Bullboard - Stock Discussion Forum 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

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... see more

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TSX:BAM - Post Discussion

Brookfield Asset Management Voting Ord Shs Class A > More TD

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Post by retiredcf on Sep 13, 2022 9:33am

More TD

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.