Brookfield sells North American district energy business for $4bn

Brookfield has sold its North American district energy business, Enwave, to two separate consortiums for a total of US$4.1bn (€3.4bn).

Australia’s IFM Investors and the Ontario Teachers’ Pension Plan Board (OTPP) have agreed to buy Enwave’s Canadian business for C$2.8bn (€1.8bn) while QIC and Ullico have teamed to take over Enwave US for US$1.9bn (€1.6 bn).

Dale Burgess, senior managing director, infrastructure and natural resources at OTPP, said: “Enwave is a prime example of an investment that we believe can be both commercially attractive and contribute to broader sustainability efforts.

“It provides district energy solutions to a high-quality portfolio of clients in Canada, helping them reduce greenhouse gas emissions and improve energy efficiency.”

Kyle Mangini, global head of infrastructure at IFM Investors, told IPE Real Assets: “We are very familiar with district heating. We first invested in this space in Poland 15 years ago, and that business is now the largest in the EU.”

Mangini said the partners intended to grow Enwave’s footprint of sustainable district energy solutions throughout North America. Enwave Canada currently supplies four Canadian cities.

The 50-50 partnership to purchase Enwave Canada is the second joint investment between IFM Investors and OTTP.

Ross Israel, global head of infrastructure, QIC, said the Enwave acquisition was the first district energy system for QIC.

“The district heating system is basically a bespoke part of the electricity grid,” he said. “It delivers a solution for heating and cooling, separate to energy from grids.”

Because there was no district energy system of scale in Australia, Israel said, Enwave provided a “unique opportunity to invest in core infrastructure that exists in largely urbanised and densely-populated cities”.

QIC’s partner, the US manager, Ullico, has jointly bid for assets with QIC in the past. In its first successful joint bid, Ullico Infrastructure Fund now holds a 20% interest in Enwave US with QIC holding 80%.

Rohit Syal, head of acquisitions for Ullico’s infrastructure businesses, said: “Enwave US is a stable business underpinned by long term inflation-linked contracts and we believe it is positioned for growth, especially in the campus PPP space.” 

Sam Pollock, chief executive officer of Brookfield Infrastructure, said: “The sale of Enwave caps off a hugely successful investment for Brookfield Infrastructure, one in which we grew the business significantly through organic growth initiatives and follow-on acquisitions.”

Brookfield Infrastructure acquired Enwave in 2012. It has since significantly expanded Enwave’s networks by acquiring other district energy systems and driving a substantial organic growth strategy.

The Enwave North America sale will deliver net proceeds of approximately US$950m to Brookfield Infrastructure.

Sale of the North American business follows the sale by Brookfield of Enwave Australia in 2019 to Australian manager, Infrastructure Capital Group for A$420m.

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