Please ensure Javascript is enabled for purposes of website accessibility

Brookfield Infrastructure Selling Enwave for $4.1 Billion

By Matthew DiLallo - Updated Feb 2, 2021 at 10:22AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The infrastructure giant plans to cash In on the growth of its district energy business, and redeploy the proceeds into new investments.

Brookfield Infrastructure (BIP 0.08%)(BIPC 1.03%) has agreed to sell its North American district energy business, Enwave, for $4.1 billion. The company announced today that it is selling the business to institutional investors in two separate deals, splitting the Canadian and U.S. operations. Brookfield expects to receive $950 million in net proceeds from the transactions. 

Enwave's district energy systems heat and cool buildings from a central plant using a network of underground pipes to pump steam, hot water, and chilled water into the facilities. Brookfield initially acquired Enwave for 480 million Canadian dollars ($375 million in today's dollars at the current exchange rate) in 2012 and has since grown it into the largest district energy system in North America. In a 2017 shareholder letter, the company noted that it had since grown its district energy business to a nearly $2 billion enterprise value.  

Two people in suits shaking hands in front of a building.

Image source: Getty Images.

Brookfield grew Enwave's value by acquiring other high-quality district energy systems and completing organic expansions. Overall, it has increased the business' EBITDA at more than a 20% compound annual rate. According to CEO Sam Pollock, the company is now cashing in on this "hugely successful investment" to recycle that capital into new opportunities.

The company intends to use the proceeds to fund a large portion of its $2 billion annual growth investment target. Brookfield believes the economy is heading toward an infrastructure super-cycle, which should drive governments and corporations to sell assets to finance new investments. It sees the greatest opportunities in data infrastructure, energy midstream, and transportation.

Brookfield estimates that its capital recycling program could grow its cash flows by an incremental 1% to 5% per year, on top of its 6% to 9% organic growth rate. That could allow it to continue outperforming the market.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Brookfield Infrastructure Partners L.P. Stock Quote
Brookfield Infrastructure Partners L.P.
$62.12 (0.08%) $0.05
Brookfield Infrastructure Corporation Stock Quote
Brookfield Infrastructure Corporation
$75.37 (1.03%) $0.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.