Brookfield Asset Management Voting Ord Shs Class A T.BAM

TD

[retiredcf]

Have a US$71.00 target. GLTA

Brookfield Asset Management Inc.

(BAM-N, BAM.A-T) US$52.35 | C$67.07

Targeting to Double Size/Value of Franchise Over Next Five Years Event

BAM hosted its annual Investor Day.

Impact: POSITIVE

 Well-Positioned for Continued Strong Growth: BAM's fee-bearing capital has tripled over the last five years, and the company is targeting a further doubling to $830bln+ by 2026, with continued strong growth in the five core businesses supplemented by the scale-up of four new strategies: insurance solutions, technology investing, transition funds, and secondaries. Among the new strategies, BAM has made the greatest progress in insurance and technology but is also well-advanced in transition and secondary mandates, with insurance solutions and transition funds representing the largest expansion potential. Other meaningful avenues for growth include cross-selling to existing clients/originating new clients, accessing new distribution channels (e.g. wealth), and developing adjacent investment strategies (e.g. core perpetual funds).

• Five-Year Outlook: BAM outlined potential upside to $150.00-$184.00/share in 2026, which represents a total annualized return of 25%+ vs. the current share- price. Distributable earnings (a FCF proxy) are projected to grow to $6.80/ share in 2026 vs. $2.40/share for the TTM ending June 30, 2021 (23% CAGR, excluding realized disposition gains), with core DE expected to be supplemented by $12bln of realized carried interest (gross) plus the growing insurance business. Notably, BAM has reached a key inflection point, whereby at least one fund in each flagship series is now generating realized carried interest, which has totaled $1.5bln (gross) over the TTM vs. $0.5bln in the comparable prior-year period.

• BPY a Source of Capital: BAM privatized BPY in late-July, and has ~$30bln of invested capital in real estate, comprised of a core portfolio ($16bln), LP investments ($7bln), and transitional/development assets ($7bln). The company sees the opportunity to surface $25bln of capital from the real estate portfolio by monetizing the transitional/development assets and executing up-financings and partial asset sales across the core portfolio, with the proceeds to be redeployed to fund growth strategies and/or share repurchases.

  TD Investment Conclusion

  We believe that an investment in BAM provides exposure to a high-quality portfolio of real assets, with the added leverage of a world-class asset management franchise.