Genworth Financial Inc. may have now cleared the last major barrier it controls to getting itself hitched to China Oceanwide Holdings Group Co. Ltd.
The Richmond, Virginia-based insurer announced today that it has closed on the sale of a majority stake in Genworth MI Canada Inc., a large mortgage insurance business, to Brookfield Business Partners of Toronto.
Genworth will emerge from that deal with about $1.8 billion in cash, Genworth said.
Genworth has also appears to have eliminated the need to get approval for the China Oceanwide deal from regulators in Canada.
China Oceanwide is a Beijing-based real estate developer and financial services company that’s been trying to acquire Genworth for more than three years.
Federal regulators in the United States originally questioned the idea of Genworth’s customer data might end up in the hands of a Chinese government.
Genworth obtained U.S. approval for the deal by agreeing to have an outside organization take charge of the data.
Canada, which has been involved in a dispute with China over cell phone data security, appears to have lodged similar data security objections to the China Oceanwide-Genworth deal. Genworth executives had said earlier that it was not sure when it would be able to get approval from the Canadian regulators.
The deal with Brookfield could make completing the China Oceanwide deal easier, and provide an extra cash cushion for Genworth if that deal falls through, Genworth executives have said.
Genworth has said that it may need to refresh some U.S. federal and state approvals because completing the China Oceanwide deal has taken so long. But Genworth executives had indicated that the Canadian approval was the last first-time approval the company still needed.
China Oceanwide has to get approvals of its own in China and other jurisdictions to complete the deal, and it also has to come up with the cash needed to pay for the deal.
—Read Genworth Suitor Puts Cash in Real Estate Subsidiary, on ThinkAdvisor.