Friday, October 31st8.1°C
23696
23129

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

22831


Recent Trending




Today's Market
S&P TSX14458.69-68.88
S&P CDNX771.65-9.42
DJIA17195.42221.11
Nasdaq4566.138+16.912
S&P 5001994.65+12.35
CDN Dollar0.8919-0.0015
Gold1176.00-22.60
Oil80.48-0.42
Lumber322.40-1.20
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.11+0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.150.00
Cantex0.045-0.015
Anavex Life Sciences0.1711-0.0089
Metalex Ventures0.0350.00
Russel Metals32.22-0.35
Copper Mountain Mining1.97-0.05
Colorado Resources0.14+0.005
ReliaBrand Inc0.012-0.004
Sunrise Resources Ltd0.05+0.025
Mission Ready Services0.375+0.005

 



23015

FEATURED Property
20682523260 Boucherie Road
4 bedrooms 4 baths
$550,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


23091