Brookfield Completes Acquisition of Chemelex

Rhea-AI Summary

Brookfield Asset Management and Brookfield Business Partners have completed the acquisition of Chemelex from nVent Electric Plc for $1.7 billion. Chemelex is a global leader in electric heat trace systems, specialized wiring systems that regulate pipe temperatures in industrial plants and commercial buildings. The company, which invented electric heat tracing in 1972, serves industrial, commercial, residential, energy, and infrastructure markets.

The acquisition was funded with approximately $830 million of equity, with Brookfield Business Partners investing $210 million for a 25% interest. The remaining funding came from institutional partners. Brookfield brings expertise in driving operational transformation in industrials and manufacturing businesses, with previous investments including Clarios, Westinghouse, and GrafTech.

Positive

• Strategic acquisition of market leader in essential industrial products
• Strong market position with high barriers to entry
• Diversified end markets across industrial, commercial, and infrastructure sectors
• Established brand recognition as original inventor of electric heat tracing
• Significant equity investment structure with institutional backing

Negative

• Substantial acquisition cost of $1.7 billion requiring significant leverage
• 25% ownership stake for Brookfield Business Partners

Insights

Private Equity & M&A Analyst

This $1.7 billion acquisition of Chemelex marks a significant strategic expansion in Brookfield's industrial portfolio, particularly noteworthy for its high-margin essential infrastructure services positioning. The deal's structure reveals careful capital allocation, with Brookfield Business Partners securing a 25% stake for $210 million, indicating strong co-investment support from institutional partners.

Chemelex's market position is particularly valuable due to three key factors:

• Proprietary technology and patents as the original inventor of electric heat tracing
• High barriers to entry in a specialized industrial niche
• Diverse end-market exposure across industrial, energy and infrastructure sectors

The acquisition presents substantial operational enhancement opportunities through Brookfield's proven playbook:

• Leveraging Brookfield's global industrial portfolio for cross-selling opportunities
• Implementing operational improvements as a standalone entity
• Expanding into emerging markets and clean energy applications

For BBUC investors, this represents a strategic addition to the portfolio, providing exposure to mission-critical industrial technology with stable recurring revenue streams. The transaction's structure, utilizing significant institutional co-investment, demonstrates efficient capital deployment while maintaining meaningful upside potential for BBUC shareholders.

NEW YORK, Feb. 03, 2025 (GLOBE NEWSWIRE) -- Brookfield Asset Management (NYSE: BAM, TSX: BAM) through one of its private equity funds, together with its listed affiliate Brookfield Business Partners (NYSE: BBU, BBUC; TSX: BBU.UN, BBUC), today announced that it has completed the acquisition of Chemelex (“the business”) from nVent Electric Plc for a purchase price of $1.7 billion.

Chemelex is a global leader in the design and manufacturing of electric heat trace systems, the specialized wiring systems that regulate the temperature of pipes in industrial plants and commercial buildings. With high barriers to entry and strong brand recognition as the inventor of electric heat tracing in 1972, the business sells its products into the industrial, commercial and residential, traditional and clean energy, and infrastructure markets.

Dave Gregory, a Managing Partner in Brookfield’s Private Equity Group, said “Chemelex is a global market leader providing an essential product and service with extensive connectivity to the Brookfield ecosystem through its end markets. We’re excited to draw on our deep expertise in industrials and corporate carve-outs as we partner with the team to enhance operations and unlock its full potential as an independent business.”

Brookfield brings deep global expertise of investing in and driving operational transformation in industrials and manufacturing businesses. Previous investments include Clarios, the global leader in advanced low-voltage batteries, Westinghouse, a leader in providing mission-critical technologies, products and service to the nuclear power industry and GrafTech, a global manufacturer of graphite electrodes.

Funding

Brookfield’s investment was funded with approximately $830 million of equity, of which Brookfield Business Partners invested approximately $210 million for a 25% interest. The balance was funded by institutional partners.

Brookfield Asset Management (NYSE: BAM, TSX: BAM) is a leading global alternative asset manager, headquartered in New York, with over $1 trillion of assets under management. We invest client capital for the long-term with a focus on real assets and essential service businesses that form the backbone of the global economy. We offer a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors.

Brookfield’s private equity business, which manages over $140 billion of assets under management, focuses on driving operational transformation in businesses providing essential products and services.

Brookfield Business Partners is the flagship listed vehicle of Brookfield’s private equity group. It is a global business services and industrials company focused on owning and operating high-quality businesses that provide essential products and services and benefit from a strong competitive position.

Investors have flexibility to invest in Brookfield Business Partners either through Brookfield Business Partners L.P. (NYSE: BBU; TSX: BBU.UN), a limited partnership or Brookfield Business Corporation (NYSE, TSX: BBUC), a corporation. For more information, please visit https://bbu.brookfield.com.

For more information, please contact:

Investor Relations: Alan Fleming Tel: +1 416 645 2736 Email: alan.fleming@brookfield.com

Media: Marie Fuller Tel: +44 207 408 875 Email: marie.fuller@brookfield.com

FAQ

What is the value of Brookfield's acquisition of Chemelex (BBUC)?

Brookfield acquired Chemelex for $1.7 billion, with $830 million in equity funding, of which Brookfield Business Partners invested $210 million for a 25% stake.

What are Chemelex's main products and markets?

Chemelex designs and manufactures electric heat trace systems for temperature regulation in pipes, serving industrial, commercial, residential, energy, and infrastructure markets.

How is the Chemelex acquisition being funded by Brookfield (BBUC)?

The acquisition is funded with $830 million in equity, including $210 million from Brookfield Business Partners for a 25% stake, with the remainder from institutional partners.

What is the strategic importance of Chemelex for Brookfield (BBUC)?

Chemelex represents a market leader with high barriers to entry, strong brand recognition, and connectivity to Brookfield's ecosystem through its end markets, aligning with their focus on essential products and services.

When did Chemelex invent electric heat tracing technology?

Chemelex invented electric heat tracing technology in 1972, establishing its position as an industry pioneer.