Brookfield not ruling out Home Capital purchase
Mortgage market in good shape, CEO believes
TORONTO • Brookfield Asset Management Inc., Canada’s largest alternative asset manager, sees the country’s real estate market as sound and wouldn’t shy away from buying Home Capital Group Inc. if the terms were right.
“Everything that is in the market we look at. If there’s a transaction that made sense on a risk/reward that we could get involved in, we’d be pleased to be involved,” chief executive officer Bruce Flatt said Friday at the company’s annual general meeting in Toronto. “Whether that happens or not, we’ll see.”
Other big Canadian investors, like Fairfax Financial Holdings Ltd.’s Prem Watsa, for example, have shied away from the residential real estate market for fear of a bubble. Flatt disagrees.
“The real estate and mortgage market in Canada are totally fine,” he said in an interview after the AGM. “Housing prices have gone up quite a bit in many places, but the mortgage market is a very sound financing market. There are a small group of banks that control the mortgage market and these are very high- quality banks and it will not be a problem.”
Brookfield has almost no exposure to the mortgage market in Canada, Flatt said, outside of its subsidiary Royal LePage Real Estate Services and by building houses in Calgary, Toronto and other places. But he added he wouldn’t shy away from the sector.
“We have been in the residential market for 30 years building houses,” he said. “There are times when it’s not as good as it was, like in the United States when it wasn’t as good for five years. But we were in it before, we’re still in it, and it’s been one of our most profitable businesses.”
Home Capital will consider all options to regain stability after settling with the regulator over allegedly misleading investors, a person familiar with the company’s plans has said.
The Toronto- based company is said to be in talks with Canada’s six biggest banks to replace a $2 billion rescue loan from Healthcare of Ontario Pension Plan. Privateequity firms Onex Corp. and Catalyst Capital Group Inc. as well as Brookfield have discussed various transactions with the company, other people familiar have said.
Flatt said he wasn’t close enough to the Home Capital situation to know if it was just a regulatory issue or whether there were some underlying concerns with the business.
“I don’t know enough to make a comment,” he said. “I’m sure some of our guys do, but I don’t.”