Brookfield’s PE group to acquire rest of Genworth MI Canada

Brookfield Business Partners, the private equity arm of Brookfield Asset Management, has agreed to acquire the shares it does not already own in Genworth MI Canada, now operating as Sagen MI CanadaTM.

Brookfield Business Partners, the private equity arm of Brookfield Asset Management, has agreed to acquire the shares it does not already own in Genworth MI Canada, now operating as Sagen MI CanadaTM. Brookfield will pay about US$1.2 billion for the additional stake. The deal is expected to close in the first half of 2021. Based in Toronto, Genworth MI Canada is a private residential mortgage insurer.

PRESS RELEASE

BROOKFIELD, NEWS, Oct. 26, 2020 (GLOBE NEWSWIRE) — Brookfield Business Partners L.P. (NYSE: BBU) (TSX:BBU.UN) (“Brookfield Business Partners”), together with certain of its affiliates and institutional partners (collectively, “Brookfield”), today announced it has entered into an arrangement agreement (the “Arrangement Agreement”) to acquire all of the outstanding common shares of Genworth MI Canada Inc., now operating as Sagen MI CanadaTM (the “Company”) (TSX: MIC) not already owned by Brookfield (the “Transaction”).

The Company is the largest private sector residential mortgage insurer in Canada, providing mortgage default insurance to Canadian residential mortgage lenders, in turn making homeownership more accessible to first-time homebuyers.

Under the terms of the Arrangement Agreement, Brookfield, which currently owns an approximate 57% controlling interest in the Company, will purchase all of the remaining outstanding common shares of the Company at a price of C$43.50 per share. The purchase price represents a premium of approximately 22% to the Company’s closing share price on the Toronto Stock Exchange on October 23, 2020, the last trading day prior to today’s announcement, and a premium of approximately 25% to the 20-day volume weighted average price on that date.

“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.
Stuart Levings, President and CEO, stated, “The Transaction, together with our Company’s recent rebranding as Sagen MI CanadaTM, represents an exciting new chapter for the Company. 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 Company’s board of directors, other than certain conflicted directors (the “Board”), unanimously approved the Arrangement Agreement following a unanimous recommendation of a special committee of independent directors of the Board.

Closing
The Transaction will be implemented by way of and subject to a court-approved plan of arrangement under the Canada Business Corporations Act. Closing of the Transaction is subject to shareholder approval at a special meeting of the Company (the “Special Meeting”) expected to be held in late December 2020. The Transaction is also subject to court approval, approval by the federal Minister of Finance, and the satisfaction of other customary closing conditions. The Transaction is expected to close in the first half of 2021.
Following closing, Brookfield and the Company intend to continue to satisfy the public float requirement of the Insurance Companies Act (Canada) through the issuance of a new class of publicly-traded voting preferred shares of the Company, which preferred shares are intended to be issued prior to or concurrently with closing of the Transaction. A special resolution of shareholders to create this new class of voting preferred shares of the Company will be presented to Company shareholders for approval at the Special Meeting.
Funding

Upon closing of the Transaction, the aggregate consideration payable by Brookfield to holders of common shares of the Company will be approximately US$1.2 billion. Brookfield Business Partners intends to fund approximately US$460 million and for institutional partners to fund the balance of the purchase price.

Brookfield Business Partners 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 listed on the New York and Toronto stock exchanges. Important information may be disseminated exclusively via the website; investors should consult the site to access this information.

Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management Inc. (NYSE: BAM) (TSX: BAM.A), a leading global alternative asset manager with approximately US$550 billion of assets under management.

For more information, please visit our website at https://bbu.brookfield.com.

Genworth MI Canada Inc. (TSX: MIC) changed its brand from Genworth MI CanadaTM to Sagen MI CanadaTM effective October 13th, 2020. The Company, operating through its subsidiary, Genworth Financial Mortgage Insurance Company Canada, is the largest private sector residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. The Company differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For more than two decades, the Company has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at September 30th, 2020, the Company had C$7.1 billion total assets and C$3.8 billion shareholders’ equity. Find out more at www.sagen.ca.