Brookfield Business Partners L.P. is set to acquire a 57% controlling interest in Genworth MI Canada Inc. (Genworth Canada) from Genworth Financial for approximately CAD 2.4 billion (USD 1.8 billion).
Genworth Canada, through its subsidiary Genworth Financial Mortgage Insurance Company Canada, is the largest private sector residential mortgage insurer in Canada.
Prior to the agreement, Brookfield did not own any shares in the firm, but is now set to acquire an aggregate of 48,944,645 common shares for CAD 48.86 per share.
David Nowak, Managing Partner, Brookfield Business Partners, said: “We are very pleased to make this investment in Genworth Canada, a high-quality leader in the mortgage insurance sector. Genworth is an industry-leading business that generates strong, consistent earnings and operates in a sector with high barriers to entry. We look forward to partnering with management to support its ongoing success, drawing on our expertise in insurance and residential real estate.”
Genworth states that it is selling its stake in Genworth Canada to increase the likelihood of subsequently completing the acquisition of Genworth by China Oceanwide Holdings Group Co., Ltd. and its affiliates.
Oceanwide has consented to the transaction and in relation to this, Genworth and Oceanwide entered into the 12th Waiver and Agreement extending the merger agreement deadline to the end of 2019.
“We are pleased to find such a high-caliber buyer for our interest in Genworth Canada. We look forward to working with Brookfield Business Partners through the sale process and required regulatory approvals and, ultimately, moving forward with our long-awaited closing of our merger with Oceanwide,” said Tom McInerney, President and Chief Executive Officer (CEO) of Genworth Financial.
Brookfield has said that it intends to fund around USD 700 million of the purchase on closing and for certain of its institutional partners to co-invest alongside it for the balance. Furthermore, the company has also agreed, between now and the closing of the deal, to provide Genworth Financial with a bridge loan of up to USD 850 million that is intended to be repaid from proceeds of the sale of its interest in Genworth Canada.
The acquisition remains subject to customary approvals, including the approval of the Minister of Finance (Canada), and is expected to close in the second-half of 2019.