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

TD

[retiredcf]

Remains on their Action Buy List with a US$79.00 target. GLTA

Brookfield Asset Management Inc.

(BAM-N, BAM.A-T) US$46.83 | C$60.88

Q1/22 DE a Slight Beat; Partial Asset Manager Spin-Out Confirmed Event

BAM reported Q1/22 and will host a conference call at 10:00 a.m. ET: https:// www.directeventreg.com/der/validateConferenceId.action

Impact: SLIGHTLY POSITIVE

• Q1/22 Results: DE of $0.73/share was a slight beat vs. the Street/TDSI at $0.69/ $0.68. Core DE was in line, and the beat largely relates to gains on the sale of principal investments. Core DE was up 28% y/y, reflecting strong growth in fee- related earnings and higher distributions from principal investments, including the increased ownership of BPY y/y.

• Spin-out of Asset Manager: As anticipated, BAM confirmed its intention to spin- out a 25% stake in the asset manager by year-end. The distribution is expected to have a value of ~$12.00 per BAM share and should be tax-free for Canadian/ U.S. shareholders. The manager will be a pure-play alternative asset manager with a public float of ~$20bln, and separating it from the asset-heavy BAM balance sheet should expand the potential shareholder base for the manager by making its performance even more visible and facilitating peer comparisons. The asset manager is expected to have a 90% dividend payout ratio while the surviving BAM entity, which will own 75% of the asset manager, as well as the balance sheet investments, will remain focused on long-term capital appreciation. The total dividend across the two entities is expected to approximate the current payout. We believe that this structure should attract a higher value for the asset manager, while preserving the flexibility provided by the BAM balance sheet.

• Fee-Bearing Capital: Fee-bearing capital stands at $379bln, up 19% y/y and 4% q/q, and the company expects to hold significant first closes on its latest flagship private equity and infrastructure funds soon.

• Carried Interest: BAM recognized $303mm of gross carried interest in Q1/22, and remains on track to realize up to $1bln of gross carried interest during 2022. The gross unrealized carried interest balance increased to $7.4bln vs. $6.8bln in Q4/21 (at BAM's share).

• Liquidity/Capital Deployment: BAM has $85bln of available liquidity, and highlighted that, although public-market volatility has created opportunities for some recent take-private transactions, private market valuations remain robust for the sale of inflation-protected, cash-generating assets.