PSP Investments buys 50 percent stake in Enercare for $1.6 billion

MONTREAL · The Public Sector Pension Investment Board is buying a 50 percent stake in home services company Enercare Inc. from Brookfield Asset Management Ltd. and its partners for $1.6 billion. The deal gives the pension fund manager joint ownership with Brookfield of the Markham, Ont.-based firm. PSP Investments has been a co-investor with Brookfield in Enercare since the company was taken private in 2018. The transaction is expected to close in the first half of 2027, subject to regulatory approvals.

Enercare rents and sells equipment such as water heaters, furnaces, air conditioners and water purifiers to more than 1.4 million homes and businesses in Canada. The company has a leading market share in Ontario and has expanded into Quebec and Western Canada since Brookfield's acquisition. "We just think it's really a strong, long-term business for us," said Andrew Alley, PSP's global head of infrastructure investments. PSP declined to disclose Enercare's current enterprise value, but Alley said the company's customer base and product offerings have been growing. Enercare earns much of its revenue from rental contracts, which provide a stable and predictable income stream. PSP is making the investment through an infrastructure portfolio designed to perform well when inflation rises, which helps protect the value of long-term pension liabilities.

"We look for things that provide stability over the long-term, so essential infrastructure assets," Alley said. "We are looking to grow the portfolio. This is a helpful addition to that." PSP and Brookfield plan to keep Enercare's management team in place and aim to grow its customer base by introducing new products and services. The deal adds to PSP's $75 billion portfolio of investments in Canada. The pension fund, which manages $321 billion for federal public service, military and RCMP pension plans, aims to increase its Canadian holdings to $100 billion in the next few years. PSP made more than $10 billion in investments in Canada last year.

"We're encouraged by the opportunity set in Canada," Alley said. "Canada is stacking up very well on how it aligns with our areas of focus." PSP chief executive Deborah Orida recently pledged to increase domestic investment at the Canada Investment Summit, which she co-organized. The pension fund is also showing interest in the federal government's plan to open major airports to private investment, as it already owns stakes in seven international airports. Brookfield, which took Enercare private in a $4.3 billion deal including debt in 2018, has been looking to sell assets and recycle capital. The asset manager outlined a plan to turn over more than US$2 billion of assets this year. BMO Capital Markets and TD Securities were financial advisers to PSP, while CIBC Capital Markets and Scotiabank advised Brookfield.

With files from The Canadian Press, BNN Bloomberg and The Globe and Mail