Ladies and gentlemen, thank you for standing by, and welcome to today's program, entitled Brookfield Asset Management 2019 Year-End Results Conference Call and Webcast. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Suzanne Fleming, Managing Partner, Brookfield Asset Management. Please go ahead.
Thank you, operator, and good morning. Welcome to Brookfield's 2019 year-end conference call. On the call today are Bruce Flatt, our Chief Executive Officer, Brian Lawson, our Vice Chairman, Nick Goodman, our Chief Financial Officer, as well as Craig Noble, Managing Partner and CEO of our Alternative Investment Strategies. Bruce will first give an update on our business, followed by Brian, then Nick, who will discuss the highlights of our financial and operating results for the year. Finally, Craig will talk about our growing alternative investments business. After our formal comments, we'll turn the call over to the operator and take analyst questions. I'd like to remind you that in responding to questions and in talking about new initiatives and our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. securities laws.
These statements reflect predictions of future events and trends and do not relate to historic events. They're subject to known and unknown risks, and future events may differ materially from such statements. For further information on these risks and their potential impacts on our company, please see our filings with the securities regulators in Canada and the U.S., and the information available on our website. Thank you. With that, I'll turn it over to Bruce.
Thank you, Suzanne, and good morning, everyone. Thank you for joining. 2019 for Brookfield was a strong year for the business. While we are also pleased with the market performance of Brookfield shares, I would note that our primary focus will always remain on growing the intrinsic value of Brookfield, over the longer term. Over the past year, we achieved many important milestones in that regard. A few highlights. First, we now own 61% of Oaktree, the premier credit franchise globally that deepens our capabilities we offer our clients and positions us even better across market cycles. It also means we have one of the most diversified offerings in alternative investments, offering clients a full suite of products. Second, just last week, we announced the final close of our flagship infrastructure fund.
The fund size totaled $20 billion. Together with co-investment, this round of flagship funds raised $50 billion of capital. Today, these funds are about 45% deployed in aggregate, which means if we're successful in deploying the remainder of the capital, we expect to be in the market, depending on pace, with our next round of flagships potentially starting later this year, and into 2021. With these funds, we continue to diversify and stabilize our cash flows. Today, approximately 40% of our fee revenues come from perpetual vehicles, 45% of fee revenues from long-term, locked-up, committed capital. Together, they provide very growing and substantial stable streams of cash flow to Brookfield Asset Management. Despite not being in the market now raising capital for any of our large flagship funds, we do expect to be very active raising capital for our other specialized core and perpetual strategies.
Today, we have Craig Noble, our CEO of Alternative Investments, joining us on the call to discuss how we are growing our offering and distribution capabilities to meet the demands of clients across each of the pools of capital that we access, and what this can mean for fundraising in the next 12- 18 months. Moving on to deployment of capital. We invested over $30 billion of capital across our businesses in 2019. Most recently, in the fourth quarter, we invested $14 billion of capital, including closing previously announced acquisitions within our infrastructure business, including transactions which you would have read about, Genesee & Wyoming, as well as a federally regulated group of pipeline assets in a carve-out transaction. In addition, in our private equity group, we closed on the acquisition of 57% of Genworth Canada.
During 2019, we also sold $13 billion in investments for average prices 9% above their most recent IFRS values, which we had in our accounts. Despite all this activity, we continued to increase our capital available for deployment, which stands at approximately $65 billion across the business for deployment into opportunities that we are seeing globally. Turning to markets, I'll be brief. Europe is slower, still quite resilient. The United Kingdom seems to have pushed past Brexit, which should be positive for businesses making long-term commitments. As an example, office space in London is extremely tight on the leasing side. No properties have been started for close to four years. Rents are going up. Cap rates are starting to go down and hence values going up largely due to inflows of capital starting to come back to the U.K.
Companies in India and China are clearly under more stress than they've been for years, with banks in India dealing with significant non-performing loans. In China, banks are pushing forwards to sell assets. Brazil looks to be back on track to continued recovery, albeit slowly, with interest rates now under 5%. The developed economy markets are not showing any signs of stress at this point in time. The United States, Canada, and Australia, in particular, have strong economies, but assets are more fairly priced. We need to be selective with opportunities, looking for transactions in out-of-favor sectors that play to our strengths. An example of this was the carve-out of Clarios last year, or the Genworth Canada acquisition, which highlighted our ability to move quickly and access different pools of capital.
The corporate credit markets are also performing well, but we believe this is where great value will be found in the next downturn. We have historically performed well countercyclically, but now with Oaktree, we are even better positioned to capitalize on this situation while continuing to invest the same way we always have, with an emphasis on fundamental analysis and downside protection of capital. As discussed, our share price performed well in 2019, generating a total return over 50%, which was driven in part by growth in our Asset Management business, as well as the strong performance of our listed partnerships. Before turning the call over, I would like to note that Brian Lawson, who has been our CFO since 2002, that's 18 years, will be assuming the role of Vice Chairman, and the board today appointed Nick Goodman as our new Chief Financial Officer.
I look forward to introducing you all to Nick. Brian has made a very, very significant contribution to our business over many years. As vice chair, he will continue to be involved in many things we do, including finance and risk management activities, while also continuing to sit on the BAM board. To Brian, thank you. While Brian continues to be very involved in the company, on behalf of all the shareholders, I wanted to thank him for that. With that, actually, I'll turn it over to him.
Great. Well, thanks, Bruce, and thanks for those comments. Good morning, everybody. I do have the pleasure of handing the call over to Nick very shortly as our new CFO. Many of you already know Nick, and I'm sure you'll agree that he is perfect for the role. For those of you who may not, Nick's been at Brookfield for around a decade and has held a number of senior finance roles across the organization during that time, including CFO of Brookfield Renewable Energy. More recently, Nick and I have spent the past couple of years working closely together in all areas of BAM's finance group, including corporate finance, treasury operations, and financial risk management. As for me, as Bruce noted, it's been 18 years since my first earnings call as CFO. That's 72 calls for those of you who are counting.
While it might be tempting to make it an even 20, it was also clear that Nick was fully ready to take on the role. I would like to say that I've really enjoyed my time as CFO. It's been a great experience, and much of that has come from the opportunity to work with many of you on the line, and I sincerely thank you for your support along the way. I'm looking forward to continuing with Brookfield, as Bruce noted, supporting Nick and the team, and helping out the business wherever I can. With that, I will hand it over to Nick.
Thanks, Brian, and good morning, everyone. I'm going to start off by saying that we're very pleased with the 2019 results. The underlying growth of both our Asset Management business and our Invested Capital drove strong operating performance. Net income for 2019 was $5.4 billion, or $2.60 per share, and funds from operations, or FFO, totaled to $4.2 billion for the year, or $4.07 a share. The decrease in net income for prior year is as a result of higher fair value gains and one-time recoveries recorded in 2018. Turning to our Asset Management results first. Fee-related earnings before performance fees increased by 41% to $1.2 billion during 2019, or 39% per share.
Growth in our fee-related earnings is largely driven by what we see as a significant step change in the business over the past year with catalysts including a successful round of flagship fundraising, as Bruce touched on, growth in our distribution channels, and expanding private fund offerings, as well as the strong performance of our listed partnerships. We also benefited from one quarter of contribution from Oaktree's fee-related earnings. Today, we have combined fee-bearing capital of $290 billion and annual fee revenues at our share stand at $2.7 billion. During the year, we generated $1 billion of unrealized carried interest before costs. That reflects continued favorable investment performance across our fund strategies. Accumulated unrealized carried interest now stands at $3.6 billion before costs. We also realized $600 million of carried interest and recorded it in our FFO as it's passed its risk of callback.
This realized carried interest is more than double that of what we realized in the prior year, and is the largest amount that we have ever realized in a single year, and is expected to grow as our fund vintages mature. Turning to Invested Capital. Excluding disposition gains, FFO for the year increased to $1.7 billion. In particular, we benefited from the strong performance of the underlying businesses as well as acquisitions, which more than offset the impact of dispositions made throughout the year. These increases were partially offset by the normalization of earnings within one of our directly held private equity operations that recorded particularly strong results in 2018, as well as lower results from our energy contracts, where generation was above long-term average and pricing was below the prior year.
Combined, these factors contributed to overall modest growth in our operating FFO from invested capital when compared to 2018. We sold several investments across the business in 2019, including multiple portfolio companies within our private equity group, as well as a number of core office properties within our real estate group. These monetizations contributed towards approximately $900 million of realized disposition gains recorded in FFO. Disposition gains in the prior year were $1.5 billion. That is the main driver why total FFO for the full year decreased compared with the prior year. Our liquidity and capitalization remain very strong. Our balance sheet remains conservatively capitalized with an implied corporate debt to market capitalization ratio of 9%. Including uncalled fund commitments, we now have approximately $65 billion of deployable capital.
Our strong capital structure continues to be supplemented by our growing cash available for distribution and/or reinvestment, or CAFDAR, as we call it, which was $2.6 billion for the year, including $1.6 billion from our Asset Management franchise and $1.6 billion from our Invested Capital before costs. I'm pleased to confirm that our board of directors has declared an $0.18 per share dividend payable at the end of the month. This equals an approximate 12% increase over the prior year and represents $0.12 per share on a post-stock split basis. I will hand the call over to Craig to provide an update on our expanding alternative Asset Management business.
Thank you, Nick, and good morning, everyone. Today, our business has over $540 billion of assets under management, including $290 billion of fee-bearing capital. The ways in which our clients can choose to invest with us are numerous and growing and fall into four broad categories. Our perpetual listed public vehicles, our private funds, our public securities offerings, and Oaktree's investment offerings. Today, I'm going to spend some time talking about one of our four ways in which we work with clients, our private funds business. Focusing on how the business has evolved over the last 10 years, and then looking at the growth potential for the next decade. Ten years ago, our private fund fee-bearing capital totaled $15 billion across 42 clients, and we were just about to embark on the fundraising for our first infrastructure fund that ended up being $2.7 billion.
Over the last 10 years, we've grown our private fund fee-bearing capital to over $90 billion, and we just completed the latest round of fundraising for our largest flagship funds across real estate, private equity, and infrastructure. The most recent of these being our infrastructure fund, which, as Bruce mentioned, had its final close last week, exceeding its initial target to reach $20 billion. This is an increase of more than 40% from its predecessor infrastructure fund, and our real estate and private equity funds have experienced similar growth rates. Today, we now have 1,800 clients across the world's major pension plans, sovereign wealth funds, and insurance companies, and we've built a private wealth distribution network that now accounts for about 10% of our annual fundraising.
We've grown the number of client-facing relationship managers from seven to 58, and we've built our fund infrastructure to ensure that we're able to cater to our clients' needs and deliver first-class service. As we look forward, we expect to experience continued strong growth in our family of flagship closed-end funds, and the drivers will be the same as the drivers that have supported our growth to date. First is investment performance, which has been strong, and we're very focused on continuing to generate strong investment returns through a combination of our global platform, our operating expertise, and our large scale. Second, investor demand for real assets and other alternatives is continuing to increase, and we believe we're in the early innings of this trend.
Third, we've built a global business with many of the largest institutional investors around the world who, in our experience, are seeking to work even more closely with even fewer investment managers, and we're very well-positioned to capture an even larger share of this market. As we described at our Investor Day, we expect that our next vintage of flagship closed-end funds will be in the range of $100 billion, including credit, which will continue our trend of growing with each vintage of funds. These funds also are seeing an increasing demand for co-investment capital opportunities, which increases our pool of capital for transactions. In summary, by continuing to execute in these established areas of our business, we expect to continue our growth trajectory across our flagship closed-end funds for many years.
However, as we think about the growth of our Asset Management business, it's important that we provide a diverse range of products that fit our clients' evolving needs. We've made great strides in this area. Over the last several years, significantly broadening both our fund offerings and also the way that we work with clients. I'll take a few minutes to describe our approach to developing new investment strategies, and I'll highlight some of the newer initiatives that we've launched over the last couple of years. I'll also mention some of the more specialized investment strategies that we're currently developing and an update on Oaktree. As I mentioned, over the past several years, we've built out complementary investment capability fund offerings, which sit very nicely alongside our closed-end funds.
These investment offerings have been driven by a combination of being reactive to investor requests and also proactive to anticipate investor demand. In all cases, we've got a set of principles that guide our development of new investment offerings. These principles really revolve around two core concepts. First and foremost is that the proposed investment strategy offers a sound investment case where we can have a differentiated view, be an industry leader, and which we would be happy to invest our own capital into over the long term. Secondly is a set of principles relating to the business case, which means our ability to leverage our existing sales and client service platform and to profitably grow the business to scale. Now, with that background, I'll profile a few of the newer initiatives underway. Starting with our family of perpetual private fund strategies.
Over the past five years, we've developed several perpetual investment offerings which are attractive to investors looking for more of a core investment profile with more mature assets and higher income and attractive risk-adjusted returns. Given that these vehicles are open-ended, meaning we're able to accept new capital on a regular basis and redeem capital as new investors come into the fund, the vehicles are perpetual in nature. To date, we've established these open-ended perpetual funds for our infrastructure, real estate, and real estate debt investment strategies. Investor demand's been strong. Our expectation is that these strategies could grow to be tens of billions of dollars over the next several years, particularly as investors are increasingly seeking fixed income alternatives in today's low interest rate environment. There's also room to further expand this family of perpetual open-ended private funds.
The second initiative is our development of several more specialized investment strategies targeting specific geographic regions or specific asset types. While our flagship funds have historically been global in nature and broad across asset classes, we've also seen investor demand in strategies that are more narrowly defined. These more specialized investment strategies are very complementary to our existing business, easily meeting our guiding principles, and will result in increased fee-bearing capital. A few specific examples where we are launching new investment strategies include our opportunistic Asia real estate strategy, a dedicated renewable strategy, infrastructure debt, real estate debt, and a real asset technology strategy, which invests in high-growth technology-focused companies that touch our ecosystems of real estate, infrastructure, and renewable power. Another area of focus for us today is what we call alternative solutions, which entails working with investors to construct programs across the alternative spectrum.
As I mentioned, we continue to hear from our clients that they want to work more deeply with fewer managers, and this lends itself to these more strategic relationships. This is somewhat new to us, and we've already have several investment vehicles and multi-asset programs. The recent addition of Oaktree's investment capabilities was really the last piece of the puzzle to enable us to offer a full suite of alternative investment strategies to clients. In addition to newer investment strategies, we're also having success in newer distribution channels. Over the past few years, we've entered the wealth channel, which currently represents approximately $7 billion of fee-bearing capital within the Brookfield private funds alone and around 10% of new capital each year. This is a rapidly growing channel for us as high-net-worth investors and wealth platforms are searching for alternatives to their traditional stock and bond portfolios.
This channel's been a good fit for our traditional closed-end funds, but we do expect to develop more investment vehicles specifically for this channel. As one example, this past year, we raised over a billion dollars for our first private fund dedicated exclusively to the wealth channel, which was a closed-end real estate fund focused on new development opportunities in core markets. We're excited about the growth runway as we further build out this channel. These are a few of the examples of the step-out investment strategies and different initiatives that are already contributing to our growth, and we expect this will accelerate going forward. We look forward to telling you more about them and others that are still in development over time. Lastly, I'll provide an update on Oaktree. As you know, the transaction with Oaktree closed September 30th of last year.
We did have the benefit of getting to know each other over the year or so leading up to that point. A few comments, starting with we're very pleased with the partnership, even in these early days. As you know, Oaktree will continue to operate independently, so while the investment teams and management will be independent, there are still many things we can do across the organizations with the goal of serving our clients better. Many of these initiatives are already underway, and there's a real excitement about what we can do together. These initiatives generally fall into the category of working more holistically with our clients at Brookfield to bring them Oaktree investment products and vice versa. This can involve creating new funds using both Brookfield and Oaktree investment capabilities. Other times, it's within the multi-asset solutions framework that I described earlier.
An example of our collaboration with distribution is the recent launch of Oaktree's non-traded REIT, where we've been able to involve the Brookfield high net worth distribution team to help raise capital for this strategy, and we expect there'll be a growing number of similar opportunities over the coming years. Hopefully, this overview gives you a good sense of the breadth of our investment offerings, which represent a full suite of alternative investment strategies and which will fuel our growth for many years. We look forward to telling you more about these newer initiatives going forward. With that, I'll hand it back to the operator for questions.
Certainly. Once again, ladies and gentlemen, if you have a question at this time, please press star then one. Our first question comes from the line of Cherilyn Radbourne from TD Securities. Your question, please.
Thanks very much, and good morning. In your letter, you spent some time talking about sustainability and your carbon footprint, which is certainly top of mind lately. I wondered if you could speak a little bit about how you incorporate ESG in your investment process and whether an increasing emphasis on ESG by LP investors makes some assets potentially uninvestable for you.
Yeah. Maybe I'll just start off, and I think I'll try to answer the question by saying this. I guess we've always had a focus on sustainability merely because it's good for business. If you can build sustainable businesses over the longer term, it usually means you're doing good things within the business. I'd say the first thing is, it's been a big focus just because it's good for business. Second, we focused specifically on renewables 25 years ago or more, and we've had a big emphasis on that. I guess it has informed us about a lot of things within the rest of our business, as well as we've been able to build the largest renewables business in the world. That informs us about a lot of things.
Because of that, many of the things that we do when we make other investments and when we look at investments across the board, we've always considered sustainability in that just because we were probably more aware of it because of the big renewables business we have. Increasingly, that's going to be more important every day because globally, investors and individuals are more focused on it. I think we're well set up for it. Obviously, we have to keep growing and learning more. I think we're in a good place, as we said today.
Maybe on a related note. At least in the public market, we're starting to see certain businesses attract a bit of a sustainability premium, and I'm curious whether you're seeing that in the private market currently or expect to in the future.
Well, we'd like to get a premium for that if we could have one. Look, I think that as more and more focus is on this, there will be a split between those that are sustainable that many more people will be interested in investing in and those that are seen as not, and that capital will shy away from those investments. Therefore, the returns on those investments that someone will buy them for are going to be a lot less. Just merely because there's less capital available. I don't think the private market is any different than the public market. I think people across the investment spectrum are all looking or seeing the same things.
Thank you. That's my cue.
Thank you. Our next question comes from the line of Bill Katz from Citi. Your question, please.
Okay. Thank you very much for taking the questions. Brian, Nick, best of luck. Look forward to continuing respective relationships. Maybe just coming back to the opportunity in terms of the next fundraising cycle. It does sound a little more optimistic, maybe for where we were last quarter this time. Could you speak to two parts of the question? First one being sort of where, like the sequencing of what you see in terms of that opportunity within the $100 billion. Secondly, you'd mentioned that sort of pickup in co-investments. How might the economics of the next $100 billion compare to the $50 billion that you brought on previously?
Yeah. Hi, Bill. It's Nick. I'm happy to start, and Craig, add anything if you want on the fundraising side. I think on the sequencing of the funds, Bill, as you know, we've just completed the latest round of flagship fundraising. The first of those flagship funds to complete the fundraising was the real estate vehicle. Likely that could be the first one back in the market. I think we said that at today, we're about 40%-45% invested across the funds. It'll depend on the pace of deployment across the funds. Maybe starting 2021, early 2021, we could be back in the market. Late 2020, early 2021, you might see back in the market for those funds. It really depends on when they get to that threshold for being able to go back out and raise new capital.
In terms of the fees for the next $100 billion for those flagship funds. Based on what we see in the market today, I would say we don't expect to see a massive change. For those flagship funds, we didn't see any extra pressure on fees through the round of fundraising. We managed to sustain our through that period. I would expect to be able to achieve similar rates as we look at the next round of flagships.
Okay. Just as my follow-up, just related to that, perhaps, if you look at your Asset Management margin, that's still among best in class, around 57%, I think, in the fourth quarter. How do you sort of see that playing through over the next year or two, counterbalancing a lot of the growth opportunities in front of you versus maybe scaling up the platform?
Yeah. I think, Bill, you saw over the last 12 months that the cost did increase in our business, and we talked about that really being the cost attributed to us scaling up the business ahead of the next round of flagships, A, from a fundraising perspective and B, from a deployment perspective. In Q3, Q4, you started to see the revenues come through as the flagships started to close, and we ended the fee holiday with the BPY transaction. We know we're at a good state, as you say, from an industry perspective for margins.
I think as we look about going forward, you can expect more investment into the platforms, not just in being ready for the next round of flagships, but I think as we diversify the channels from raising capital and maybe as we shift product mix a bit and start to build out some of the strategies that Craig talked about, you'll see more investment in the business. I think historically, we've kind of guided to 55%-65% being the range for the margin of the business, and I think we expect to continue to be in the midpoint of that range.
Thank you.
Thank you. Our next question comes from the line of Mario Saric from Scotiabank. Your question please.
Hi, good morning. Just sticking to the fundraising theme and the $100 billion target. I think, Craig, you laid out well enough the drivers behind the confidence in terms of achieving that goal, including expanded capital deployment capabilities, strength in the organization and whatnot. When you sit back and you look at the broader environment, what do you consider to be the bigger risks to achieving that goal over the next couple of years?
It's Bruce. Maybe I'll take that as just a start. I think the biggest risk to alternative managers broadly is that the environment we've enjoyed over the past 10 years has been interest rates came down. Now they're at the bottom, and they're low. They could be higher. They could probably be 50% higher. If interest rates went to, if the 10-years today, 1.5% or just above 1.5%. If it went to 6%, I think that changes the outlook of investors and what they need to do with their portfolios. We don't expect that to occur for the next three, five, seven, 10 years, maybe ever. I think that's the one risk that we can't control that changes the outlook on the business. All it means is that it will be different. We'll just figure something else out. It would change the outlook of many institutions pushing into alternatives.
How would you assess the risk of a significant global contraction in economic activity towards the appetite of real asset investors to allocate incremental capital to the mandates?
Here's what I would say. In past, what we've seen is all investors, if an economic decline comes, all investors, they slow in all investments into something for a very short period of time. The opportunities are significant, I think at that point in time, our private equity funds will have very positive investments into opportunities. The Oaktree franchise will have very significant opportunities. I think if we can position ourselves to come out, what we're working for today is underwrite every investment we make, like we're going to hit a recession. If we can come out of the bottom of the market, having our reputations intact and our investments intact and grow out of that recession, we'll be able to take very, very significant amounts of money from people.
With the caveat that if interest rates happen to, in that recession, go to 8%, which I suspect is not going to happen then that might change that. If it doesn't, then I think probably more greater amounts of money will be allocated at that point in time.
Great. Thank you for the color. My second question just relates to the alternative solutions that Craig was discussing. While it's early days with the Oaktree transaction, can you just maybe talk about what penetration rates look like today and what target penetration rates may look like over the next three, five, 10 years?
I would say, so it is early days, and there are several examples of us working together with clients, and I described a few of them. The overlap of our clients is pretty modest. It leaves a lot of opportunity and a lot of space for us to work together on things. Given that we're just several months into it, there's not any statistics in terms of penetration that are trackable. There's a lot of white space and opportunity for us in terms of collaborating on different investment strategies but also maybe even more so of working more holistically with some of our larger clients in particular.
Okay. Thank you.
Thank you. Our next question comes from the line of Andrew Kuske from Credit Suisse. Your question, please.
Thank you. Good morning. I think it's a question for Craig to start off with, and I think you mentioned the 1,800 client relationships. If you could provide maybe a bit of color, just pre-Oaktree close on the Brookfield relationships out of the 1,800 versus the Oaktree ones, and then what was the overlap and where are we now?
Yeah, sure. That 1,800 is our institutional relationships across Brookfield and Oaktree. If we segment that into the two different components, I think Nick has the specific numbers internally.
Yeah, I would just add that pre the transaction, we had about 750 institutional clients on the Brookfield side, and the balance would come from Oaktree. As Craig said, there was a small amount of crossover, not significant, but the incremental, there was no crossover. We take it from 750 up to the 1,800.
Okay. That's very helpful. Just maybe a follow-up to Craig also. It's just on the co-investment capital, and this has been a long-term hallmark of the entire Brookfield franchise. As you grow the size and scale of the offerings you have, does that co-investment capital effectively help certain clients build up the capability to eventually internalize some of the strategies themselves? Does that create a bit of a tension?
No. What we've found is that the co-investment capital is a great way for us to have access to larger pools of capital, which is very helpful for some of our transactions, in particular, the largest transactions that we pursue. Also, it gives an opportunity for our large LPs to deploy more capital alongside of us. I wouldn't say that we've seen a trend of that moving towards the internal capabilities. It's been more the larger access to larger pools of capital, which is helpful, and also deploying more from our LPs.
The follow-up to that would be as the flagship funds get larger, and you're already at the $20 billion on BIF IV, but as they get larger, does the co-investment capability also get larger for some of your core clients?
Yeah. I would say, maybe just add to Craig's comments, two things. The first is some of our most sophisticated and largest clients in the world do a lot of investing themselves, but also invest with us. That's because we do different types of transactions than what they invest directly on their own. Therefore, we're additive to them. I think one of our great strengths and offerings that we've been able to bring to our clients is to offer them co-investments. We're going to continue to do that. As the transactions scale up, having capital available, but also those partners with us is extremely important from many different perspectives.
Okay. That's great. Thank you.
Welcome.
Thank you. Our next question comes from the line of Zachary McDermott from KBW. Your question, please.
Hi. Thanks for taking my question. I just have a quick question about capital management. I think you had previously talked about stock buybacks and cash generation increases a few years ago. Now that you've incorporated Oaktree, how should we feel about capital priorities moving forward? Any possibility of future stock buybacks?
Yeah. Hi, Zachary. It's Nick. I don't think you'll see a significant change to what we've communicated in the past. I think the themes will remain the same. We are generating $2.7 billion of cash available for distribution or reinvestment now, and we'll continue to pay the distribution right now, maybe pays out about roughly 30% of that. The remainder of the cash, we have a priority for that to reinvest back into the business to support our Asset Management franchise, to seed new strategies, to support the list of issuers and their growth. After that, we look at opportunistic use of that capital based on relative capital allocation and values. If you look at last year, most of that residual cash we invested into the Oaktree transaction.
Going forward, we would look to obviously maintain cash, maintain liquidity, to be opportunistic to weather any eventual dislocation in the capital markets. Once we feel that we have no use internally, then we would look to return capital to shareholders via buybacks. That will start to happen, especially as you see a ramp-up in our cash over the next five years as carry really starts to step up. I don't think you'll see any change in strategy now that Oaktree is part of the family.
Thank you.
Thank you. As a reminder, ladies and gentlemen, if you have a question at this time, please press star then one. Our next question comes from the line of Sohrab Movahedi from BMO Capital Markets. Your question, please.
Thank you. A lot of the questions have been asked and answered. I just wanted to clarify a couple of things around the next kind of phase of fundraising. Nick, you said that it doesn't look like you'll have to make any concessions around the fee rates. Are you seeing any need to adjust hurdle rates or target returns?
No. I think, Sohrab, we're not having to adjust the target returns. I think as we've discussed in the past, the great thing we get is when we go out and fundraise, and we've just raised fundraising for these, you do get that opportunity every time you go out to potentially reset the target returns. We, in this climate, we haven't felt the need to change it for this set of flagships. We'll reassess when we come to the next round.
Okay. Maybe it's a bit of a naive question, but a re the larger sizes of funds necessitating you pursuing larger transactions? Is this becoming a bit of a self-fulfilling thing, or they're independent of each other?
Yeah, I would say that there's no doubt, as our fund sizes got bigger, our transaction sizes are bigger. We don't do a lot of things today where it's a $50 million investment. The point I would make, and I think we've tried to make this point before, is what we've found is that we actually lower the risk as we buy larger things, because what we generally get are better businesses when we acquire them. They're more professional, they're later stage, they're more mature, and we're buying it at a different stage in their formation. Generally, when you do a carve-out from a Fortune 500 company, it had really great systems. It was run by an SEC-compliant business, and that is a highly attractive thing for us. I'd say the risk, inverse to what one might think, is the risk as size gets bigger, actually goes down.
Bruce, just to clarify, just as I guess from a mechanical perspective, are there single name limits on a per fund basis? In other words, how large can a particular investment be in any given fund?
We have some limits in some funds as to concentration. Generally, I would say we would never expose one fund more than 10% or 15% of any one specific type of investment. The way that we can accomplish that, and this is going back to Craig's comments on our partners and co-investments, is that the way that we can diversify the risk for each fund we have is to allocate portions of that capital as transactions get bigger to either our partnerships as a co-investor or our clients as a co-investor. Those are extremely important to us as we scale up the investment decisions.
That's very helpful. Thank you.
Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Suzanne Fleming for any further remarks.
Thank you, operator, and thank you everyone for joining us today. With that, we will conclude the call.
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Goodbye.