's largest pension fund manager, will reduce its position to 5.3 per cent from 6.5 per cent.

Underwriters BMO Capital Markets and RBC Capital Markets plan to sell the shares through a secondary offering in Canada and private placement in the United States.

In October, Bain, the Caisse and other shareholders announced an agreement to sell eight million shares of BRP at $27.85 each for $223 million in gross proceeds.

BRP (TSX:DOO) received $262 million in an initial public offering last May after selling shares at $21.50 per share.

Both the Caisse and Bain Capital have been handsomely rewarded from more than a decade of investments in BRP, which has seen its financial results surge in recent quarters.

The company announced last month that its profits climbed 52 per cent in the third quarter, buoyed by consumer enthusiasm for its snowmobiles, particularly its new side-by-side vehicles.

It earned $48.2 million in profits, or 41 cents per share, in the three-month period ended Oct. 31. This compared with $31.7 million, or 31 cents per share, a year earlier.

Revenues for the former recreational products division of Bombardier Inc. increased by 18 per cent to $866 million versus $733.9 million a year ago. The company says its revenues benefited from a more than 20 per cent growth in North American sales in the quarter, when excluding its sport boat business.

Analyst Steve Arthur of RBC Capital Markets increased his share price target for BRP to $33 last week and said strong longer-term revenue and profit prospects point to the shares surpassing $50 in three to four years.

"Expect revenue growth and margin expansion to drive earnings growth over the next five years," he wrote in a note to investors, forecasting annual EPS will reach $2.89 per share by fiscal 2019, representing a 14 per cent compounded annual increase.

Arthur anticipates that annual revenues will increase could increase 37.5 per cent to reach $4.4 billion on the strength of its side-by-side vehicles and the new Sea-Doo Spark appearing to be a hit. Additional U.S. and international dealers should contribute one-third to half of expected revenue growth. He said margins should continue to impact as BRP moves more manufacturing to Mexico, boosts volume of key segments and streamlines manufacturing processes

BRP designs, develops, manufactures and distributes powersports vehicles including Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am all-terrain and side-by-side vehicles, Can-Am roadsters, Evinrude outboard engines as well as Rotax propulsion systems.

The Quebec-based maker of snowmobiles, personal watercraft and all-terrain vehicles was spun off from Bombardier Inc. (TSX:BBD.B) in 2003 when it was sold to members of the Bombardier and Beaudoin families, Bain Capital and the Caisse for $960 million.

Prior to the IPO, a subsidiary of Bain owned half the company, the Beaudier group had a 35 per cent stake and the Caisse a 15 per cent holding.

Beaudier Inc. is a family-owned company controlled by Laurent Beaudoin, a former CEO of Bombardier Inc. and a son-in-law of Joseph-Armand Bombardier, the Quebec inventor who founded the company.

Based in Valcourt, Que., BRP has approximately 6,800 employees around the world.

On the Toronto Stock Exchange, BRP shares lost 59 cents, or 1.92 per cent, at $30.06 in Monday midday trading.

The Canadian Press

Read more Business News

Recent Trending

Today's Market
S&P TSX13978.66+110.31
S&P CDNX547.04+4.59
S&P 5002013.43+17.60
CDN Dollar0.7705+0.002
Natural Gas2.483-0.015

Okanagan Companies
Pacific Safety0.23+0.01
QHR Technologies Inc1.23-0.02
Metalex Ventures0.05+0.00
Russel Metals21.55-1.57
Copper Mountain Mining0.61-0.02
Colorado Resources0.07-0.01
ReliaBrand Inc0.0166+0.0135
Sunrise Resources Ltd0.02+0.00
Mission Ready Services0.08-0.01
Decisive Dividend Corp3.11-0.10
Diamcor Mining0.94+0.06



2254666928 Arbor View Drive
6 bedrooms 4 baths
more details
Click here to feature your property
Please wait... loading

Income for life?

Photo: Thinkstock.comIn almost every conversation I have with clients these days, the topic swings to interest rates. What direction they’re going, how long will they stay where they are and how...

Perfect (reno'd) home

Photo: Thinkstock.comHow many times have you found a home in the perfect location, but it needs too much work as per the home inspection? There is a great program available through most lenders that w...

5 Claim misconceptions

Photo: Thinkstock.comIf you have been hurt in an accident or as a result of medical negligence you will likely look to your friends and family for some advice on how to deal with the situation. These ...


Member of BC Press Council