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Brookfield: Strong Financial Performance and Strategic Initiatives

CEO Khai Intela
Financial performance was strong in the third quarter, and strategic initiatives are progressing well. Introduction Brookfield Asset Management has reported strong financial performance in the third quarter, with distributable earnings of $1.2 billion and a...

Financial performance was strong in the third quarter, and strategic initiatives are progressing well.

Introduction

Brookfield Asset Management has reported strong financial performance in the third quarter, with distributable earnings of $1.2 billion and a total of $6.6 billion over the last 12 months. The company has also made significant progress on its strategic initiatives, generating positive operating results and experiencing robust fundraising momentum.

Market Environment

The global economy is gradually reopening as vaccination rates increase and restrictions are lifted. This has led to strong GDP growth, improving labor markets, and favorable conditions in capital markets. Although there have been challenges in matching supply with demand due to global logistics disruptions, the situation is expected to stabilize in 2022. Interest rates are expected to remain low, providing opportunities for real asset owners like Brookfield.

Operating Results

Brookfield generated $1.2 billion in distributable earnings in the third quarter, resulting in $6.6 billion over the past 12 months. The company's distributable earnings benefited from increased fee-related earnings and realizations of carried interest. These positive results demonstrate the strength of Brookfield's asset management franchise and its ability to generate strong returns for investors.

Fundraising Remains Robust

Brookfield is currently in active fundraising for several flagship funds, including its opportunistic credit fund, fourth flagship real estate fund, Global Transition Fund, and sixth private equity fund. The company has also raised additional capital for its special investments' strategy, growth fund, and perpetual private infrastructure and real estate funds. These fundraising efforts, along with the expansion of client base, are expected to contribute significantly to Brookfield's growth.

Investment Returns

Brookfield has a long track record of delivering high returns to shareholders. Over the past 30 years, the company has achieved a compound annualized return of approximately 20%. A $1 million investment in Brookfield shares in 1991 would now be worth $111 million, showcasing the compounding effect of long-term investments. The company's flagship private funds have also delivered impressive returns, further establishing Brookfield's asset management franchise.

Fee-Related Earnings

Brookfield's fee-related earnings have shown consistent growth, compounding at 33% over the past 10 years. This growth is a result of the company's diverse asset management business, which leverages its core competencies and permanent capital base. Brookfield manages over $650 billion in assets for more than 2,000 clients, providing stable and predictable cash flows. The company's fee revenues are diversified across various asset classes and strategies, ensuring resilience and profitability.

Private Credit Is the New Fixed Income

Brookfield has expanded its credit platform through its private credit franchise and partnership with Oaktree. With $30 billion in assets under management across seven strategies, Brookfield is well-positioned to capitalize on the growing demand for private credit. The company's focus on direct lending, strategic partnerships, and risk control has enabled it to generate market-leading returns and minimize losses. Brookfield plans to further expand its direct lending product suite and explore opportunities in high-growth industries like life sciences.

Private Equity Has Provided High Returns and Is Broadening Out

Brookfield's private equity business manages $91 billion in assets and has a track record of 28% gross internal rate of return (IRR) since inception. The company has diversified its business geographically and by sector, offering private and public investment opportunities. Brookfield's private equity offerings include flagship funds, growth investing strategies, special investments, and a publicly traded vehicle, Brookfield Business Partners. These offerings provide investors with access to different segments of the private equity market and contribute to the company's growth and financial flexibility.

Overview of Investor Day

Brookfield recently hosted its annual Investor Day, highlighting the advantages of real assets and businesses in a low-interest-rate environment. The company's five main businesses are poised for growth, with strong institutional relationships, enhanced wealth solutions, and new product offerings. The second day of the event focused on Brookfield's perpetual affiliates, including Brookfield Business Partners, Brookfield Infrastructure Partners, and Brookfield Renewable Partners. These affiliates have achieved significant growth and are well-positioned to capitalize on market opportunities.

Closing

Brookfield remains committed to being a world-class asset manager and generating increasing cash flows and intrinsic value per share over the long term. The company's strong financial performance, strategic initiatives, and diversified offerings make it an attractive investment option. Investors can expect continued growth and attractive returns from Brookfield's portfolio of real assets and businesses.

sign Bruce Flatt, Chief Executive Officer

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