Brookfield Asset Management Inc.’s earnings declined as volatile markets weighed on valuations of private assets, but the firm says it’s still on track for its biggest year of fundraising ever.
(Bloomberg) — Brookfield Asset Management Inc.’s earnings declined as volatile markets weighed on valuations of private assets, but the firm says it’s still on track for its biggest year of fundraising ever.
The alternative asset manager has $125 billion of capital to deploy and sees “many more opportunities coming to us that you wouldn’t have imagined six, 12 months ago,” Chief Executive Officer Bruce Flatt told investors on Thursday.
“Most of them we don’t do, but there will be one of them I think that could be very interesting.”
Brookfield soared 10.3% in New York, the most since March 2020, on a day that also saw the biggest gain for the S&P 500 in more than two-and-a-half years.
Brookfield is still down 26% this year, slightly worse than KKR & Co.’s 24% drop.
Brookfield is raising money for an opportunistic credit fund that it expects to be more than $16 billion, according to Flatt’s letter to shareholders.
Its fifth flagship infrastructure fund stands at $21 billion and it has closed a real estate fund with $17 billion.
“The current environment has created dislocation in the financial markets, with access to capital becoming a challenge for many,” Flatt said in a letter to shareholders.
“Fortunately, we have approximately $125 billion of deployable capital and the skills to navigate these markets and execute transactions.”
Brookfield’s net income fell to $716 million in the third quarter from $2.7 billion in the same period last year as the fair value of some holdings was marked down, the Toronto-based asset manager said in a statement.
Funds from operations, a more closely-watched measure, came in at $1.47 billion in the quarter, slightly better than the $1.45 billion estimated by analysts in a Bloomberg survey.
The private equity industry is contending with the toughest environment since the 2008 financial crisis as higher interest rates and persistent inflation paint a dark macroeconomic picture.
Brookfield plans to spin out a 25% stake in its asset management division to shareholders by the end of the year.
The move will give investors the option of owning a pure-play asset manager that’s expected to pay out 90% of its distributable earnings in cash dividends.
The new publicly-traded company will take the name Brookfield Asset Management, while the parent company will be renamed Brookfield Corp.
Intel Deal
Brookfield had made a number of significant deals in recent months, despite the market turmoil.
It announced an investment of as much as $15 billion in a new Intel Corp. chip manufacturing project in Arizona. The firm also formed a partnership to buy an interest in Deutsche Telekom AG’s tower business in Germany with a total value of about $17.5 billion.
Brookfield managed $762 billion of assets as of Sept.
30.
Buyout firms are seeking innovative ways of unloading assets. Last month, Brookfield’s private equity arm sold Westinghouse Electric Co. to uranium miner Cameco Corp. and another Brookfield affiliate, Brookfield Renewable Partners.
The deal avoided triggering a change of control, which would have forced Westinghouse to refinance debt.
(Adds quote from investor call and updates closing share price)
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