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

TD 2 (Upgrade)

[retiredcf]

Raise their target by a buck to US$71.00. GLTA

Brookfield Asset Management Inc.

(BAM-N, BAM.A-T) US$56.55 | C$70.84

Fundraising is Accelerating; Carried Interest Also Ramping Up

Event

BAM reported Q2/21 and provided a business update.

Impact: POSITIVE

• Solid Q2/21 Results: OFFO was $0.50/share, up 25% y/y. Fee-related earnings grew 49% y/y, including the first incentive distribution from BBU since Q3/18. FFO from invested capital was stable y/y, in part because BAM has executed secondary sales, which have reduced its ownership in certain listed affiliates/listed investments y/y. Total FFO was $1.01/share, up 38% y/y, reflecting a receptive capital markets backdrop for asset monetizations. Distributable earnings, a proxy for free-cash-flow, totaled $0.79/share in Q2/21 and $4.05/share for the TTM.

• Fundraising is Accelerating: Fee-bearing capital increased 17% y/y to $325bln. BAM raised over $8bln during Q2/21, and subsequently held a $7bln founders' close on its inaugural Global Transition Fund, and a $9bln first close on its latest flagship real estate fund. The company expects to launch its sixth private equity fund shortly, and remains on track to launch the next infrastructure fund in late-2021/early-2022. Once the American National deal closes, BAM should have ~$40bln of insurance assets under management, which represents faster-than- expected progress against a multi-year target to reach $100bln-$200bln.

   Carried Interest Ramping Up: BAM recognized $335mm of gross carried interest in Q2/21, and has already exceeded its full-year target of realizing $1bln. The company is now recognizing carry in at least one fund across each of its businesses, and expects to recognize it on a more regular basis going forward. The gross unrealized carried interest balance, a forward-looking indicator, increased to $5.3bln vs. $4.7bln in Q1/21 (BAM's share), primarily driven by higher valuations in credit, as well as the flagship infrastructure, real estate, and private equity funds.

 Near-Record Liquidity: BAM has $78bln of available liquidity, including $18bln of core liquidity and $60bln of uncalled fund commitments. Competition for deals has increased, but BAM continues to identify opportunities consistent with its risk- return parameters, deploying $10bln in Q2/21 and $45bln over the TTM.

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