Brookfield Completes Acquisition of Chemelex: A Strategic Move into Essential Infrastructure Services

Brookfield Asset Management (NYSE: BAM, TSX: BAM) and its listed affiliate Brookfield Business Partners (NYSE: BBU, BBUC; TSX: BBU.UN, BBUC) have completed the acquisition of Chemelex, a global leader in electric heat trace systems, from nVent Electric Plc for a purchase price of $1.7 billion. This strategic move aligns with Brookfield's long-term investment strategy, focusing on essential infrastructure services and high-margin businesses.

Chemelex's electric heat trace systems are critical for maintaining the temperature of pipes in industrial plants and commercial buildings, making it an essential infrastructure service. This acquisition allows Brookfield to expand its industrial portfolio and tap into a high-margin, stable revenue stream. Dave Gregory, a Managing Partner in Brookfield's Private Equity Group, expressed excitement about the acquisition, highlighting Chemelex's extensive connectivity to the Brookfield ecosystem through its end markets.

Brookfield's investment was funded with approximately $830 million of equity, with Brookfield Business Partners investing approximately $210 million for a 25% interest. The balance was funded by institutional partners, demonstrating strong co-investment support. This efficient capital deployment maintains meaningful upside potential for BBUC shareholders.



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

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

These factors enable Chemelex to maintain a strong competitive position and generate stable recurring revenue streams, which are attractive to Brookfield as a long-term investor.

Brookfield plans to implement several operational enhancement opportunities at Chemelex to drive financial performance and strengthen its market position:

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

By pursuing these opportunities, Brookfield can unlock Chemelex's full potential and drive long-term value for its stakeholders.

In conclusion, the acquisition of Chemelex by Brookfield aligns with the company's long-term investment strategy by focusing on essential infrastructure services, high-margin businesses, strategic expansion in the industrial portfolio, and operational enhancement opportunities. This strategic move positions Brookfield to capitalize on the growing demand for essential infrastructure services and high-margin businesses, driving long-term value for its investors.