Industry Overview
Our Action List Pick
Brookfield Asset Management Inc.
BAM-N, BAM.A-T; US$44.50; ACTION LIST BUY 12-Month Target: US$63.00
Brookfield Asset Management is a leading global alternative asset manager with US $312 billion of fee-bearing capital (including Oaktree at 100%) and a focus on real assets: property, renewable power, and infrastructure.
We see a prolonged period of low interest rates as a favourable backdrop for BAM, as it should only increase investor appetite for alternative investment products as fixed- income substitutes. Furthermore, we anticipate that BAM will deploy its record US $77 billion of liquidity to capitalize on market dislocation resulting from the pandemic to enhance its franchise, as it has done in previous cycles.
BAM's latest round of flagship fundraising is currently underway, and we expect related announcements to be positive catalysts for the stock over the next twelve months. The company is targeting to raise US$100 billion from this round of fundraising (including co-investment capital) versus US$50 billion from the last round, and has already made good progress, in our view, having raised US$13 billion to-date for the latest distressed debt fund. Fundraising for the fourth flagship real estate fund recently commenced, and fundraising for the latest flagship infrastructure and private equity funds should follow during 2021.
Notably, BAM's current round of flagship fundraising includes the company's inaugural Global Impact Fund, which is targeting US$7.5 billion, inclusive of a US$2 billion contribution from BAM. The fund will be focused, not on buying existing green assets, but on taking assets/companies that are currently brown/beige and putting them on the path to net-zero over the life of the fund. We believe that BAM has the potential to carve out an early-mover advantage in this emerging asset class, much as it did in infrastructure more than 10 years ago.