Brookfield Business Partners (BBU.UN-T) announced Monday morning it plans to purchase all outstanding shares of Genworth MI Canada, the country’s largest private sector residential mortgage insurer, in a deal which values the firm at about $3.8 billion.
Brookfield already owns a controlling 57 per cent share of Genworth, which recently rebranded and is now operating as Sagen MI Canada (MIC-T). Brookfield and a group of affiliates and institutional partners will pay $43.50 per share for the outstanding Genworth/Sagen units.
Buying the remaining units will cost about $1.6 billion, of which Brookfield will fund about $606 million and its affiliates and other investors the remainder.
Brookfield’s initial Genworth investment
“The transaction, together with our company’s recent rebranding as Sagen MI Canada, represents an exciting new chapter for the company,” said Stuart Levings, president and CEO of Genworth/Sagen, in the announcement. “We look forward under Brookfield’s ownership to continuing to work with lenders, regulators and mortgage professionals to help people responsibly achieve and maintain the dream of home ownership.”
The deal comes as Genworth’s stock price, like many others focused on the real estate sector, remained depressed amid the COVID-19 pandemic and related economic uncertainty. The stock closed at $35.58 on Friday on the TSX after trading as high as $60 in January.
“We are pleased to have reached this agreement, which will provide existing shareholders of the company with price certainty and a meaningful premium in an uncertain market environment,” said David Nowak, managing partner, Brookfield Business Partners, in the release.
Brookfield bought the 57 per cent controlling interest in August 2019 for about $2.4 billion. At the time, it paid $48.86 per share.
The purchase price represents a premium of approximately 22 per cent to the company’s closing share price Friday on the TSX and a premium of approximately 25 per cent to the 20-day volume weighted average price on that date.
Genworth rebrands to Sagen
Genworth MI Canada Inc. changed its brand from Genworth MI Canada to Sagen MI Canada as of Oct. 13. The company operates Genworth Financial Mortgage Insurance Company Canada, the largest private sector residential mortgage insurer in Canada.
It provides mortgage default insurance to Canadian residential mortgage lenders. As at Sept. 30, Genworth had $7.1 billion in total assets and $3.8 billion in shareholder equity.
Genworth is based in Oakville, just west of Toronto.
The transaction requires a number of approvals, including two thirds of Genworth/Sagen shareholders, as well as the approval by at least 50 per cent of minority shareholders (which excludes Brookfield). It is also subject to a series of court and governmental approvals.
The company expects to mail an information circular for a special meeting in November and to hold the special meeting in late December. The transaction is expected to close in the first half of 2021.
During this period, Genworth/Sagen will continue paying its quarterly dividend of $0.54 per share.
Scotiabank is acting as financial advisor to the special committee. Blake, Cassels & Graydon LLP is acting as legal advisor to the company and Goodmans LLP is acting as legal advisor to the special committee.
Torys LLP is acting as legal advisor to Brookfield. McCarthy Tétrault LLP is acting as legal advisor to Scotiabank.
About Brookfield Business Partners LP
Brookfield Business Partners L.P. is a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs.
Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management Inc. (BAM.A-T), a global alternative asset manager with approximately US$550 billion of assets under management.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
