Jul 20, 2022

Alberta Investment Management Corporation Acquires 100% Stake in Cando Rail & Terminals from TorQuest Partners and Cando Employees

Brandon, Manitoba – TorQuest Partners (“TorQuest”) and Alberta Investment Management Corporation, on behalf of certain of its clients, (“AIMCo”) today announced the signing of a definitive agreement that would see AIMCo acquire a 100% equity stake in Cando Rail & Terminals Ltd. (“Cando” or “the Company”), one of North America’s largest owners and operators of first and last mile rail infrastructure.

Cando, founded in 1978 and headquartered in Brandon, Manitoba, serves as a critical and integrated link in the rail supply chain, connecting large industrial shippers to the Class I rail network. The Company operates an inter-connected network of 40+ industrial railyards, nine owned terminals and one short-line railroad. This network, along with 900+ employees and 100+ locomotives, allows Cando to deliver significant benefits to both shipper-customers and Class I partners. The Company, long a proponent of the benefits of broad-based employee ownership, has more than 400 active employee shareholders, who collectively own 25% of the business. There will be no changes to the company’s operations or management as a result of the transaction, and Cando remains committed to investing in its rail infrastructure in order to enhance customer service.

Since 2018, TorQuest and Cando management have overseen a dramatic transformation of the business. On an organic basis, revenue more than doubled and EBITDA more than tripled. This growth was enabled by significant capital investments, in support of the Company’s shipper-customers and Class I partners, to build out the Company’s owned rail infrastructure. In expanding their owned network of rail terminals, today more than 60% of the Company’s EBITDA comes from owned assets as compared to less than 40% prior to TorQuest’s investment. To support these asset additions, the company had to invest meaningfully in its people and resources, adding over 400 new employees over this period, many of whom also became shareholders in the Company.

AIMCo is a global infrastructure investor with significant experience in the transportation sector including as part of a consortium of institutional investors that acquired the Porterbrook Group of companies in October 2014. Porterbrook has been a stable feature of the U.K. rail network for more than 25 years as the owner of nearly a third of Britain’s rolling stock. With the support of AIMCo, Porterbrook has become a recognized leader in innovation and sustainable rail practices, adopting technologies that will reduce nitrous oxide emissions and hydrocarbons, while partnering to develop the low-carbon technologies of tomorrow such as HydroFLEX, the U.K.’s first hydrogen-powered trains.

"Cando is the type of platform investment that has become the hallmark of AIMCo's infrastructure portfolio. With this investment, our clients add one of Canada’s most successful rail platforms to their infrastructure portfolios,” said Ben Hawkins, Head of Infrastructure, Renewables and Sustainable Investing at AIMCo, “We believe in Cando’s incredible potential and look forward to collaborating with their exceptional management to realize a continued track record of growth.

“Our investment in Cando exemplifies TorQuest’s strategy of partnering with great people and investing in our businesses to achieve exciting results” said Jonathan Fraser, Partner at TorQuest. “Cando is a wonderful business, with wonderful people, and it has been a pleasure for us to partner with Brian Cornick, Steve Bromley, and all of the employees and employee shareholders of Cando. We have seen first-hand the positive impact that employee ownership can have on business performance and culture. A sincere thank you to every person on the Cando team for helping to achieve a great result for TorQuest and our limited partners in Fund IV.”

Brian Cornick, President & CEO of Cando said, “TorQuest has been an excellent partner for us. Their commitment to investing in our business and our people has provided Cando with an exceptional platform for continued growth and success. We are delighted with the success of our partnership with TorQuest and excited about the next chapter of our business evolution in partnership with AIMCo. We look forward to continuing to support our customers and benefitting from AIMCo’s considerable experience, relationships and resources.”

The transaction, which is subject to customary regulatory approvals, is expected to close in late Q3 or Q4 2022. Financial terms of the transaction were not disclosed.

Wells Fargo Securities, LLC served as the lead financial advisor to Cando and TorQuest, and Northborne Partners, LLC also served as a financial advisor. Torys LLP and MLT Aikins LLP served as legal advisors to Cando and TorQuest.

RBC Capital Markets served as an exclusive financial advisor to AIMCo on the transaction. Stikeman Elliott LLP, Mayer Brown LLP and Fletcher & Sippel LLC served as legal advisors to AIMCo.

About TorQuest Partners

Founded in 2002, TorQuest Partners is a Canadian-based manager of private equity funds. With more than C$3.5 billion of equity capital under management, TorQuest is currently investing from TorQuest Partners Fund V, a C$1.4 billion fund that closed in March 2020. TorQuest invests in middle market companies and works in close partnership with management to build value. To learn more about TorQuest, please visit www.torquest.com

About Alberta Investment Management Corporation

AIMCo is one of Canada’s largest and most diversified institutional investment managers with $168.3 billion of assets under management as at December 31, 2021. AIMCo was established on January 1, 2008, with a mandate to provide superior long-term investment results for its clients. AIMCo operates at arms-length from the Government of Alberta and invests globally on behalf of 32 pension, endowment, and government funds in the Province of Alberta.

About Cando Rail & Terminals

Cando Rail & Terminals is Canada’s leading provider of specialized rail operating services that allow industrial shippers to optimize their supply chains and connect to Class 1 railways by leveraging Cando’s operating capabilities and network of owned multi-purpose rail terminals. The company provides a wide range of rail services including short line operations, industrial switching, material handling, terminal & transload services, railcar staging, train assembly, and related services. Fully embedded in their customers’ supply chain, Cando Rail & Terminals ensure their customers’ products get to where they need them, when they want them.

For more information, please contact: mediarelations@aimco.ca