Over four decades, Peter Gilgan turned Mattamy Homes into the largest closely held home-construction company in North America. Now the Canadian billionaire wants to do something entirely new.

Gilgan is stepping aside as chairman of Mattamy Homes and setting up a new company to invest in other sectors, using the $1.5 billion of excess cash flow expected to be generated by the builder over the next four years.

Mattamy Asset Management Inc. will also be the parent company of Mattamy Homes Canada and Mattamy Homes U.S., which will operate as separate, standalone businesses. Gilgan will be chief executive officer and chairman of MAM, which will focus on a range of asset classes and risks, including private equity, strategic partnerships and possibly even startups.

“I basically had all my eggs in one basket for 40 years and it’s time to take a few of those eggs and put them into a more diversified portfolio of assets,” Gilgan, 68, said in an interview at Bloomberg’s Toronto office.

Gilgan declined to specify what initial investments MAM is considering, but said he was interested in technology, infrastructure and sustainable initiatives.

“As an entrepreneur by nature, I’m more inclined toward the more adventurous spectrum of investment,” he said.

Housing Slump

Gilgan is adamant the move to diversify is no reflection of his view of the housing market, which has seen a sharp slowdown across Canada and softened in the U.S. New home sales in Toronto, Canada’s biggest city, sunk to the lowest in almost two decades last year after the government tightened mortgage regulations to reduce soaring household debt. In the U.S., the slowdown in housing continues amid increased borrowing costs and scarcity of available properties.

Gilgan said he’d like to see the Canadian government peel back some of those restrictions as the market stabilizes. Thanks to a large supply of Canadian land acquired over the last two decades before prices began to soar, the firm has years of building ahead of it and is able to sell at the right price to move the product, he said.

Housing Zoo

“We’ve been launching projects across Toronto every week, sometimes two a week, every weekend since early January,” and writing more business than ever before, Gilgan said. “It’s a zoo. It’s all hands on deck, 12 hours a day, all weekend.” The U.S. business is also expanding amid job growth, he said.

The Toronto-based company, which doesn’t reveal financial information, is generating about $4 billion in annual revenue across Canada and the U.S., is likely to see close to a 20 per cent increase in revenue and profit for this fiscal year, Gilgan said.

The extra cash flow from home building will also be used to reduce Mattamy’s debt, with a goal of lowering the ratio of debt to capital to about 40 per cent, from the high ’40s per cent, Gilgan said. Mattamy finished last fiscal year with just under $2 billion in debt, and is rated BB at S&P Global Ratings, two levels below investment grade.

“You can attract a broader interest group of people and obviously at more beneficial rates as your risk profile continues to improve,” he said. “I’m not going to say we’re going to get to be an investment-grade bond lender, but we certainly want to move up a notch or two in order to attract capital less expensively.”

Braves Park

Mattamy has built more than 100,000 homes from Ottawa to Florida, according to its website. Its homes -- which range from detached houses to condos and townhomes -- are usually built in clusters of cookie-cutter suburban subdivisions. Its biggest development in the U.S. is 10,000 acres in Sarasota, Florida, and will include a spring training baseball stadium for the Atlanta Braves, and a hospital.

“We’re going to build a city there, we’re going to build a downtown, we’re going to build all the infrastructure,” Gilgan said. “We’re going to have the general groceries, drug stores, and all that jazz all in place before we actually launch our city.”

Excess cash from housing will flow into MAM. The goal is that within 10 years, half his family’s assets will be invested in sectors outside of residential real estate, Gilgan said. He also invests in charities through the Peter Gilgan Foundation, which has a budget of $20 million a year, and is run by his children.

“It’s a point in my own personal journey where it’s time to diversify and it’s time for me to also pursue some things that I’d had interest in, but not an ability to do anything with for 40 years,” he said. “What’s my legacy going to be? Really, what am I going to leave to my children?"