On July 13, 2017, Hong Kong-based Cheung Kong Property (Canada) Holdings Ltd. (CKP) completed the acquisition of the Toronto headquartered Reliance Home Comfort from Alinda Capital Partners for CAD $2.82 billion. Reliance Home Comfort provides 1.7 Canadian residential homes and commercial businesses with water heaters, home furnaces, and air conditioners. CKP is a Chinese global investment firm, owned by one of Hong Kong’s richest families. This acquisition is significant for two reasons: first, according to the China Institute’s Investment Tracker Database, the Reliance Home Comfort sale was the only instance of Chinese investment in Consumer Products and Services in Canada for 2017, and the largest acquisition made by a Chinese firm in Canada so far this year. This acquisition is also the largest instance of Chinese investment in a Canadian firm based east of Alberta.
CKP (Canada) is managed by Victor Li, chairman of Husky Energy Inc., and Canadian citizen of 30 years. His father, Li Ka-shing, owns Cheung Kong Properties, the largest publically-listed infrastructure company in Hong Kong. The Li family has adopted a similar approach to other family-owned Canadian conglomerates, through a mixed-industry portfolio, and has amassed a considerable set of investments in Canada, including Park N’ Fly, CIBC, and Wex Pharmaceuticals. Victor Li expressed that “for our Group, Canada has always been an important market. We have had very positive experiences nurturing Canadian businesses…we hope that Reliance will also grow and succeed just like our other Canadian companies, creating value to Canadians and contributing to the growth and development of the country’s economy.”
Reliance has three main business components, encompassing commercial, residential and industrial sectors. The company is one of Canada’s largest providers of largest rental water heaters and rental HVAC. Since 2014, Reliance has expanded by acquiring National Energy Corp., a company which provides HVAC home services and water heating, for CAD $505 million. Much like infrastructure investment, Reliance has a steady, long-term recurring revenue stream that results from its large customer base. For this reason, CKP has announced that it intends to sell up to 25% of Reliance to another company owned by the Li family trust: Cheung Kong Infrastructure (CKI).
Given recent controversies surrounding the Norsat sale to Chinese firm Hytera, many Canadians and news media outlets have expressed anxiety about high-profile acquisitions by Chinese corporations operating in Canada. However, public reaction to the Reliance sale appears to be relatively positive: both CKP and CKI maintain a hands-off approach to ownership, and it is expected that Reliance will continue to be run from Toronto by the existing management team. Unlike Norsat, Reliance primarily services Canadian residences and Canadian commercial firms, and therefore the sale of Reliance is unlikely to impact the Canadian relationship with other countries, including the United States.