Brookfield Expands Mortgage Holdings with $2.9bn First National Deal

Global asset manager Brookfield Asset Management has partnered with Birch Hill Equity Partners to acquire a controlling stake in First National Financial Corporation, marking a significant expansion of Brookfield’s presence in the Canadian mortgage sector. The transaction, valued at CAD $2.9 billion, will see the two private equity firms jointly own 62% of the non-bank mortgage lender.

The deal follows a strategic review process conducted by First National, during which multiple bids were considered. The chosen offer, at CAD $48 per share, represents a 22.8% premium on the company's 90-day volume-weighted average trading price. Once completed, the transaction will also reduce the ownership stakes of First National’s co-founders, Stephen Smith and Moray Tawse, each of whom will retain a 19% indirect interest.

First National is one of Canada’s largest non-bank mortgage originators, administering over $155 billion in residential and commercial mortgages as of early 2024. The company focuses primarily on prime borrowers — those with strong credit histories — and services a wide range of property types, from single-family homes to large multi-unit and commercial developments.

The acquisition aligns with Brookfield’s ongoing strategy to grow its private credit portfolio, particularly within the real estate and mortgage sectors. This includes both lending and mortgage insurance, the latter bolstered by Brookfield’s earlier acquisition of Sagen Mortgage Insurance Company (formerly Genworth MI Canada).

According to Brookfield, the firm is seeking to capitalise on growth opportunities among borrowers underserved by conventional financial institutions. It has also expanded beyond Canada, acquiring U.S.-based Angel Oak Companies earlier this year. Angel Oak has originated more than US $30 billion in residential mortgages and completed over 60 securitisations, with expectations of accelerated activity.

Brookfield’s credit division now manages over $300 billion in assets globally, spanning infrastructure, real estate, renewable energy, and corporate lending. It operates in partnership with other financial entities, including Oaktree Capital Management and 17Capital.

While the First National purchase deepens Brookfield’s stake in Canada’s mortgage ecosystem, industry analysts do not expect the deal to result in consolidation of lending and insurance functions under one umbrella. One limiting factor is that Stephen Smith, who will remain a shareholder in First National, is also an owner of Canada Guaranty Mortgage Insurance Company — a direct competitor to Brookfield-owned Sagen.

Furthermore, the transaction is being executed through Brookfield Asset Management’s private equity funds, whereas Sagen is held by Brookfield Business Partners, another division within the group. These structural distinctions reduce the likelihood of regulatory or competition concerns, according to analysts such as Jaeme Gloyn of National Bank of Canada.

“Generally, Brookfield seeks to leverage the ecosystem to drive upside for any of their portfolio companies,” Gloyn said, but he added that integration between First National and Sagen would likely be limited.

First National’s chief executive, Jason Ellis, will remain in post following the deal, along with his existing management team. The acquisition is expected to close in the fourth quarter of 2025, subject to regulatory and shareholder approval.

According to a statement from First National, the bidding process involved a wide range of domestic and international private equity firms, with the Brookfield-Birch Hill offer emerging as the most favourable. The transaction includes provisions ensuring shareholder support, and a break fee clause of CAD $50 million if the deal is terminated.

The transaction reflects increasing private equity interest in Canada’s housing finance market, driven by the stability and long-term returns of mortgage assets. Brookfield’s involvement signals continued confidence in the underlying strength of the Canadian housing sector, even amid broader economic uncertainties.

The acquisition is part of a broader trend where major private equity firms are consolidating their influence across the mortgage value chain — from underwriting and servicing to insurance and securitisation. With rising demand for alternative lending options and a continued housing affordability challenge in Canada, non-bank mortgage lenders such as First National are positioned for growth.

Brookfield’s recent investments, both in Canada and abroad, suggest the firm sees strategic value in building an integrated ecosystem of mortgage-related services. However, as regulatory frameworks and competitive dynamics evolve, how these holdings interact will remain a subject of interest for investors and policymakers alike.