Brookfield takes an interest in UK boiler repair insurer HomeServe
Energy efficiency is starting to make institutional investors pay attention. Brookfield has taken an interest in UK boiler repair insurer HomeServe. While a potential €3.8bn deal may seem like little more than a toss-up for the giant, it gives it greater scale in one of the key growth areas of the energy transition.
Decarbonisation creates a huge need for renewable-powered electric heat pumps to replace gas boilers, and for insulation to upgrade inefficient buildings. Starting in 2030, about 2.5% of the world’s homes will need to be modernized each year, up from less than 1% today.
Brookfield, which has enlisted former Bank of England Governor Mark Carney to lead its energy transition activities, has been at it since 2018, when it acquired electrical equipment firm Enercare for €3.2bn in its home market. But it has speeded things up. In 2021 it took a majority stake in Germany’s biggest heating installer, Thermondo, and in January it took a €24m stake in UK smart home installer Boxt. At 15 times 2021 EBITDA, HomeServe would not be cheap to operate. But add the rapid growth in France, Spain and the Americas, and it means that Brookfield would have a global army of directly hired boiler experts, all capable of installing heat pumps and managing retrofits.
Unfortunately, Brookfield can’t wait for the money to arrive. There are still major political issues around who will pay to upgrade the housing stock with skyrocketing inflation, since a heat pump costs €18,000. Still, unless carbon removal technologies make a quantum leap soon, governments will have to figure out how to subsidize pumps. The good news is that the big firms are increasingly willing to participate.
