Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Brookfield Asset Management has said it is closing in on $1tn in assets under management, underlining investors’ enduring appetite for private market strategies spanning buyouts, infrastructure and renewable energy.
The Canadian group on Wednesday reported $995bn assets under management, according to its second-quarter earnings release. It raised $68bn during the period, mainly for its credit business, it added.
However, unlike most of its peers, which typically take into account the value of their equity investments to calculate AUM, Brookfield counts the entire enterprise value of the assets in its portfolio, including debt. US rival Blackstone reached the $1tn milestone last year under the more conservative industry-wide accounting method.
The way Brookfield calculates assets under management, a key metric in the fund management industry, was a legacy of its previous structure, when it operated businesses directly, a person familiar with the firm said. The figure reflected the scale of the assets, the person added.
The Toronto-based group is best known as a major player in commercial real estate but it has diversified into infrastructure, renewable energy and credit over the past decade.
“Despite our growth, we have never pursued growth merely for its own sake,” chief executive Bruce Flatt and president Connor Teskey wrote in a letter to shareholders. “Instead, this achievement reflects our steadfast commitment to serve our clients and deliver attractive risk-adjusted returns over the long term.”
Stubbornly high interest rates and a shift to hybrid work following the coronavirus pandemic have strained the real estate sector in recent months, as well as some of Brookfield’s investments. However, its exposure to credit and infrastructure assets such as data centres has helped to boost its profits.
Credit, in particular, has become an increasingly important focus of the investment firm’s strategy. In 2019, the group took a majority stake in Oaktree Capital, the distressed and credit markets investor founded by Howard Marks.
In May, it took a majority stake in $22bn private credit manager Castlelake, a further push into lending and debt investments that have benefited from high interest rates.
The group also generated $583mn in fee-based earnings for the quarter, a 6 per cent increase from the same period a year ago.
Renewable energy commitments have made up an increasingly bigger portion of Brookfield’s portfolio. In May, the group agreed to a $10bn deal with Microsoft to finance renewable electricity projects across the US and Europe.
The group is also raising money for a second fund devoted to investing in the energy transition away from carbon, which is expected to surpass the $15bn amassed for the first pool.
