Brookfield sells stakes in DexKo, CDK Global, and BrandSafway to seed new evergreen investment fund
Brookfield Business Partners has unlocked US$690m by selling partial interests in three portfolio companies to seed a new private equity fund that will target wealthy investors, according to a July 4 press release.
The sale gives the new evergreen strategy an immediate, diversified portfolio even before new capital is raised.
As per Brookfield, the fund will follow an evergreen structure—open-ended with no fixed maturity—and will offer periodic liquidity options, allowing investors to buy in or redeem holdings over time.
The structure is designed to open access to private equity deals that have typically been reserved for large institutional players.
The company sold an approximate 12 percent interest in engineered components firm DexKo, a 7 percent stake in software provider CDK Global, and a 5 percent interest in scaffolding and access services company BrandSafway, as reported by Bloomberg.
The deal, expected to close on July 4, is priced at an 8.6 percent discount to the net asset value of the holdings.
Brookfield Business Partners will receive units of the new fund equal to the US$690m redemption value.
According to the press release, those units are expected to be redeemed for cash within 18 months after the fund’s initial closing later this year, at the same 8.6 percent NAV discount.
Any remaining units after that window will be redeemed at full NAV.
David Levi, CEO of Brookfield’s global client group, signalled the strategy last September, stating, “We are tailoring our private equity capabilities for wealth… This is something we’re super, super excited about,” as quoted by The Globe and Mail.
Anuj Ranjan, CEO of Brookfield Business Partners, said the deal “provides a strong outcome for Brookfield Business Partners’ unitholders and shareholders” and offers the new fund a ready-made seed portfolio.
He added that the transaction allows the firm “to continue to accelerate the return of capital under current and future buyback programs, reinvest in the growth of the business and reduce corporate leverage.”
According to the company, the sale also provides a liquidity event for Brookfield’s existing private equity assets while funding strategic goals such as debt repayment and reinvestment.
The transaction underwent independent review by special committees of Brookfield Business Partners L.P. and Brookfield Business Corporation.
The boards retained Origin Merchant Partners as financial adviser and Stikeman Elliott LLP as legal counsel.
As per Brookfield, the committees determined the deal to be fair and in the best interests of both entities.
The boards approved the transaction, excluding any conflicted directors from voting.
