Brookfield Asset Management Voting Ord Shs Class A T.BN.PF.G

Primary Symbol: T.BAM Alternate Symbol(s): BAM | T.BN.PF.A | BKFOF | T.BN.PF.B | T.BN.PF.C | BROXF | T.BN.PF.D | T.BN.PF.E | T.BN.PF.F | BKFDF | BRCFF | T.BN.PF.H | T.BN.PF.I | T.BN.PF.J | T.BN.PF.K | BKFPF | T.BN.PF.L | T.BN.PR.B | BKFAF | T.BN.PR.K | BXDIF | BRPSF | T.BN.PR.M | T.BN.PR.N | T.BN.PR.R | BAMGF | BAMKF | T.BN.PR.T | T.BN.PR.X | BKAMF | T.BN.PR.Z

Financial Services Asset Management

Brookfield Asset Management Ltd. is a global alternative asset manager. The Company invests client capital for the long-term with a focus on real assets and essential service businesses that form the backbone of the global economy. It offers a range of alternative investment products to investors around the world including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. Its products have three categories, which include long-term private funds, perpetual strategies and liquid strategies. These are invested across five principal strategies: renewable power and transition, infrastructure, real estate, private equity, and credit.

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Brookfield Asset Management Voting Ord Shs Class A

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Post by retiredcfon Sep 13, 2022 9:33am

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Post# 34959063

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Brookfield Asset Management Inc.

(BAM-N, BAM.A-T) US$51.33 | C$66.66

Investor Day Outlines Substantial Runway for Growth

Event

Yesterday, BAM hosted an Investor Day.

Impact: POSITIVE

Macro Tailwinds: The macro environment favours BAM's heavy weighting to real assets, which offer significant inflation protection (~55% of FBC). The company is a global leader in real estate, is dominant in infrastructure/renewables, and is a first-mover in transition investing. Alternatives have become mainstream among institutions and the industry has just begun to tap the retail wealth channel (~ $80tln opportunity).
Asset Manager: BAM expects FBC to reach $1tln over the next five years (~20% CAGR) by: 1) deepening existing relationships (~65% of clients invest in only one strategy); 2) originating new relationships; 3) expanding distribution channels (15 new banking relationships in wealth); and 4) developing complementary investment strategies (non-traded REIT, etc.)
Insurance Solutions: BAM has deployed ~$4bln of equity to insurance to-date, which generates ~$400mm+ of DE and should earn returns of 15–20% over time, as the high levels of cash/liquid financial assets are redeployed to higher-yielding strategies. The company has $40bln of insurance AUM and sees the potential to reach $225bln over the next five years and $400bln over time.
Capital: The corporation will own 75% of the manager and 100% of insurance and will be responsible for allocating BAM's proprietary capital/free-cash-flow. DE of $3.7bln (pro forma) is expected to reach $9.3bln in 2027 (~20% CAGR). FCF will be used to sponsor continuity vehicles, participate in co-investments, complete scale transactions, incubate new businesses, etc. Excess capital will be returned to shareholders (H1/22 share repurchases of $450mm).
Five-year Outlook: BAM outlined potential upside to $175-$198/share across three pillars of growth (asset manager/insurance/balance-sheet capital), which represent a total annualized return of ~30%+ vs. the current share-price. The partial distribution of a pure-play asset manager should attract a higher valuation for the manager, while preserving the synergies of the "Brookfield ecosystem". Insurance solutions propel growth in funds/fees and the corporation's access to capital provides scale to the manager.
Valuation: Assigning no value to carried interest, using current share prices for BAM/the perpetual affiliates, and valuing real estate at an ~30% discount to IFRS, the asset management stub is trading at only 15.7x 2023E FRE.