Brookfield Asset Management Ltd. BAM-T raised US$93-billion for its funds last year and expects to bring in similar amounts this year as it fills its coffers ahead of what could be a busier period for deal making as the prospect of declining interest rates helps open up stalled markets.
The Toronto-based asset manager expects to raise between US$90-billion and US$100-billion in 2024, with four of its main funds and dozens of its smaller strategies in the market seeking new money from investors. That excludes some commitments that were tallied as part of last year’s fundraising totals but that slipped into January of 2024 as fund investors waited for the new year to commit.
Brookfield reported a profit of US$374-million for 2023, compared with US$504-million in the previous year, and raised its dividend by 19 per cent to 38 US cents per share.
Interest rates have levelled off after a sharp run-up, and central banks have started to talk about rate cuts, so markets have started to come back to life and the gap in expectations between buyers and sellers has started to narrow. Brookfield now predicts that the volume of deals will pick up throughout this year, after a broad slowdown in activity last year.
Brookfield chief executive officer Bruce Flatt said that “should be an excellent environment for investing,” and asset managers are in a better position to sell holdings and return cash to investors.
“It’s already started. It’s not something that we’re only forecasting for the future,” Connor Teskey, the asset manager’s president, said on a Wednesday conference call. “We are already seeing transactions in the early part of 2024 higher than they were” in the third and fourth quarters last year.
Brookfield was busy while some rivals were idle in 2023, and made investments that totalled US$55-billion. And it still has US$107-billion of fund commitments that it has not drawn on yet, as well as nearly US$3-billion in cash, setting it up to be an active buyer as markets thaw. The company is also expected to be busy selling businesses it has owned for a number of years, including some from its private equity and real estate portfolios.
Brookfield sees increasing opportunities to pick up distressed assets that are cheap, including in its real estate business – the arm of Brookfield that is under the most pressure as the stress of higher interest rates and shifting working habits ripple through the commercial real estate market.
Though Mr. Teskey acknowledged pressures in parts of the real estate market, he said Brookfield has so far been able to refinance a number of its real estate loans while it waits for market conditions to improve. Brookfield has raised US$8-billion for the latest version of its main real estate fund and expects to reach its US$15-billion target before the year is over.
“We see a path to riding through this, but this is where the opportunity is created,” he said.
Brookfield’s distributable earnings – a measure it uses as a proxy for cash earnings that could be paid to shareholders – were US$586-million, or 36 US cents per share. That beat the analysts’ consensus estimate of 34 US cents per share, according to data from London Stock Exchange Group.
Brookfield had US$581-million of fee-related earnings. It now has US$457-billion of fee-bearing capital, which was an increase of 9 per cent from a year earlier.
Total assets under management at Brookfield Asset Management swelled to US$916-billion, and are set to jump about US$50-billion higher when its acquisition of annuity and insurance provider American Equity Life Holding Co. closes, which Brookfield expects will happen shortly.
James Bradshaw