Briefing

Genworth Financial, Canada’s largest private-sector residential mortgage insurer, to sell Canadian arm to Brookfield for $2.4 billion

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Brookfield Business Partners is set to purchase 48.9 million shares for a 57 per cent stake in the company at $48.86 per share. The deal awaits regulatory approval. Federal law requires Ottawa to approve the sale of more than 10 per cent of a federally incorporated insurance company; sales to foreign buyers are subject to additional scrutiny. (Bloomberg)

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Talking point: For Genworth, this is an opportunity to offset a Canadian subsidiary that has been making it difficult to sell the whole company to China Oceanwide Holdings Group; Ottawa has put a hold on that deal, citing national-security concerns. Genworth said in July that negotiations with Ottawa had stalled, which prompted it to seek out a “strategic alternative” for its Canadian subsidiary. For Brookfield, the deal is a way to expand its presence in Canada’s booming mortgage insurance market at a discount. The firm is offering a 5.1 per cent discount on Genworth’s Monday closing price. Genworth is one of only three companies allowed to issue mortgage insurance in Canada for homebuyers with less than a 20 per cent down payment. With housing prices in big cities staying high, and Toronto’s housing market rebounding from a drop earlier this summer, there’s plenty of future business for Genworth to come.