GFL Environmental has announced a $4.25-billion recapitalization of its construction subsidiary, Green Infrastructure Partners (GIP), in partnership with funds managed by Energy Capital Partners.

As part of the transaction, GIP will receive gross proceeds of $775 million. Of that amount, $585 million will be distributed to shareholders, with GFL receiving $200 million. The remaining $175 million will be used to support GIP’s future growth. GFL will retain a 30.1% ownership interest in GIP, valued at approximately $895 million.

The deal allows GFL to partially monetize its stake in GIP, which it co-founded in 2022 with HPS Investment Partners and GFL chief executive Patrick Dovigi. HPS and Dovigi will continue to hold minority interests.

“This transaction allows GFL to monetize part of our position in GIP in a tax efficient manner, while still retaining a meaningful equity interest that will allow us to participate in what we expect to be continued value creation from the GIP business,” said Dovigi.

GIP, which operates independently of GFL’s core waste and environmental services business, focuses on road construction, paving, and site development. The unit has expanded through acquisitions and increasing demand for civil infrastructure.

The recapitalization follows GFL’s disclosure during its first-quarter earnings call in May that it was evaluating a partial sale of GIP. It also comes amid a broader strategic review prompted by investor concerns about GFL’s debt-driven growth. In January, GFL completed a $5.6-billion sale of its environmental services division to Apollo and BC Partners.