Where Are We Now
Updated on: 11/6/2021
There are asset managers, and then there’s Brookfield. Brookfield has a world-class management team that carefully invests in the most critical and highest-quality real estate, infrastructure, renewable power sources, private equity, and alternative assets around the globe. We think Brookfield today is a no-brainer with the portfolio of assets it holds.
Brookfield’s assets under management continue to soar. Currently above around $650 billion, we think shareholders will one day be celebrating the $1 trillion mark. Fee-bearing capital is also north of $340 billion now.
When interest rates are low, investors and investment funds seek better returns through alternative assets. Brookfield will help to meet this demand expansion by being a global premier alternative asset provider.
Brookfield Asset Management (BAM) is an owner, operator and investor of real assets over the globe including real estate, infrastructure, renewable power and private equity through their publicly-listed subsidiaries.
Brookfield’s ability to deploy capital at scale allows them to make deals around the globe that few enterprises could even think of.
There is a growing demand for alternative investments in real assets taking market share from traditional fixed income investments as funds seek to make a satisfactory yield.
Brookfield is a high quality, durable and proven cash flow compounder led by a team of very experienced and disciplined capital allocators.
BAM is well positioned to take advantage of positive global tailwinds including renewables growth, low rates, acceleration of appetite for real assets and global infrastructure growth.
Brookfield is an asset management company that purchases and manages real assets. Their scale allows them to enter projects and geographies with size that very few would even think of attempting.
Asset Management - Alternative investment products in their verticals (real estate, infrastructure, renewables, PE, debt).
Real Estate - Office, retail, residential, hospitality
Infrastructure - Utilities, transport, toll roads, data
Renewable Power - Hydroelectric, wind, solar
Private Equity - Business, infrastructure and industrial services
Credit - High yield, corporate debt, distressed
Insurance - provides capital-based solutions to insurance companies and their stakeholders.
Brookfield owns large or full ownership stakes in their affiliate listings. As of August 2021:
Brookfield Property Partners (BPY). 100% stake. After fully acquiring this affiliated listing, Brookfield decided to make the subsidiary private.
Brookfield Renewable Partners (BEP). 48% stake.
Brookfield Infrastructure Partners (BIP). 28% stake.
Brookfield Business Partners (BBU). 74% stake.
Brookfield Investment Management. This subsidiary manages investment funds within public securities through Oaktree Capital Management.
Just recently, Brookfield Asset Management also created a new listing called Brookfield Reinsurance Partners (BAMR), which focuses on providing capital-based solutions to insurances companies.
Brookfield Total Assets Under Management ($B) (Q3 2021)
Brookfield Fee-Bearing Capital ($B) (Q3 2021)
Brookfield has a business unit focused on investment management through Oaktree Capital Management. Fee-Bearing Capital refers to the total amount of money that Brookfield invests on behalf of another party.
Brookfield Property Partners (BPY)
Brookfield Property Partners is a global real estate company that owns, operates, and develops one of the largest selection of industrial, office, retail and student housing on the planet. They are the main driver for Brookfield Asset Management (BAM) to make investments in real estate.
The company's main goal is to focus on long term investments that compound over time and have 12-15% return on equity. This kind of strategy has helped BPY incur steady cash flows and explosive asset appreciation.
Brookfield Property Partners created a subsidiary called Brookfield Property REIT (Real Estate Investment Trust). This subsidiary has the same focus as BPY, but purely manages US REIT securities. Everything else in terms of management and goals stays the same, just different scope.
Just recently Brookfield also bought out the remaining 49% of BPY, making them completely private.
As mentioned before, Brookfield Property Partners focuses on long term investments that will provide solid returns over time. That is in addition to their wide variety of property types such as commercial buildings, student housing and hospitality and you get an outstanding investment portfolio with high yield.
BPY's goal at the end of the day is to acquire high quality assets that are in resilient markets across different geological areas. Keeping things diversified is very important to Brookfield Property Partners as it can create steady financial metrics such as free cash flow and return on equity while also creating a defensible position.
Brookfield Renewable Partners (BEP)
Brookfield Renewable Partners operates one of the world's largest publicity-traded renewable power platforms. They have around 6,000 generating facilities across North America, South America, Europe, and Asia and accumulate over 20,000 MegaWatts of energy per year. As a frame of reference, one MegaWatt of generation capacity has enough electricity to power 400 homes in a year.
The company as a solid track record of organic growth with effectively building and financing assets, actively managing their operations, and purchasing quality facilities that generate sustainable cash flows and annualized total returns.
Currently, Brookfield Asset Management holds a 48% stake in the business.
In terms of the BEP business, the company is a global leader in hydroelectric power. It is such a big part of the business that it accounts for over half of the portfolio.
The main portfolio consists of:
Brookfield Renewable Partners Portfolio by Gigawatt Hours (Q3 2021)
Source: Brookfield Investor Relations
Brookfield Infrastructure Partners (BIP)
Brookfield Infrastructure Partners is known as one of the largest owner and operator of global infrastructure networks in the world. Their main infrastructure assets revolve around storage of energy, water, freight, passengers, and most importantly, data.
Just like every other Brookfield company, it is all about playing the game long-term. BIP's strategy is always about looking to invest in infrastructure projects with potential for long term growth and solid return on equity.
Currently, Brookfield Asset Management holds a 28% stake in Brookfield Business Partners.
As one of the largest infrastructure investors, with over $100 billion worth of assets under management, Brookfield Infrastructure Partners knows its way around a quality portfolio.
They split their focus into four sectors:
and each of these sectors puts up high-quality figures, which aligns with BIP's growth strategy.
Brookfield Business Partners (BBU)
Brookfield Business Partners acquires high-quality businesses around the world. The company regularly deploys hundreds of millions, sometimes billions, of dollars every year.
By using their expertise and funds, BBU is able to help businesses perform better by working steadily with their management team to optimize their operations and workflow. This in turn helps the company improve their profitability, while also creating rock-solid margins and sustainable cash flows.
Currently, Brookfield Asset Management holds a 74% stake in Brookfield Business Partners.
Brookfield Business Partners has set criteria when it comes to its acquisition. They look to make sure businesses have low production costs and a high barrier of entry. One of the most important criterion they use is if the business can actually benefit from Brookfield's area of expertise - real assets. Having years of expertise in this field, if businesses don't have similarities to Brookfield, it is not always worth it for them to follow through with an acquisition.
In terms of industries, Brookfield Business Partners has dipped its foot in multiple industries, but puts a big emphasis on volatile industries. These environments are much more fast-paced and have opportunities for higher returns.
This last year BBU acquired a few companies such as Clarios, an electric battery manufacturer and distributor. They helped the company broaden their product and service offerings in addition to penetrating new geographic markets.
Brookfield Reinsurance Partners (BAMR)
Just recently, Brookfield created a new business unit called Brookfield Reinsurance Partners.
This business focuses on providing capital-based solutions to insurance companies and their stakeholders.
BAMR provides annual reinsurance products to insure businesses and manages their pension risk plans. In turn, being in this industry can generate long-duration liabilities and steady returns. Just like every other Brookfield business unit, the focus is on a quality investment portfolio and attractive returns.
Accelerating Demand for Alternatives
The demand for real assets is growing taking market share from traditional fixed income investments.
In this low interest rate environment, funds look to Brookfield, a provider of alternative investment vehicles, to provide them yield.
Brookfield estimates that by 2030, the real assets/alternatives market will pass equity/fixed income. Whether that prediction is too bold or not, the allocation to real assets is certainly growing and Brookfield will continue to benefit from that secular trend.
For both subsidiaries and attracting fee bearing capital
Key growth drivers moving forward:
Clean energy and decarbonizing
Data infrastructure upgrade cycle
Acceleration into real assets/alternatives
New fund opportunities in technology, ESG impact and insurance.
BAM Revenue ($M) (Q3 2021)
BAM Operating Cash Flow ($M) (Q3 2021)
BAM Funds from Operations ($M) (Q3 2021)
Source: Brookfield Investor Relations
Brookfield Asset Management has become the behemoth of real assets.
Their scale and reach allows them to deploy capital in ways others could only dream of.
They have some very positive tailwinds including renewables growth, low rates, acceleration of appetite for real assets and global infrastructure growth.
By having large stakes in every Brookfield business unit, BAM will be able to capitalize on the bulletproof investment portfolio and attractive returns on equity.