Brookfield Asset Management Ltd. BAM-T brought in US$26-billion of fresh capital in the third quarter, flexing its fundraising might even as rivals have struggled to attract new money in fraught markets.
This latest influx of new money, reported in third-quarter earnings released Monday, brought Brookfield’s fundraising total to US$61-billion for the year. The driving force was private credit partnership with Oaktree Capital Group LLC, which raised US$11-billion in the quarter. Investors are flocking to private credit funds as rising interest rates have boosted returns and U.S. banks have reined in lending.
Brookfield has been making more deals than many of its peers in recent months, and has US$102-billion available from uncalled fund commitments to deploy into new investments. In a letter to shareholders, Brookfield chief executive officer Bruce Flatt and asset management president Connor Teskey said markets are getting more confident about how to assess risks and price deals accordingly, and predicted that the pace of dealmaking will pick up over the coming year.
“With record levels of dry powder currently on the sidelines, we expect a very busy period of transaction activity through to the end of 2024,” Mr. Flatt and Mr. Teskey wrote.
During the quarter, Brookfield closed its largest private equity fund to date, raising US$12-billion for its sixth opportunistic fund. It also had strong fundraising in infrastructure, raising US$3-billion for its fifth flagship infrastructure fund – bringing the total fund size to US$27-billion and showing the demand from investors for exposure to infrastructure assets and the protection from rising inflation they typically offer.
But it is private credit that is attracting the most attention. Brookfield announced last week that it closed a US$6-billion infrastructure debt fund, and has already invested half of that capital, raising the prospect that the company could launch the next vintage of the same fund as early as next year. And a swell of commercial real estate debt is coming up for renewal in a tight market over the next two years, which could “create a very attractive lending environment for sponsors with significant dry powder like us,” Mr. Teskey said on a conference call with analysts.
Brookfield is on track to have its best fundraising year, and though Mr. Teskey told analysts that it may not match this year’s lofty levels in 2024, “we expect another extremely strong year” raising money to come.
Earnings from fees increased 8 per cent to US$565-million in the quarter, in line with an 8-per-cent increase in fee-bearing capital over the same span, to US$440-million.
That helped boost distributable earnings – a metric Brookfield uses to show profits that could be paid out to shareholders – to US$568-million, up from US$524-million in the third quarter last year.
Third-quarter profit for Brookfield was US$494-million, or 30 US cents a share, compared with US$395-million, or 24 US cents a share, in the same quarter last year.
Earnings attributable to the publicly-traded, 25-per-cent stake in the asset manager – parent company Brookfield Corp. owns the remaining 75 per cent of Brookfield Asset Management – was US$122-million.
Brookfield announced a quarterly dividend of 32 US cents a share, unchanged from the second quarter.
James Bradshaw