Brookfield Asset Management Inc. continues to raise money from investors, closing two new funds and reporting that it has reached US $ 325 billion in equity, with a goal of adding US $ 100 billion to its fundraising round. current funding.
Brookfield is attracting large investors to its giant portfolios of what it calls “alternative assets”: real estate, infrastructure, energy and distressed debt. The assets – valued at US $ 626 billion as of June 30 – are placed in partnerships, some of which are traded on US and Canadian stock exchanges, and other private funds. Brookfield invests its own money alongside foreign capital.
The company said Thursday that investor fee income – a major component of its overall profits – jumped to US $ 483 million in the second quarter from US $ 324 million in the same period last year. Net income for the quarter, which also included investment gains, was US $ 2.43 billion, compared to a loss of US $ 1.49 billion last year.
Managing Director Bruce Flatt told investors in his quarterly letter to shareholders that the company expects to add about US $ 50 billion in outside capital this calendar year, and expects it will add US $ 25 billion in revenue and of real estate sales.
As of the end of the second quarter, Brookfield announced that it had raised US $ 9 billion for its fourth flagship real estate fund and US $ 7 billion for its ESG-focused global transition fund.
Mr. Flatt said Brookfield has 2,000 institutional clients who invest on average in 2.1 Brookfield funds. Five years ago, it had 425 clients who belonged to an average of 1.8 funds.
“This means that not only are we gaining new customers, but we are also seeing an increase in the number of Brookfield products that they participate in,” he said. “The scaling up of our flagship products, the diversification of our product offering and the penetration of new fundraising channels should lead to significant growth in our asset management franchise. “
At the end of the quarter, Brookfield launched its new insurance business, Brookfield Asset Management Reinsurance Partners Ltd., and this week announced that the company would make its first major acquisition, a US $ 5.1 billion purchase of Texas insurer American National Group Inc. The new reinsurance company already owns Brookfield’s retirement risk transfer business, which began in 2016, and has reached an agreement to purchase up to US $ 10 billion in annuities from the company. ‘American Equity Investment Life Holding Co.
Mr. Flatt said that Brookfield has “a line of sight of at least [US]$ 40 billion ”of capital in the insurance industry.
Following the At the end of the quarter, Brookfield also proceeded with the privatization of Brookfield Property Partners LP (BPY), thereby eliminating the Toronto and New York Stock Exchange quotes. Mr Flatt has offered a rock-solid defense of commercial real estate, particularly office buildings, throughout COVID-19 pandemic, and Brookfield said public investors, who were disappointed with BPY’s ownership of malls and other retail real estate, were undervaluing the shares.
Mr Flatt continued his anthem to Brookfield’s US $ 30 billion real estate portfolio on Thursday, saying that US $ 16 billion is “an irreplaceable portfolio of high quality mixed-use office and retail properties in cities. global gateways. Overall, we intend to hold onto these assets for a very long time, if not forever. “
The remaining $ 14 billion in real estate is more “opportunistic,” Flatt said. “Virtually all of these assets will be opportunistically monetized over the next five to seven years, with the proceeds then available to invest in the entire franchise. “
Assuming reasonable returns, Flatt said, Brookfield is expected to generate US $ 15 billion from sales, and prime properties that are not for sale are expected to generate total income of US $ 10 billion over several years. The resulting $ 25 billion capital “will fuel Brookfield’s next phase of growth,” he said.
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