Stantec Eyes Acquisitions in the U.S. After Infrastructure Bill

(Bloomberg) -- Stantec Inc., a Canadian engineering and consulting firm, is looking at acquisitions in the U.S., where the recently passed infrastructure bill will unleash $550 billion of spending on projects like roads and bridges.

The Edmonton, Alberta-based company is still looking at more purchases after agreeing last month to buy Cardno Ltd.’s North America and Asia Pacific engineering and consulting groups for $500 million. That deal will be funded with the company’s bank facilities, but the firm doesn’t rule out needing more funding in the future, said Theresa Jang, chief financial officer.

“We continue to look for opportunities in the U.S.,” said Jang adding that the infrastructure bill “gives us a lot of eagerness to continue to grow in that market.”

The U.S. House of Representatives last week passed the biggest infrastructure plan in decades, with money for new roads and bridges, expanded broadband, clean water, power grid upgrades, pollution cleanup and other priorities.

Some of Stantec’s future funding needs may be met by selling sustainability bonds, Jang said. The company sold its first bonds last year. Last month it set up sustainability loans, reaching an agreement with banks to connect the size of required interest payments on as much as C$1.1 billion ($884 million) of credit facilities to its meeting goals related to carbon emissions and gender equality.

“If we continue to be very acquisitive and look to term out some of our credit facilities, then absolutely we would pursue having sustainability linked targets or metrics for that financing,” said Jang in a video interview. 

Telus Corp. and pipeline operator Enbridge Inc. are the only corporations in Canada so far that have priced sustainability-linked bonds. Sustainability-linked bonds generally penalize issuers with higher borrowing costs if they don’t meet certain environmental, social and governance metrics. In contrast to most green bonds, companies can use proceeds from the sale as part of their general funding plans, as opposed to funding environmental projects in particular. 

The U.K. is another market where Stantec  is looking to grow though “we’re still waiting for the dust to settle on Brexit,” said Jang, adding that “continuing to grow our geographic reach is very much a focus of ours.”

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