Good morning, everybody. Still morning, so good to see everyone. It's, we're gonna get started with our next session. It is my pleasure to introduce Bruce Flatt, CEO of Brookfield Asset Management. Brookfield, of course, is a leading global alternative asset manager, with about $540 billion in fee-bearing capital, across a wide range of capabilities, renewables, power, transition, infrastructure, private credit. The list is fairly lengthy, with lots of expertise in this space, plenty of us to cover. Thank you for being here. Always great to see you. Let's jump into it.
Number seventeen interview for you, Alex. We'll see if I'm better than 16 others.
We'll see. And a few more to go. So, I'll try to keep it fresh, though. Okay. So let's start with next year and your priorities for 2025. You guys had Investor Day only a couple of months ago. You refreshed your five-year targets. You talked about high-teens growth in FRE and total earnings, obviously pretty ambitious but realistic. As you start to execute towards that plan, talk to us a little bit about what your key priorities are, what your focus areas are for next year.
Look, so we're two years out, now listed separately as Brookfield Asset Management. I would just say that our plan now is just, and it has been this for 25 years, but just continue to execute against everything we set out we need to do. The good news is the backdrop for alternatives more broadly, and we can get into that, but more broadly is highly constructive. Really what this is about now is us just executing our strategy to grow the business for what we have. From time to time, we add things on, but we have among the largest businesses around, and it's just execution and widening out each of the businesses.
Yeah.
There's no, there's nothing more scientific than that. It's we have 2,000 clients. We're bringing in retail and family offices. We need to invest. We need to collect money. We need to invest it well, and we need to monetize it. This is a really simple business, highly complex down below. But it's a really simple business at the top level. And so there's nothing more than that, but we're in a very, in 35 years of doing this, I'm not sure I've seen a more constructive environment for alternative investment management. It's been getting better for 25 years straight, and it now is more exciting t han it's probably ever been.
Yeah. That's a big statement. Okay. Let's unpack why that is. Let's start with fundraising. To your point, the environment has gotten better, including the AEL acquisition this year. You guys brought in about $110 billion of inflows. Obviously, some of that is inorganic, but even the organic piece was quite substantial. As you turn your focus to 2025, talk to us a little bit about your expectations for next year's fundraising and also take into account that a number of your big flagship funds are wrapping up this year. What are likely to be the bigger drivers of fundraising in 2025?
Look, I will. I'd say 10-15 years ago, we used to raise $5 billion-$25 billion a year. For 5 or 7 years, we raised $50 billion-$100 billion a year. And I think we're heading to a phase where we'll raise $100 billion-$150 billion a year. And it's sort of just that. And the our annuities that we take in from Brookfield's Brookfield Parent's balance sheet is more consistent. Our retail will be more consistent. Our institutional, which is what you were referring to, depends on how many large pools of money, large funds we have in the market.
Yep.
because when you're doing infrastructure, our last infrastructure fund was $30 billion. When you're doing $30 billion funds at a crack, it the timing can get a little bit out of whack. Although we have six flagship funds that are north of $15 billion, and we even have 10-15 mid-sized funds between $2 billion and $5 billion. And when you do 10 funds at $4 billion a piece, that's $40 billion.
So I would say, without getting specific on exact years, and I guess what I would say is, the fundraising keeps getting bigger, partly because our annuity underwriting, that we Brookfield Asset Management takes the capital to invest, is $20 billion going to $40 billion a year. Retail is $20 billion going to $40 billion or $50 billion. And institutional's $50 billion-$100 billion a year. And so that continues to ramp up. And I would just say what probably the most, why we're excited about is institutional clients continue to push money in because of their experience over the past 15 years. Why it's the best now than it's ever been is all of the people have had excellent experience, not all. Most people have had excellent experience in private markets with us or people like us. And therefore, they keep pushing allocations greater.
Right.
And retail and annuities, but retail in specifically, is now we're tailoring products to accommodate them. And they see success in institutional, and therefore t here's a huge area of growth coming in these areas that didn't even exist.
Right.
10 years ago.
Right.
It, like, alternatives were nascent in institutional portfolios 20 years ago. They were large 10 years ago. They're still growing today, and I'd say, Alex, that same trend is going to play out in retail, and retail is far greater wealth.
Yeah.
Than institutional. Now, probably the numbers on balance won't get as large.
Mm-hmm.
But I think the amount eventually that can get placed into individuals' wealth is as large as what institutions have i n the next 20 years.
Yeah. No, definitely very large addressable market, for sure. Over the last couple of quarters, you talked a bit more about monetization opportunities. It's part of the business. You return capital. You invest capital. You know, harvest it. You return it back to LPs. When you look out into sort of expectations for increased capital velocity in this space, the monetization outlook feels much better than it's been over the last few years. So talk just a little bit about what that means for Brookfield, which part of your investment portfolios you're likely to be more active in monetizing things over the next kinda 12 to 18 months.
Yeah. So we invest, given all that fundraising I just talked about, we invest $50 billion-$75 billion a year a cross the board. We normally monetize less 'cause the funds we have in past are smaller than the ones we're doing today. So we monetize less. But we, we generally monetize $20 billion- $25 billion- $50 billion a year. I think in the last 12 months, we've monetized $15 billion- $20 billion. So it's been less, although we've been the diversity of our business is a huge we benefit from.
If you are in, others that are just in private equity or just in real estate have not had a lot of monetizations. We've had some. We've had a number, in both of those areas, but again, diversity helps. If you need to sell something in those areas in the United States, it wasn't happening, but internationally, the businesses are much more robust. S o we've been selling a lot of real estate internationally. We've been selling private equity deals internationally. But our infrastructure and renewables businesses, we've monetized a lot of things over the last 12 months.
Specifically in renewables, there's still a very robust bid for highly contracted great assets in renewables. And we've been capitalizing on that and returning capital to investors. For 2025, there's no doubt. Look, the markets depend on credit. There was lots of equity available to buy things, but the capital markets weren't available on the debt side. So since November of 2023, that has dramatically changed. It has improved.
I'd say every single month since November of 2023. So we're now one year later. I would say on the funding fronts, and remember, we're among the largest consumers of credit in the world because of the long-dated, large type of things that we buy. I'd say we're back to 80%. On the credit side, not on in sales of assets, but on the credit side. Liquidity in the credit markets foretells what's gonna happen in equities.
Mm-hmm.
Now that you can borrow, there is many more transactions going to occur. In 2025, you will see a large return of capital because sponsors want to do it. They're not doing it. They weren't holding onto the assets because they wanted to earn extra fees or something like that.
Right.
They just couldn't get a proper price for the asset 'cause there wasn't really bids. Most of that was 'cause debt wasn't available. It is now, and therefore, we're gonna see a big change.
Yeah. And clearly, a lot of pent-up demand also from LPs to get some of that cash back in their hands. For you guys, though, so when I think about 2025 exit opportunities, I know you said you guys were really active in renewables on the exit front. Is that likely gonna be the pool of capital that you'll see more monetization in next year as well, or is that gonna broaden out?
No, I think it's, look, I would say renewables was an exception in 2023 and 2024. Not many other areas had that many exits, but we're now seeing broad-based exits in our real estate business, in private equity, in infrastructure. And 2025, you'll see it across the board. So we're gonna see a whole lot more exits, us and others across the board. I think, look, where exits will struggle is the venture markets.
Yeah.
Which we don't. We have a secondary business called Pinegrove in venture, but we're, it's small. The venture business is still struggling to find its place.
Yeah.
Broad businesses, you're seeing activity coming back strong. 2025 will be a big year for monetizations b y most businesses, including ours.
Great. Okay. Let's flip to the other side of that coin, and let's talk a little bit about deployment of capital. A little steadier, but also you guys have seen a lot of acceleration in your own activity when you deploy capital. You have still I think there's over $100 billion of capital available for deployment. And you spoke to, you know, very sizable transactions that are in the pipeline, on the last call and really over the last couple of quarters. Can you frame areas of deployment that you're most active in today, with many of your peers focused on some of the similar trends, AI, infra, renewable energy, housing, private credit? What differentiates Brookfield in the opportunity to deploy capital in these areas?
Look, I would just say our business is about having the operating skills and the establishment to do transactions in certain places in the world. We've put people over the past 30 years in 30 countries in the world, and we can actually deploy capital in those 30 places if you bring me a transaction tomorrow morning. That's a unique skill. That combined with access to money, which we have access to funds, our co-investments, and the backing of the parent company of Brookfield with substantial resources, which allow us to do transactions which most or many others can't.
Yeah.
So just scale operating skills and scale allow us to differentiate ourselves. And it's not I won't say it's better or worse than some others, but it is very different. And we've found that over time, if you can be different in investing, odds favor you will earn higher returns. And so we're always trying to differentiate our money. The United States is slow today because interest rates went up the fastest and the most.
Yep.
Therefore, there's significant opportunity here, so we're on balance selling things internationally because they had more liquidity, and capital markets are more developed.
Mm-hmm.
and we're buying a lot more things in the United States. So our vintages this time will be much more tilted towards the U.S.
Mm-hmm.
not because we decided that South Korea or the Middle East or Europe aren't good places to invest. It's just that on balance, if you're going to invest, and you can invest, go to the places where there's less money, usually give you more opportunity. And so more will be in the U.S. And we're finding exceptional opportunities really in every asset class, largely driven by sponsors wanting to get rid of businesses.
Yeah.
Companies needing capital, and the three big megatrends out there are just the digitalization of everything, the decarbonization of the world, and the reshoring, or deglobalization of capital a nd relocation of manufacturing businesses. All three of those things are advancing, you know, each one of them has huge trends behind it, which affect all of our businesses.
Right.
In particular, it affects our infrastructure and our data center businesses, which are enormous and will get bigger and bigger all the time.
Yeah.
But they affect all of businesses out there.
Okay. Gotcha. Okay. Why don't we get into some of the individual businesses? I wanted to start with private credit. It's Brookfield's largest business, at this point. I think it accounts for a little bit over a third of the firm's total management fees. There are several businesses that sit underneath it. There's Oaktree and some of their more established kinda distressed businesses, direct lending business, some of their liquid capabilities.
You've got the insurance business that we talked a little bit about earlier. There's the IMA, and there's the relationship with Brookfield Corporation. And there's some of the more newer capabilities in asset-backed finance, private credit 2.0, however you wanna call that. Over the next two to three years, can you talk a little bit about which one of these sub-verticals you're most excited about? Where do you see the most attractive growth opportunities for Brookfield over the next few years?
So our credit business is about $300 billion of total assets. As noted, it is probably a third of it is our own different funds.
Mm-hmm.
and then two-thirds is our partner managers. And we had our strategy in credit has been to accumulate investments with other partners, and let and continue to help them to deploy resources. And so we're expanding credit both ourselves and through our partner managers, the biggest one being Oaktree. But we just bought a business called Castlelake, which is an asset-backed and a viation lending business.
So we continue to grow each of those businesses and directly growing our business. We have enormous amounts of capital coming in from the insurance business of corporate Brookfield, which we have to deploy. We set up Brookfield Credit as a main over top of everything because that business deploys. Now is responsible to deploy money into the partner managers where it suits the book that we need to have managed or to build the capabilities to put the rest of the money to work.
Right.
And I guess I would just lastly say that the credit markets for long-dated paper, where we are and always have been one of the largest generators of long-dated paper because of our infrastructure, renewables, and real estate businesses. And that's what's perfect for credit today in private credit. And as we build out our capabilities, we will keep adding in other areas where we can do long-dated credit and offer those both to funds that we create, but also to SMAs of insurance and other businesses that we can build this out for.
Because private credit is often, I get the question, is private credit going away? And look, the banks are gonna find a place where they participate in the capital markets, and private credit is gonna find another place. And what we have access to is large, large sums of institutional and retail money to put to work, and therefore, private credit's gonna keep growing.
Yeah. You bring up a really interesting point, with respect to origination. And that's the question that we get a lot of, and I think a lot of managers try to really differentiate themselves when they talk about private credit, asset-backed finance, these longer-dated duration paper, in the context of other things that are available out there. So in terms of your capabilities, you've acquired Castlelake that brings some unique capabilities on the origination front. How do you think about the sort of internal TAM from your ownership in some of these really large, infrastructure assets and other things that could produce enough origination for you on the credit side?
So, the first thing I would say is, often the second thing that's criticized about private credit is that they'll make mistakes, unlike the banks. But remember, in the things that we do well, we own, we're the largest equity investor in the world in most of them. If we're not the largest, we're in the top five. That gives us knowledge greater than most others in the marketplace.
Mm-hmm.
The first thing is, I believe we can make better credit decisions because of the information that we have.
Yeah.
On the markets, and that's a huge benefit. Internally, we generate through our funds we refinance or acquire and finance about current run rates of over $100 billion a year of product, and that gets placed into public markets, banking markets, or private markets.
Mm-hmm.
And we are the largest provider of many of those assets to other private credit firms. And many of those things, of course, can fit in our portfolios.
Yeah.
So, it's a big advantage because when other credit firms want to partner on transactions, we're a big provider of business for them, so we can also ensure we get some business back the other way.
Yeah.
And that's beneficial to the whole ecosystem that we have.
Yeah. Insurance will be a big part of that, as you mentioned. So let's talk for a couple of minutes about that. You guys have pretty ambitious growth targets there. Even earlier today, you talked about sort of $20 billion a year in origination from your sort of internal insurance channel that's now part of BN. You talked about that going to $40 billion at some point of time. It's a pretty competitive space. There's a lot of others that are trying to do similar. What gives you guys an edge in insurance? How do you achieve these targets? How do you gain share, especially in an annuity channel, which has been, you know, fairly mature and pretty competitive?
I would just say that the markets are firstly, maybe just to be very specific for everyone, Brookfield Asset Management.
Correct.
Which I am here representing today, owns no insurance assets. And if you're a shareholder, you take no insurance risk.
Correct.
This is an asset-light business that only receives fees and invests in nothing. We have a special relationship with Brookfield Corporation, which provides us proprietary annuity product that we can manage. So that's the first point. I would say, more broadly, though, to answer your question, the wealth accumulation in the world and the retirement of people over the next twenty.
I think in the United States, in the next 20 years, each single year, there will be more retirees in the United States than there were the last year. For 20 years straight, more people will retire in the United States than retired the year before, every single year for the next 20 years, and defined benefit products have gone away. They need products to manage their wealth, and annuities are perfect for that. We're in the top five annuity writers now in the United States. We've just, we're licensed in Canada to do PRT, pension risk transfer from defined benefits.
Mm-hmm.
We're licensed in the United States to do that. We're just getting licensed in the U.K. We have capital and licenses to accumulate money, and back policies with very high credit ratings, unlike many others in the world. And our special benefit we have is that we know how to, our skill is investing the asset sides of the balance sheet. And so that's what BN is doing. And Brookfield Asset Management has an enormous benefit because it will manage all of that capital, and that will propel a significant amount of the growth in Brookfield Asset Management.
Got it. Sort of related to that, wealth came up a couple of times over our conversation today, and obviously, it's been an important topic for the space for a while. You guys have a couple of semi-liquid retail products dedicated to that market, one in private credit, one in infra. Those are scaling but remain relatively small in the context of Brookfield Asset Management. Talk to us a little bit about other product innovation you're thinking about for this channel. How do you plan to scale and amplify distribution of this part of the market?
You know, they're small, yes, but we raised almost $2 billion a month, the $2 billion a month in annuities and $2 billion a month in retail products. So it's getting significant. At $4 billion a month, I think that could be over time, it could grow much, much larger. In specific retail, the one thing we're very, very we pay a lot of attention to is to make sure that we regulate how much money we take in and that we can put it out. Because these are products where you take money in, you have to invest it right away.
Yep.
The one thing we have learned in time is that never force yourself to invest money. It's a bad idea. And so we're very cognizant of that. And in fact, as an example, our infrastructure product that we have on many distribution systems, we regulate how much money comes in, and it could be much, much more, but we can only invest so much.
Right.
So we're not restraining how much money we take into the fund and not distributing as much because we need to have product put into the fund to earn the returns it needs. And I would say we will, even though it's been growing fast and growing large, we're hyper-focused on ensuring our returns are good because this is a long-term game, not a short-term one.
Yep. Scale is critical in this business. You guys are obviously very large. You have a lot of resources deployed here. But as you think about partnering potentially with some of the other existing players, whether it's like a, you know, KKR and Capital Group partnership, or there are others that are leaning into this convergence between liquid and illiquid markets, how are you thinking about that as a prospect for Brookfield? Does it make sense? Does it not make sense? Is that something that's on your radar?
The business we set up five years ago, I guess, after we brought Oaktree into the fold, is called Brookfield Oaktree Wealth Solutions, BOWS. BOWS markets our private wealth products through basically bank distribution. That's where most of private wealth is distributed today. A lot is. I think over time, all of these large distribution systems are going to need more alternatives.
Yep.
And what our skill is managing alternatives. It's not, we don't own distribution systems, but we need to tailor products to be distributed through their systems. And if we can do that, we're gonna be a partner with many of these organizations over time, and our products will fit into their pools. With Fidelity, we have one in Canada, actually, where we put real estate into one of their liquid product funds.
And that's just one example of an early stage thing that's happening, and it's gonna happen across the board because they have big distribution, but what they lack, what many of the groups, not all, but many, lack the ability to manage the capital on the alternative side. That's really our specialty. Our specialty is managing capital. The only reason we're in insurance is we're taking low-risk insurance, liability risk above. But our special skill is being able to manage assets just like we've managed for insurance companies and institutional clients forever.
Yeah. Okay. Let's talk about some of the other key points of the business. I wanna zone in on renewables. Been a really powerful growth area for the firm, both energy transition business and your kinda legacy, kinda classic renewables business as well. As part of the, I wouldn't say the entire growth theme here, but part of it, was the fact that Inflation Reduction Act opened up incremental opportunities in this marketplace for you and some of the others. Nobody knows what happens, but to an extent, the act gets watered down or goes away entirely. How do you think about that with respect to interest in the asset class and the returns that you could generate there?
The Inflation Reduction Act came in four years ago, approximately three years, three to four years ago. At that time, it was probably important to bring many projects forward in the United States that would not have otherwise gotten built. It allowed them to be built. What's happened in the interim is that an artificial intelligence revolution has occurred. The electricity projections have gone up by three to four times.
Yep.
Like, we're gonna double electricity in the United States and most other countries, but double it in the United States in the next 20 years. That has all happened over the last five years. And as a result of that, most of those projects that might have needed the Inflation Reduction Act will get built because pricing of electricity is higher and going to be higher in the future.
Mm-hmm.
So what I would tell you is it's really nice if the Inflation Reduction Act is there, but most projects that people have, they got brought onside because of energy pricing in America. And it does not look like that is going to stop. Those are all gonna get built, and you're gonna need more.
Yeah.
And the biggest issue we have for clients today, and we're the largest builder of renewables in the world. The biggest issue we have today is we just are running out of projects. And we keep bringing in more developers, and we keep bringing in more projects, and we keep hiring more people to entitle land. And we cannot keep up with the building and the producing sites for data centers and for electricity.
I see. Okay. Let's wrap up with a question around some of the inorganic opportunities you guys might see in the business. You've been acquisitive in the past. Obviously, most recently, you've done a couple of relatively smaller deals, but the ones that give you some interesting set of capabilities. Talk to us a little bit about the framework for M&A from here. Obviously, Brookfield Asset Management's very healthy balance sheet, lots of cash, quite healthy multiple. What else is on your radar from an M&A perspective? and, you know, is it likely to follow a similar path, kinda smaller and nichier things, or could there be something bigger on the horizon?
Look, we were probably among the first in, when we did the Oaktree transaction, among the f irst in, " buying into a manager." We've done a few since then. We don't need a lot of things in the business. We have among the largest businesses, out there in almost every category, so we can just keep doing the things we're doing, and every projection we have is based on, "We have an amazing business. Just don't do anything dumb.
Yeah.
And keep it compounding for the next 25 years, but from time to time, because of the things that we have: access to client relationships, operating people, skills we have, relationships around the world.
Yep.
Relationships in 30 countries, we can be additive to others. And if we think that things are additive to the overall franchise, the culture of the people can fit with us, and we can help them grow their business, and it can be additive to all of us, we're willing to expand. And that it's additive. It's not conflicting with something we do.
Yep.
And if that's the case, we'll keep adding businesses, but we don't have to do anything.
Great. Okay. Well, we're almost at time, so we'll leave it there. Bruce, thank you very much. Appreciate you being here. Thanks for the time and having a holiday.
Thanks, Alex.
Thanks.