Q1 2025 Brookfield Asset Management Ltd Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to the Brookfield Asset Management First Quarter 2025 Earnings Call.
At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session you'll need to press star 1-1 on your telephone You will then hear an automated message advising your hand is raised To withdraw your questions, please press star 1-1 again
Please be advised that today's conference is being recorded.
Speaker Change: I'd now like to hand the conference over to Jason Fooks, Managing Director, Investor Relations. Please go ahead.
Speaker Change: Thank you for joining us today for Brookfield Asset Management's earnings call. On the call today we have Bruce Flatt, our Chief Executive Officer, Connor Teskey, our President, and Hadley Pure Marshall, our Chief Financial Officer.
Bruce Flatt: Bruce will start the call today with an overview of the quarter and then cover our scale and strategy position as well to navigate the current market environment and to continue to deliver long-term growth.
Connor Teskey: Connor will follow up and cover how our platform and ecosystem give us a strategic advantage in capital raising and deployment And finally, Hadley will discuss our financial results, balance sheet strength, and recent strategic initiatives
Bruce Flatt: After our formal comments, we'll turn the call over to the operator and take Daniel's questions.
Speaker Change: In order to accommodate all those who want to ask questions, we ask that you refrain from asking more than two questions at one time.
Speaker Change: If you have additional questions please rejoin the queue and we'll be having to take additional questions at the end of time permits.
Speaker Change: Before we begin, I'd like to remind you that in today's comments including in responding to questions and in discussing new initiatives and our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable US and Canadian securities law.
Speaker Change: These statements reflect predictions of future events and trends and do not relate to historic events There's subject to known and unknown risks and the future events and results may differ materially from such statements [inaudible]
Speaker Change: For further information on these risks and their potential impact on our company, please see our filings with securities regulators in the US and Canada and the information available on our website.
And with that, I'll turn the call over to Bruce.
Bruce Flatt: Thank you Jason and to everyone joining us on the call.
Bruce Flatt: We had a strong start to the year marking our highest quarterly earnings growth since we went public.
Bruce Flatt: B-related earnings reached a record $698 million for the quarter, up 26% year-over-year, or 43 cents per share.
Bruce Flatt: Distributable earnings grew by 20% to 654 million or 40 cents per share.
Bebearing Capital now stands at approximately 550 billion, up 20 percent.
Compared to last year. [inaudible]
Bruce Flatt: This performance reflects the continued strength and global reach of our business.
Bruce Flatt: We raised 25 billion of capitalist quarter bringing total inflows over the past year to more than 140 billion.
Bruce Flatt: Importantly, and exemplifying the resilience of our business, we close six billion of commitments during the first quarter for our flagship real estate strategy.
bringing total capital to 16 billion.
Bruce Flatt: And when we round out the strategy with the last retail and regional sleeves, this will be our largest real estate strategy ever.
Bruce Flatt: We also had a final close of our opportunistic credit strategy on par with our largest ever for this strategy at 16 billion.
Bruce Flatt: We are very active on the deployment and monetization front as well.
Bruce Flatt: In total, we deployed $16 billion into opportunities globally and we sold $22 billion of assets. This generated $9 billion of equity proceeds during the quarter.
Bruce Flatt: Together, these results demonstrate the strength and the resilience of our platform even in a volatile environment.
Thanks for watching!
Bruce Flatt: Recently, the broader market faced heightened volatility and equity markets reacted sharply.
Bruce Flatt: Despite this, we remain confident in our long-term strategy as the secular trends underpinning our business continue to accelerate.
Whether it's the growth and demand for AI infrastructure.
Bruce Flatt: The rising global need for energy, or the increasing role private credit plays in capital markets, these trends continue to drive capital market flows globally.
Bruce Flatt: We have leadership positions around these secular drivers having built deep expertise operational capabilities in global scale. We believe we have never been better positioned to capitalize.
The current environment favors scale, expertise and capital.
Bruce Flatt: Periods of uncertainty often lead to attractive opportunities as they can create compelling valuation and entry points for investors with scale and experience.
This kind of environment is not too new to us.
We've navigated many similar challenges before.
Bruce Flatt: At the onset of COVID, we maintained our discipline, stayed focused on our long-term strategy and invested when many others hesitated.
Bruce Flatt: To make a point, since then, we have raised over $400 billion of capital.
Bruce Flatt: Nearly doubled our fee-related earnings and are now better positioned than ever before.
Our franchise is more global, more diversified, and more capable
Bruce Flatt: At the center of all of this is our investment in operating teams representing our capabilities in more than 30 countries. This gives us unmatched flexibility to direct capital to the most attractive opportunities globally.
Bruce Flatt: We also have a high-quality, durable earning space to support the business.
Bruce Flatt: Our cash flows are 100% comprised of fee-related earnings, of which approximately 95% are derived from capital that is either long-term or perpetual in nature.
This provides a stable and predictable foundation for disturb the learnings
Bruce Flatt: The ongoing growth of our themebearing capital base supported by strong fundraising, deployment and monetization gives us conviction that these earnings will continue to compound over time.
Irrespective of the Environment.
Bruce Flatt: Our investments are focused on essential assets, power, infrastructure, real estate, and critical business services.
These businesses operate locally.
Serve domestic demand and are often highly contracted or regulated.
Bruce Flatt: That makes him less exposed to global shocks and tariffs and more attractive in periods of uncertainty where investors seek consistency.
Bruce Flatt: We also benefit from our jurisdiction across asset classes, allowing us to pivot to different strategies and across region.
Bruce Flatt: This ensures we can capitalize on disc location whenever or wherever it may emerge.
Bruce Flatt: Taken together, our client relationships, scale, brand, access to capital and long-term track record enable us to maintain steady and growth through volatility
Looking ahead, our priorities are very clear.
Bruce Flatt: We will continue to stay disciplined. We'll lean into scale and with our capabilities and we will continue to find opportunities in market dislocation.
Bruce Flatt: Our experience over many cycles has shown us that by focusing on these priorities in times of uncertainty, not only helps us navigate through them, but allows us to emerge stronger.
Bruce Flatt: We expect to grow through this market cycle as we have in previous ones, just the same.
Speaker Change: I will now turn it over to Connor and Hadley, who will go deeper into our portfolio, our liquidity position, Kappa location, and the details of our recent deployment and monetization activities.
Thank you all for joining us today.
Connor Teskey: Thank you, Bruce, and good morning to everyone on the call.
Speaker Change: As Bruce outlined, the past few months have seen heightened uncertainty, and while public markets have experienced swings, private markets have remained relatively stable.
Speaker Change: During these periods, investors turned to proven global platforms with strong track records and trusted partnerships.
That has always been a core strength of Brookfield.
Speaker Change: While parts of the industry may be more directly affected by today's volatility.
Speaker Change: Our diversification across strategies, sectors, and geographies continues to give us a competitive edge and the ability to extend our lead.
Speaker Change: These competitive advantages were illustrated by our successful fundraise for our real estate strategy this quarter.
Speaker Change: Despite a more challenging fundraising environment for real estate in recent years.
Speaker Change: We secured commitments from many of the world's largest and most sophisticated investors.
Speaker Change: Demonstrating their strong conviction in our strategy and platform and providing us with substantial fresh capital to invest at an especially attractive point in the cycle.
Speaker Change: These results reinforce why we believe our platform across segments is uniquely positioned to thrive.
as well as the growing role of private credit.
Speaker Change: A key source of that advantage lies in the types of assets we own and operate.
They are not only diversified, they are essential. [inaudible]
Speaker Change: Our portfolio was anchored in essential real assets in critical business services.
Sectors that have historically demonstrated strong resilience through economic cycles.
Speaker Change: While no business is entirely immune to broader market forces, the nature of our assets provides resiliency to these short-term headwinds.
Speaker Change: Many benefit from inflation-linked revenues or regulated pricing structures, which allow us to effectively manage rising input costs and preserve cash flows.
We saw this play out during the recent inflationary cycle. [inaudible]
Speaker Change: Cash flows across much of our portfolio, not only kept pace with, but in many cases outperformed
Speaker Change: We've also been preparing for macro shifts like de-globalization for several years.
Speaker Change: This is led to large and attractive investment opportunities to help corporates increase manufacturing of critical goods and services closer to home.
Speaker Change: as well as invest in the resiliency of their supply chains.
Speaker Change: Within our existing businesses, in anticipation of a more protectionist policy environment, we proactively restructured supply chains and procurement strategies to further bolster this resilience.
Speaker Change: For instance, in our renewables business, where tariffs have been in place for years, we have
These actions offer significant cost certainty.
Speaker Change: and put us in a comparatively stronger position versus many others who did not.
Speaker Change: Gearies of uncertainty have also historically created some of the most compelling opportunities to deploy capital.
Speaker Change: especially for firms like us with the scale, structure, and conviction to act decisively, providing execution certainty.
Colonial Pipeline fits this type of deployment. [inaudible]
Speaker Change: We were able to use our scale capital to limit competition, provide execution certainty that was especially critical in this environment.
Speaker Change: and value this world-class midstream asset backed by high-quality cash flows with discipline.
Speaker Change: and we are well positioned to continue deploying capital into this environment.
Speaker Change: We have nearly a 120 billion of uncalled long-term oriented cap already to deploy.
Speaker Change: Across many markets today, the headlines do not reflect the underlying fundamentals
and that disconnect is creating compelling opportunities.
Speaker Change: Our ecosystem gives us real-time access to data, insights, and operating feedback from across our global portfolio, which allows us to see through the noise, identify value, and move decisively.
Speaker Change: This is especially important in a market where volatility is pressuring public valuations creating entry points that are only accessible to those with true on the ground visibility. We fully intend to capitalize on that positioning.
Thanks for watching!
And what capital is critical?
Speaker Change: It's our platform's breadth and reputation that unlock differentiated access to opportunities that others may not see.
Speaker Change: We are increasingly seeing the most sophisticated governments, corporates, and institutions turning to private capital to pursue strategic initiatives.
Speaker Change: They are choosing Brookfield because we can deliver not only capital at scale, but operating experience, speed, certainty, and a proven ability to execute complex transactions.
Speaker Change: This quarter, we announced a 20 billion euro AI infrastructure commitment alongside the French government and a strategic partnership with Barclays to help its scale its payments platform.
Speaker Change: Similar to previous partnerships with Intel, Microsoft, Deutsche Telekom and others, these are further examples of our platforms approach to partnerships.
Speaker Change: which creates differentiated proprietary transactions that we are uniquely positioned to execute.
Another area where we see tremendous opportunity as private credit.
This is an area where we've been rapidly expanding [inaudible]
Speaker Change: With over 320 billion credit AUM today, we now operate one of the largest private credit businesses globally, leveraging our expertise in real asset, corporate, and opportunistic credit.
And we're just getting started.
Speaker Change: Our goal is to more than double the size of our credit business over the next five years.
Speaker Change: Periods of illiquidity make our capital even more valuable as private credit fills funding gaps left by traditional lenders in public markets.
Speaker Change: The pullback from these sources is part of a longer structural trend.
Speaker Change: It is creating a significant opportunity for our private credit strategies to play an even more meaningful role in providing liquidity when there is less available, allowing us to generate higher returns for lower risk.
Speaker Change: This opportunity is particularly available to those with leading market knowledge and underwriting capabilities in these market segments.
A position where we are unmatched.
Speaker Change: Over recent quarters, we've made meaningful strategic advancements to complement our existing direct investment capabilities and brought in our platform to meet this rising demand.
over the past couple months.
Speaker Change: We acquired a majority stake in Angel Oak, a leading specialized mortgage origination platform an asset manager with more than $18 billion of assets under management.
Speaker Change: This platform adds deep origination capabilities and significantly expands our presence in the US mortgage market.
Speaker Change: We also increased our ownership stake in Oak Tree by one and a half percent, raising our total ownership stake to approximately 74 percent, underscoring our long-term commitment to our partnership.
Speaker Change: With fundraising now complete for the latest vintage of our highly successful opportunistic strategy,
Speaker Change: Oak Tree is similarly well positioned to capitalize with significant capital to deploy in this environment.
Speaker Change: Moments like this are where oak trees' longstanding discipline and value-oriented approach is particularly powerful.
Speaker Change: Throughout every cycle in our history, we have successfully turned volatility into opportunity. We believe this time will be no different.
Speaker Change: We have the capital, relationships, and track record to move with conviction when others can't and will do so in a disciplined manner and at scale.
Speaker Change: This environment plays to our strengths, and as the environment continues to evolve
Speaker Change: Our global reach, diversified strategies, and long-term mindset positions us to deliver sustainable, attractive returns for our clients.
Hadley: With that, we will turn the call over to Hadley to cover our financial results
Hadley: Thank you, Connor. Today, I'll cover our first quarter performance, fundraising, deployment and monetization activity.
Hadley: I'll then highlight some of the strategic initiatives we have recently undertaken, including bolstering or balance sheet, within our grow bond offering, backed by recently obtained high investment grade rating, as well as our recent opportunistic repurchase of shares.
Hadley: First, on our financial performance, we had another record quarter of earnings.
Hadley: Fee-related earnings or FRE were $698 million or $43 cents per share in the quarter, up 26% from the prior year period, bringing FRE over the last 12 months to $2.6 billion.
Hadley: Distributable earnings or DE were $654 million or $0.40 per share. In the quarter of 20% from the prior year period, Freeman, last 12 months to $2.5 billion.
Hadley: Growth in our earnings is largely attributed to our fee-bearing capital base, which currently stands at $549 billion, a 20% increase from the prior year period.
Hadley: This increase is due to two primary sources, fundraising and capital deployment.
Hadley: Over the past 12 months, we raised $142 billion of which 80% began generating fees in the period.
Hadley: In addition, $18 billion of our fee-bearing capital inflows came from the capital that was deployed over the last 12 months.
Hadley: These inflows will partially offset by $21 billion of capital return to clients through distribution from our private funds and permanent capital vehicles.
Hadley: In a market when many sponsors are struggling to generate distribution to paid and capital or DPI, this level of distribution reinforces the strengths of our business.
Hadley: Returning capital is fundamental to the investment cycle, and our ability to do so consistently supports our track record of delivering value through both dividends and monetization.
Hadley: Capital Formation remains strong in the first quarter. We raised $25 billion, diversified across our flagship strategies, complimentary funds, and partner managers.
Hadley: Some of the highlights include in real estate. We raised $7.1 billion, including $5.9 billion for the fifth percentage of our flagship real estate strategy.
Hadley: As mentioned, this is set to be our largest flagship real estate strategy ever
Hadley: In renewable power and transition business, we raised $1.5 billion, including $700 million for the second vintage of our global transition strategy, bringing total capital raise for that strategy to over $14 billion.
Hadley: We expect to hold a final close for this tragedy in the coming month.
Hadley: And in credit, we raised $14 billion, including $6.3 billion across our partner managers and $6.7 billion from our insurance account.
Hadley: We also completed the final close for the 12th ventures of our flagship opportunistic credit fund, bringing total capital raise for that strategy to $16 billion.
Hadley: Overall, we have never been more diversified in our fundraising, with more than 40 strategies raising capital during the quarter. This is a direct result of significant investments we've made in our people and products over the past couple of years, building out fundraising teams and supporting platforms to invest capital.
Hadley: The best is yet to come from these efforts, and we expect to see continued growth in expansion our business, both throughout the remainder of 2025 and the years to come.
Hadley: As we complete final closing for real estate and transition flagships in the coming months, we expect complimentary strategies to drive an increasing share of fundraising in the second half of the year.
Hadley: We also continue to see strong deployment activity, investing $16 billion during the quarter.
Connor Teskey: As Connor mentioned, we have significant available capital and intend to be active in the market as uncertainty creates opportunity.
Connor Teskey: A few notable large-scale transactions that were either signed or closed in the first quarter include in our Renewable Power and Transition Business, we invested over $3 billion to complete the privatization of NEON, a leading global renewable energy developer.
Connor Teskey: We also committed $1.2 billion to acquire the U.S. Renewable Business of National Grid.
Connor Teskey: This transaction is expected to close in the second quarter of 2025.
Connor Teskey: In our private equity business, we deployed approximately $1 billion to acquire Chemilex, a global leader in the design and manufacturing of a Letcher-Key Trace system.
Connor Teskey: We also committed $800 million toward the acquisition of Antilia Scientific, a leading manufacturer and distributor, especially consumable products and testing equipment using quality control and research application.
The deal will close in the second quarter of 2025.
Connor Teskey: And after quarter end, our infrastructure business signed agreement to acquire the midstream asset portfolio of colonial enterprises for $3.4 billion of equity capital, representing $9 billion of enterprise value.
Connor Teskey: The portfolio includes the Colonial Pipeline, the largest refined products pipeline in the United States.
Connor Teskey: and is expected to close in the second half of 2025.
And let me turn to our balance sheet and liquidity.
Connor Teskey: When we spun out Brookfield Asset Management two and a half years ago, our model was and remained simple and focused. We are a premier alternative asset manager with a strong asset-like balance sheet.
We selectively use our balance sheet for two purposes.
One to pursue strategic acquisition, six-fander capability.
Connor Teskey: and Q. To provide seed capital for the creation of new complimentary investment products that will grow and become meaningful revenue generators over time.
Connor Teskey: Since that time, we've strengthened our platform through new partnerships with three leading managers, Cassellate, Pine Grove, and most recently Angel Oak, and by increasing our ownership in Oak Tree.
All together in these we invested $1.4 billion. $1.4 billion.
Connor Teskey: We also have existing options in place that provide a clear path to increase our ownership and all of our partner managers over time.
Connor Teskey: These options should add more than $250 million to our fee-related earnings over the next five years.
Connor Teskey: This is a meaningful advantage for our business and it allows us to increase our ownership and high quality businesses we know well. Deepening alignment, building on an already strong foundation and positioning us to drive further growth over time.
Connor Teskey: At the same time, we continue to demonstrate strong alignment with our clients by investing meaningful capital alongside them.
Connor Teskey: Since our spin-out, the Brookfield Group, that is all the Brookfield affiliates, including Brookfield Asset Management, have collectively committed $16 billion to our fund.
Connor Teskey: with our Brookfield Asset Management Chair of $1.3 billion focused primarily on seeding smaller new complimentary strategies.
Connor Teskey: Overall, our access to liquidity remains strong. We're top to your client for our banks and continue to maintain a diversified mix of funding sources.
Connor Teskey: To support our growth initiative, we completed our inaugural bond offering in April , issuing $750 million of 10-year senior unsecured notes with a coupon of 5.795%.
Connor Teskey: This offering received exceptionally strong demands in the market, more than seven times over subscribed.
Connor Teskey: and we're able to tighten pricing and upsize materially, reflecting investor confidence in our differentiated business, stable earnings profile, and long-term capital base.
Connor Teskey: In connection with the offering, we received high investment grade ratings of A from Fitch and A minus from S and P. I'm just going to the strength of our asset light model and the durability of a long-term earnings.
Connor Teskey: At the end of the quarter, we had $1.4 billion of available liquidity, comprising cash, financial assets, and capacity on a revolving credit facility.
Connor Teskey: This is not count our recent bond issuance nor the capacity at these ratings of over $4 billion of additional debt capacity.
Connor Teskey: Our goal is to generate increasing cashless on a per share basis and to distribute that cash to you by dividend or share
Connor Teskey: I'm pleased to confirm that the board approved our quarterly dividend of 43.75 cents per share, payable on June 30, 2025 to share holders of records as of the close of business on May 30, 2025.
Connor Teskey: In addition, we repurchased 2.1 million shares of Brookfield Asset Management during the quarter when our stock traded lower in line with the broader market. Given our strong outlook, these were easy purchases to make.
Connor Teskey: In short, our balance sheet is strong and our access to capital is robust. This supports our continued momentum and leaves us well positioned in the current market.
Connor Teskey: This wraps up our remarks for this morning. We'd like to thank you for joining the call and we'll now open it up for questions. Operator?
Speaker Change: As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.
Please stand by when we compile the Q&A roster.
Thanks for watching!
Speaker Change: Our first question comes from Craig Siegenthaler with Bank of America.
Thank you. Thank you.
Thank you.
Speaker Change: Good morning everyone. We wanted to start with fundraising and specifically Real Estate Fund 5. So, we all know Real Estate isn't the easiest vertical to fundraise today, but you already raised 13 billion. So,
Speaker Change: That's a pretty impressive number just given the backdrop and I'm curious which geographies, channels were helpful for this raise to date and to the opportunistic element really fell with clients given very limited new construction and the migration of capital away from this vertical.
Good morning, Craig.
Speaker Change: I'll start by just correcting you in a positive way. We've already raised $16 billion for this strategy, so it's well on track to be our largest real estate strategy raised ever. And it's really capitalizing on I would say three things that you mentioned there.
One, the fundamentals are incredibly strong right now.
Speaker Change: The world needs more great real estate, but there is a very significant lack of new supply in major markets and high quality assets around the world that is creating a very robust supply demand dynamic in those who can bring capital to the market.
Speaker Change: The second thing is, there is no doubt some legacy capital structures [inaudible]
Speaker Change: that are not well suited for the current interest rate environment and that's going to create very attractive opportunities to buy high quality assets within perfect capital structures.
Speaker Change: at significant discounts to replacement costs. And that's actually what this strategy already has been doing early in its vintage.
and then the last point is very much. [inaudible]
Speaker Change: that well different asset classes and different geographies around the world in the real estate cycle will draw at different points in time.
Speaker Change: The strength of this fundraise was very indicative that investors realized this fund will deploy capital from 12 months ago to two or three years into the future. And no doubt...
Speaker Change: We are going to catch the bottom during that time frame and that made this a vintage that many of our most sophisticated and large scale partners did not want to miss.
Speaker Change: Maybe just to close out in terms of where we saw a significant demand, this quarter very broad at base, but I would highlight strength in the US market.
Thanks for watching!
Speaker Change: Interesting, US market counter, I wasn't expecting that one, but let me go for my follow-up into BII, your private wealth infrastructure fund.
Speaker Change: It launched like 17 months ago and you haven't had a down month, so on the distribution front what channels, geographies is it in today and do you see any size will platform ads coming in 2025?
Great, so we, BII continues to show.
Speaker Change: I would say just in terms of our growth through retail and high net worth, even since investor day when we profiled this business, we're even more optimistic today about the growth trajectory going forward.
Speaker Change: In terms of how we've approached retail and high net worth [inaudible]
Very similar to what we've done in our institutional business. [inaudible]
Speaker Change: We very much focused on being globally diversified. We feel that's particularly important for these types of products that do offer semi-liquidity to the investors that we feel having a diverse investor base.
Speaker Change: is the right way to build the strategy over the long term. And then just in terms of the performance, we expect more of that to come. We're leveraging our best-in-class infrastructure platform and building a portfolio of exceptionally high-quality assets that work well in a perpetual vehicle like BIOS.
Thanks, Connor.
Our next question comes from Cherilyn Radbourne with TD Cowan
Thank you very much, and good morning. Good morning.
Speaker Change: First and foremost, the headlines and some of the partnerships you see being announced and in particular the interactions between more traditional security managers and alternative managers, we think underscores
Speaker Change: An incredibly large and important trend, which is that alternatives are increasingly becoming part of a standard investment portfolio for all types of investors.
Speaker Change: A decade ago, it was only institutional investors who invested in alternatives, then insurance companies, now we're seeing it across retail, high net worth and the more common investor, it's no longer just stocks and bonds, it's now stocks, bonds and alternatives.
Speaker Change: And in terms of those types of partnerships, we of course are monitoring that space carefully and having a number of conversations of our own and we will look to build our business appropriately. We view this as a long game and it is something we would consider in the future.
Speaker Change: Thank you. And secondly, I think the plan had been to launch your second or your next flagship PE fund in 2025. Is that still your expectation? And do you think BAM has enough of a differentiated strategy in PE to attract new and existing clients?
Thanks for tuning in. Bye.
Speaker Change: We are extremely confident about our PE strategy particularly in the current market.
and as a reminder, Andrew Dirk,
Speaker Change: We have a differentiated approach to private equity versus many in the space.
in that...
Speaker Change: Our approach to private equity is focused on driving values, you driving value using operational enhancement.
Speaker Change: And we feel that is perfectly suited for the current market. And that's not just a sentiment, we're seeing it in our business. A news ranger who runs our private equity business has been on record in saying it's been the most active start.
Speaker Change: Our private equity business has ever had whether it's the transactions with Antilia or Chemalax or spring education.
Speaker Change: All of that is showing that our approach to private equity is well suited [inaudible]
Speaker Change: to the current market. And therefore, we do continue to expect to launch the next vintage of our flagship private equity fund at some point this year. In terms of the timing of the first close, hey, it may tip this side of the calendar year, it may tip the next side of the calendar year, but the momentum in that strategy and the track record is very strong.
Thank you.
Our next question comes from Alexander Blostein with Goldman Sachs [inaudible]
Alexander Blostein: Hi, good morning, everybody. Maybe just doing out a little bit and a question on broader fundraising across the platform. You guys had a very strong start to the year, $25 billion in the first quarter.
I think on the last call we talked about organic.
Alexander Blostein: Capital Raising in 2025, being a bit better than it was in 24, excluding obviously the insurance deal, which I think puts you something in the high 80s to 90 billion dollar range. So, given the uncertain environment, but obviously momentum in the business is pretty good. Maybe help us kind of reunderwrite that. How are you thinking about fund raising through the rest of the year?
Alexander Blostein: and how much of that call it, high 80s billion, do you think ultimately will be fee-paying? Thanks.
Alexander Blostein: There is nothing we see in the current market that would cause us to change the forecast that we...
Alexander Blostein: at the year. Obviously, things like the strength we've seen in real estate, finishing off the flagships in transition, closing with a record number for Oak Trees Ops Fund, we remain confident in the number that we outlyed at the beginning of the year. And maybe just to overlay that versus the current environment.
Yes, there is more uncertainty than there was.
Alexander Blostein: six or eight weeks ago. But this is also the environment where being partnered with a large-scale manager like Brookfield allows investors the opportunity to capitalize on some of the investment opportunities that may surface in this environment. And we do expect the current uncertainty in the environment to only exacerbate the flows of capital to the largest most of the established managers.
Alexander Blostein: with the largest execution capabilities in the greatest track record. So, nothing we've seen to start the year would cause us to change our fundraising forecast.
Speaker Change: Perfect, that's great to hear. Hadley won for you on just brought a balance sheet management. Obviously so you guys do the debt offering a couple of weeks ago. Maybe help us just sort of frame how you think about the property model average at the firm that you've been a, you know, standalone public company for a little while.
Speaker Change: and similarly on the by-back, very encouragement to see you guys step up here given the volatility in the market. Should we be thinking about share repurchases as more of an ongoing part of kind of EPS growth algorithm for the firm going forward?
Thank you.
Thank you.
Speaker Change: We were very excited to enter the market as everyone appreciates this was our first bond deal and we did it as an SEC registered bond
Speaker Change: We found a window where we got a very attractive demand and pricing attached to that bond.
Speaker Change: Under our existing ratings, Fitch, which is A and S&P, which is A minus, we have a lot of capacity.
Speaker Change: Two times, DEE, so that puts us in position to really allow that to grow over time. And that capacity also grows over time because our business is growing.
Speaker Change: Those Product Offerings, and then, of course, M&A, whether it's within our current partner managers or additional ones that we may partner with to complement our existing capabilities.
Speaker Change: So when we look forward, you know, we do anticipate being a repeat issuer and making sure that we have liquidity to support the growth of the business. But we've already built up, you know, we've got 1.4 billion plus the bond offering proceeds and the upsizing at 7,750 million. So that puts us in a good position to also think strategically about share repurchases. When we see times where we want to support our stock and we see good value attached to those purchases, which is what we did have in mind. And so that's what we're going to do.
Speaker Change: Earlier in the year, when we bought back about $50 million. So it just again continues to strengthen our liquidity position because our balance sheet in liquidity is a competitive advantage of ours and it will really support the growth that we see going forward. Thank you very much.
Great. Thank you very much.
Speaker Change: Our next question comes from Robert Kwan, with RBC Capital Markets
Great. Thank you. Good morning.
just in the uncertain and volatile.
Environment like we have, historically. [inaudible]
Speaker Change: Brookfield has taken the contrarian approach and confidently put money to work, giving your letter of comments today, you're saying the environment's playing to your strengths.
Speaker Change: and so just what segments and geographies are you seeing market dislocations or are you positioning for significant opportunities to arise?
Speaker Change: We expect to be very active. And in terms of where we're seeing the opportunities across the portfolio, I would say right now it's very broad-based, but I would highlight maybe two or three themes that we're seeing.
Our verticals and across-athletes classes [inaudible]
One is...
Speaker Change: The uncertainty in the public markets is very exacerbated versus the demand we are seeing in private markets. And when you make a comment like that, everyone's head immediately goes to take private and those types of opportunities may...
Speaker Change: Originate over time, but it also really lends itself to carve-outs.
Speaker Change: and we're seeing more and more opportunities to do car votes and partnerships going forward.
Speaker Change: The second thing that we would say that we are seeing across all of our verticals
is the opportunity to do structured investments.
Speaker Change: Particularly when counter parties may not have access to the public capital markets, the way they have in the past, that's working really well for our structured investment strategies, whether it be across infrastructure, whether it be across private equity.
Speaker Change: And then the last one that just goes without saying is this is the environment where Oak Tree goes to work and this is perfectly suited to their approach and that's been proven over cycles and we're excited to see what our partners can do there as well.
Speaker Change: That's great. Thank you. And then if I just finish here on fundraising, you know, with the largest real estate flagship closed and global transition tracking really nicely here.
Speaker Change: Can you just speak to, you know, what these types of results say about the fundraising environment?
Speaker Change: of the allocation to all your market share and the allocation that you're seeing to the various sub-sectors, you're institutional and will buy the LPs.
Speaker Change: Track Records, the largest capabilities in can offer the broadest suite of products. And while there are short-term headlines that may create some, you know...
Speaker Change: Periodic Uncertainty, those trends are very robust and very enduring and I think that's what you're seeing in our most recent flagship fund graces and we expect it to continue going forward.
That's great. Thank you very much.
Thank you for watching!
Our next question comes from Ben Rubin with UBS.
Great, thank you for taking my questions.
Speaker Change: From my first one, I have a two-parter on private credit. We're starting to hear some concerns around potential overcrowding or saturation within private credit as an asset class, and direct lending more specifically. Is that a theme you're seeing as well across your business or is your focus on asset back lending and financing real assets? Let's get started.
Speaker Change: Less impacted from some of this broader competition we're hearing about. And then secondarily, could you just expand on what Andrew Oak adds to your platform and then how kind of the mortgage or origination component fits within your larger push into managed insurance. Thank you.
Speaker Change: Yeah, actually, I can take that one and tie it in nicely with Angelic. So, you know, when you think about our 300 billion of assets under management within our credit business.
Speaker Change: It is heavily focused on opportunistic and real assets, including real estate infrastructure and ABF.
Speaker Change: And so that puts us in a position to really be able to capitalize on the value add that we can bring to the market.
Connor Teskey: especially in this environment of Connor was mentioning, the dislocation makes our capital, and that specific type of capital even more valuable. And so we're seeing a strong pipeline of opportunities, the deployment has been quite strong, and we also very focused on continuing to build out our strategies attached to credit, which takes us to Angeloke. Angeloke is...
Connor Teskey: is actually fits perfectly into the type of credit that we focus on and is actually well positioned to benefit especially our clients associated with insurance.
Connor Teskey: So the non-qualified side of the mortgage space is quite attractive and we are excited to have them once we close as part of the overall partner manager group as we continue to expand our capabilities.
Thanks for watching!
Speaker Change: Great, thanks. Another question here for you, Hadley. In one cue, your FRE margins expanded 300 basis points to 57%, although the catch-up fees from your real estate flagship certainly helped.
Connor Teskey: I know a lot of the investments spend behind your insurance platform is now behind you, but how should we think about the potential expense growth or trajectory or spending for the remainder of this year? Thank you.
Connor Teskey: You have, and you do see the operating leverage with that 300 basis point improvement year-rear, so that operating leverage of the growth that we've been focused on continues to be a benefit to our business.
Connor Teskey: and that will continue to play out as well. But we are still doing some building, especially as we further expand our credit capabilities.
Connor Teskey: and our fundraising channels. And so that's important and an area that we think is quite valuable investing in. And then we'll continue to benefit in that operating leverage to hit our long-term stride of around 60%.
Thanks for watching!
Great, thank you for taking my questions.
Our next question comes from Michael Cypress with Morgan Stanley .
Michael Cypress: Good morning, thanks for taking the question. Given the significant growth that we've seen across your credit platform with large insurance customers, just curious how you're thinking about
Michael Cypress: The opportunity set for building out a capital markets business alongside as we've seen some others across the industry monetize origination flow
Michael Cypress: Credit and broader connectivity with insurance. I just curious how you're thinking about this potential sea-generating opportunity for Brookfield and what it would take to build this out.
Michael Cypress: A modest driver of incremental fee revenue going forward. The one point I would highlight is none of that was included in our five-year plan that we presented at investor day. So it is something that we are now focused on. We do think it can increase into something meaningful into the low hundreds of millions over the next four or five years, but it's not something that we previously included in our forecast. [inaudible]
Thanks for watching!
Speaker Change: Great. Thank you. And then just a follow-up question on capital allocation. I think the dividend payout ratio is a little over 100% in the quarter. So just curious how you're thinking about the dividend on a multi-year basis is the intention to grow that in line with earnings growth, or you're thinking about targeting a certain payout over time. And then could you maybe just speak to the buybacks in the quarter as well, and how we should think about that going forward too. Thank you.
Thank you
Speaker Change: So, in terms of the dividend, we expect to pay out north of 90% of our distributed earnings.
and yes,
Speaker Change: We are a little bit above that in Q1, but I think the read through there is it should give you an indication of
Speaker Change: The visibility and confidence we have in the earnings growth for the rest of the year.
Speaker Change: We've been building our business. We've had some nice step changes with some of the flagships coming on. You saw that in Q3, you saw that in Q4. You see it again in Q1. We expect that momentum to continue into Q2 and obviously compound through the end of the year. And then in terms of the buybacks, we will be opportunistic. As Hadley mentioned, we have an extremely robust balance sheet. [inaudible]
Speaker Change: and therefore when we see value in our shares, we're not going to hesitate. Thank you very much.
Great, thank you.
Please see the complete disclaimer at https://sites.google.com
Our next question comes from Mario, Saric with Scotiabank Thank you.
Good morning and thanks for taking the question.
Speaker Change: Now, the first ones have been more of a thematic one, Fooks from the US, like the tariff law, it's really that we've seen has raised some questions about the leading global role, but is played by the US. It doesn't seem to have been impacted or have impacted your LP commitment to the buzzer of bias, you know what it is, but high level, can you talk about any normal trends?
Speaker Change: and how LPs are thinking about future U.S. commitments in a post-liberation day world and secondarily do recent developments that all change your desired global allocation next going forward.
So in terms of fundraising and allocations from investors, we...
Speaker Change: I'd like to think we have one of, if not the most diversified LP base around the world. And well, it would be reckless to diminish the impact of—
Speaker Change: tariffs and what they've done to markets. We really don't see it changing our fundraising trajectory. Any changes and allocations are going to be diminished and on the margin. Thank you.
Speaker Change: In terms of just our assets and what we see in terms of allocating capital, we think this actually plays to our strengths. This is going to lead to a focus on energy security, a focus on data security, a focus on ensuring and declobalization. This requires huge amounts.
Speaker Change: Capital, and as one of the largest managers and custodians of that type of capital around the world, we actually think that this environment may be not week to week, but over months and quarters is going to create an even bigger opportunity for our franchise.
Okay, my second question.
Speaker Change: Maybe for Hadley, as new complimentary funds are launched, BAM itself may increasingly become the book field co-investment in these funds. Is there a reasonable range of annual co-invest capital that we should think about as it pertains to the book field to our BAM specifically over the next say three to five years?
Speaker Change: More of the equity complementary strategies, the credit complementary strategies are typically supported by
Speaker Change: Our IMA with Brookfield Wealth Solutions, so it really is a subset of the overall complimentary strategies from that perspective. So just one data point to keep in mind. In terms of we look forward, as you know, we've got about 40 strategies in market now. That's going to grow up to, you know, call it 80 strategies over the next five years. [inaudible]
Speaker Change: So we continue to see the expansion and the capital needs attach that. But if I had to put a number, it's a handful of 100 million. It's like 500 million or less attached to that.
Thank you for watching!
Okay, thank you.
Our next question comes from Ken Worthington with J.P. Morgan .
Ken Worthington: Hi, I'm still good morning, so thanks for taking the question. I wanted to start by asking where the flagship fund stand in terms of percentage of capital invested and committed and really interested in infrastructure, infrastructure 5, transition to and cap partner 6.
Speaker Change: Sure, so Infra-5 is on exactly 50 percent.
Speaker Change: BGTF II is at 5.2 of 17 billion, so call it about 33% and Brookfield Capital Partners, I believe that one's at about 60% range.
Speaker Change: Okay, excellent, thank you. And then the well-solution space management fee of 68 million has been growing really nicely, but with IMAs really driving the entirety of the increase over the past three quarters.
Speaker Change: Is this just a matter of well-solution funds being committed but not yet deployed in private credit? Or is there something else here?
Speaker Change: And then where do you expect solutions, allocation to private credit to go as it reaches equilibrium and keeps rising, where does that get to?
So you're absolutely right around the dynamic there.
Speaker Change: You know, when you look at the breakdown, I think the number of actually deployed capital is somewhere in the three percent range, maybe three to four percent, but maybe to put it in perspective, about ten percent of the capital has been committed to those private strategies, it just is in the process of being deployed. [inaudible]
Speaker Change: The other thing that needs to be recognized is, well, we continue to deploy that capital. We're also constantly writing new annuities and bringing new cash in that typically glows into liquids. We're going to move on to the next slide.
Speaker Change: before being redeployed into a private strategy. So you're on a bit of a treadmill there, but the commitments are certainly higher and growing and that's being pushed through the system. [inaudible]
Speaker Change: We continue to expect the equilibrium to be somewhere in the 25-25% to 1-3rd range over time.
Excellent, thank you very much [inaudible]
Thank you. Bye.
Thank you.
Our next question comes from Brian Bedell with Deutsche Bank
Speaker Change: for your deployment across a number of verticals. How do you think about the cycle times of deploying through these large funds that you've?
raised recently compared with cycle times and in prior ventages.
Speaker Change: and the objective of the question is when would you get to the next vintage?
Speaker Change: And if I can put another angle on this question, how would your answer change if we were to say we were going to have a very distressed environment over the next few quarters versus not such a distressed environment.
Speaker Change: Certainly. So, typically for our flagships, we look to deploy them over at three to maybe three and a half year period. And that's a run rate in a normalized market kind of...
Just averaged across our various flagship strategies. [inaudible]
We absolutely would expect that deployment timeline to shorten.
Speaker Change: where we would put more capital to work at the low point in the cycle. That is where we do feel that our Brookfield Ecosystem, our access to opportunities, our access to information can allow us to be active when maybe others...
Speaker Change: are looking to hold back a little bit more. In terms of what we're seeing in the current market, we would expect to be at our traditional run rate or inside of it, certainly longer than average in this environment.
Speaker Change: Yep, that's great. And just a quick follow up for Hadley. I think you mentioned increasing the ownership stakes in some of the partners. I think you mentioned that if you were to do that over time into the full ownership, stake it would be about two. I think you said contribute about 250 million to FRE.
Speaker Change: If I'm not mistaken, and the question there would be with, does that include the oak tree, you know, a rate raising oak tree, or is it just the other partners?
Speaker Change: No, and you've got the number right since it is 250 million over five year period and that includes all of our partner managers including Oak Tree. Okay, great. Thank you.
Thank you.
Speaker Change: That concludes today's question and answer session. I'd like to turn the call back to Jason Fooks for closing remarks.
Jason Fooks: Okay, great. If you should have any additional questions on today's release, please feel free to contact me directly. Thank you everyone for joining us.
Thanks for watching!
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.