TSX:BAM - Post Discussion
Post by
retiredcf on Nov 13, 2022 6:26am
RBC 2
This is a USD target and their upside scenario target is US$82.00. GLTA
November 11, 2022
Brookfield Asset Management Inc.
The biggest kick I ever got, was doing fundraising all around the clock
Our View: Q3/22 results demonstrated the strength and diversity of the Brookfield franchise. Financial metrics (OFFO and FRE) were ahead of our forecast with fundraising remaining very strong, which bodes well for FRE growth. We see the upcoming Asset Manager spinoff as likely surfacing value and with the shares trading at an 18% discount to NAV, we see BAM as attractively valued and a core holding.
Key points:
The Asset Manager spin-off was approved by shareholders at yesterday's vote. For a detailed analysis on the transaction, please click on this link to see our Primer on the Asset Manager Spin-off.
Q3/22 Operating FFO/share (OFFO) of US$0.73/share was ahead of our US$0.70/share forecast and was up +31% Y/Y. The positive variance was driven primarily by higher-than-forecast fee related earnings (FRE) and to a lesser extent invested capital OFFO.
Q3/22 consolidated Fee Bearing Capital (FBC) (incl. Oaktree at 100%) was US$407B, +4% Q/Q and +19% Y/Y. The +4% Q/Q growth in FBC was primarily due to Infrastructure strategies (+18% Q/Q), as the 5th flagship infrastructure fund (US$21B) had its first close in Q3/22. The +19% Y/ Y growth in FBC was driven by double-digit growth across all strategies with Infrastructure strategies (+35% Y/Y) growing the fastest followed by Renewable Power and Transition strategies (+26% Y/Y).
US$33B fundraise in Q3/22. Flagship funds had strong 1st closes (~US $21B for Infrastructure, ~US$8.4B for Private Equity) and a final close (~US $17B for Real Estate) with fundraising started for the next opportunistic credit fund (BAM expects to exceed the US$16B current fund size). US$14Bst was raised for non-flagship strategies (e.g., US$2.8B 1 close for BAM’s 3rd infrastructure debt/credit fund; US$1B for its Supercore Infrastructure Fund; and ~US$0.75-US$1B of inflows from its perpetual real estate strategies).
Other key takeaways: (1) BAM expects Insurance Solutions to generate ~US$550MM in annualized FFO over the coming quarters; (2) gross accumulated unrealized carry now stands at US$7.8B (vs. US$8.6B Q/Q), of which US$3.9B or 49% is expected to be realized within the next 3 years; (3) management noted that ~US$7B of its ~US$15B Global Transition Fund (~47%) has been invested or committed and that the pace of deployment is going well.
Increasing price target to $63 (was $62), and maintaining our Outperform rating. Introducing 2024 forecasts. The higher target reflects a higher-than- forecast Q2/22 NAV.
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