The stake in Genworth Canada will be acquired from Genworth Financial, which is pursuing the deal to close its previously announced merger with Oceanwide

Genworth Lynchburg, VA

Genworth Financial to sell 57% stake in Genworth Canada to Brookfield Business Partners (Credit Genworth Financial, Inc)

Brookfield Business Partners has agreed to acquire a controlling stake of around 57% in Canadian mortgage insurance provider Genworth Canada from Genworth Financial for about 2.4bn Canadian dollars (£1.5bn).

Genworth Canada, through its subsidiary Genworth Financial Mortgage Insurance Company Canada, is a residential mortgage insurer. The company offers mortgage default insurance to residential mortgage lenders in Canada.

As of 30 June 2019, Genworth Canada had C$6.9bn (£4.33bn) in total assets and C$4.1bn (£2.57bn) in shareholders’ equity.

Brookfield Business Partners will be acquiring the stake from Genworth Financial International (GFIH) and Genworth Mortgage Insurance (GMIC), both subsidiaries of Genworth Financial for C$48.86 (£30.64) per share.

The deal, which is subject to approval of the Canadian Finance Ministry, is expected to be closed in the second half of 2019.

Brookfield Business Partners managing partner David Nowak 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.”

Why Genworth Financial is selling stake in Genworth Canada

For Genworth Financial, the sale of its stake in Genworth Canada is to increase the chances of closing its acquisition by China Oceanwide for $2.7bn as announced in October 2016. The previously announced deal between Oceanwide and Genworth Financial was expected to be closed in 2017 but has been delayed due to regulatory hurdles.

Earlier this year, the proposed merger was approved by the New York State Department of Financial Services (NY DFS), which was the final insurance regulatory approval it needed in the US.

Genworth Financial said that the transaction with Brookfield Business Partners will enable it to increase its financial flexibility, irrespective of the closing of the merger with Oceanwide.

Genworth Financial president and CEO Tom McInerney said: “We are pleased to find such a high-calibre 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.”