I think we'll get going. We have 2 hours and then a cocktail party. I think we'll probably use almost the 2 hours. If not, we'll go down early. Firstly, I'm Bruce Flatt, and I just want to welcome everyone for coming. I'd just say that we've done this. This is our 11th year. We figured out this morning this is our 11th year of doing this. We're never too sure what we should do, how fast we should do it, how long we should do it, what we should actually put in. Any suggestions you have for us, I'd say up front, please send them to us because we'll try to incorporate them. In fact, if it's a totally useless day, we'll just end it and we won't waste our time.
We'll try to make the 2 hours, and tomorrow's activities with the other companies, as useful as possible while we're doing it. I'll just introduce the agenda. Before I do that, and then do my presentation up front, I'd just say that maybe thank you for 3 things. One, just your interest in Brookfield. Each one of you in a different way, either as an investor or in some other capacity, is involved with us, and we appreciate that a lot. Many of you supported the companies over the years, so we thank you for that. Often we get ideas and suggestions from people, either on how we disclose something, on how we're dealing with our shareholders, how we're doing something, or a business opportunity, and we really appreciate that.
I encourage any of you to speak to any of us about that because great ideas are not exclusive to us. We really appreciate the thoughtful people who actually care about the franchise in bringing ideas to us. Since this time last year when we had the presentation, I'd say we had a pretty good time to execute our business plans. The last 6 months have been more volatile. The 6 months prior to that were pretty good. Despite that, the underlying fundamentals of the business are, I'd say, very good, although spotty. Anything related to commodities and anything related to emerging markets in the short term has been tougher. That's presenting some amazing opportunities for those with capital, and thankfully, we fit into that group.
Generally, the markets are in pretty good shape, and therefore we continue to execute the business plan that we'd laid out, and Brian's going to talk about our past ones we showed you. After my presentation, I'll take a couple of questions, not too many, just because of time. Each of the presenters will take a few questions, and then I'll sum up a few at the end if we have time. Our agenda for the day is that I'll start off and make some presentations. Craig Noble, who runs our public markets group, will then talk about that business. Leo van den Thillart will talk about our private fundraising. We often get questions about this. We don't have significant disclosure on it in our materials because we have to be very careful given the SEC regulations.
We'll try to shed as much light on that as possible. Cyrus Madon is going to talk about our private equity business, then Brian will sum it all up, trying to pull it all together. In fact, all of the presentations together that we'll do over these two days into our financial results. As you know, our information is available online. You have it here. The three other partnerships are having their own days like BPY just did. We're not going to spend a lot of time talking specifically about those partnerships. I'm more focused on the overall business of Brookfield management in the parent. Just as an overview, this is pretty simple, our goal is to be one of the leading global managers of real assets, and we continue driving towards that goal and have been over the past 15 years.
This is a repetitive slide from past, we always like to use it because the business we run is actually really, really simple. Number 1, we just source equity from people that are seeking exposure to property or infrastructure returns. We use the access to the large amounts of capital that we have to invest that on behalf of the clients. We utilize our global reach to identify and acquire high-quality real assets on a value basis. We finance them as longest term as possible, especially in this interest rate environment, because largely it just isn't worth the risk in taking short-term exposure on interest rates if you can put a permanent financing in place.
Lastly, we try to use all the people that we have in the franchise and the platforms to be able to enhance the cash flows of the assets that we buy over time. We leverage that to earn excess returns. Overriding all of that is that we, throughout every one of our businesses, we try to be value investors, we keep this around most of our offices in the world to remind us that the sheep walking against the herd is always the way to go. We don't always act this way, but we try all the time to do this. Most of our actions you will see in many different ways is trying to act on a contrarian basis and be value investors.
There are 3 types of categories that we offer to our clients, which leads to our fee-bearing capital today being approximately $100 billion. The three are $44 billion in our listed partnerships. Just under that in our private funds about $20 billion in our public market strategies, which for very specific purposes is us managing real estate and infrastructure securities that are actually listed in the stock market for clients. Which gives us, in our view, important benefits, there's really four that I'll focus on. Number 1, it diversifies the sources of capital that we have, such that at one time the public markets will be right as people were talking about BPY earlier, for those that were here. The public market isn't trading BPY at a premium to its multiple. I'm positive someday it will.
While it isn't, what we're doing is we're liquidating assets with institutional clients, we're using that money to fund the business plan and buy back stock. It just gives us a number of various sources of capital, whereas others, if you just have access to the public market or you just have access to the listed market, or you just have access to private funds, it limits the opportunities during capital availability. That's, I'd say, the number one important thing that we've been trying to establish is maximum ability to source capital in any environment or any capital market area. Two, it provides options to our clients. Some people want to have a listed security. Some people are in institutional funds, and therefore they can buy a security that's listed.
Some people actually need direct exposure to real estate, and they can't buy a listed security. We have an offering to all of them. Increasingly, there are departments within the institutional clients which, as you know, do each of them. Increasingly for us, it's important to have an offering to all of them because we can then offer many products to the same institution, and it just increases our touchpoints. Leo will talk about that in a bit. It provides certainty of capital through market turmoil for us. Times when stock markets are volatile, our ability to access private capital and on our own balance sheets is extremely important. Lastly, it aligns the duration of capital with strategy. Often we can do things which others can't, largely because of the duration of our money that's in some of our strategies.
That gives us an added benefit. Just to summarize on our portfolio, it's about $200 billion or just over $200 billion of assets. It's global. It's global very selectively, I would say. We're in 25 countries. Most of the assets are in some major ones. Most of those are developed. The other ones, we're very specific about where we go, and we really don't want to be in every country of the world, and we probably never will be. We continue methodically to build out the platform where it makes sense over time. In total, it's about 30,000 people, which gives us a great ability and platform and allows us to do a few things. It allows us to enhance the return on capital we get out of the business.
Often we can take assets, as Ric Clark was describing earlier, we can do things with them that otherwise people couldn't. Therefore, it's not that they couldn't see the fact that you could do that to an asset. It's the fact that they had no ability to actually execute on the transaction. That's a very important thing. Second, we often find organic investment opportunities within the portfolio, those are very additive to the franchise. Third, and probably I'd say maybe even most important from my perspective and from our investment committee perspective, is that it gives us a huge advantage in diligence because we can ask people whether something is the right number we should be buying at and what's going on in that asset. That's an incredibly important thing when you have to make quick decisions from an investment perspective.
We've used those competitive advantages we have essentially to enhance the returns for our clients, such that at the end of the day, people will continue to give us money. I guess I'm proud to say that our investment track record has been very good over time. I'm even more proud to say that this period of time includes the financial crisis of 2008 and 2009. We went through that period largely because, and I've often said this to people, but we didn't do anything really stupid in 2006 and 2007. We made our share of mistakes, but these returns include all of those investments that were in those periods in these funds and have generated returns. Probably you can say that we're good at marketing or we have international franchise or we're nice people.
The number one reason why people come to us and invest with us is because not the quantum of returns. It's because when they look back at our funds through 2008 and 2009, we performed well, and we therefore are a prudent manager of capital through the cycle. When I think of private fund people, I'd say that's probably the most important thing that we have to our credit. This has enabled us to increase our fee-bearing capital, Brian will talk about it later, to just over $100 billion. We continue to successfully put that to work in many things. Five, I'll point out here because a number of them are very significant investments, but there's many other investments we've made in the different funds we have.
Number one, I'm not sure it's possible to describe, I'm not sure when the real estate presentation was done, it's possible to describe what is at Canary Wharf today in words. Or in a picture, what it's going to be 10 years from today and 20 years from today. This is one of the most incredible groups of assets on the planet. It has an amazing group of office assets. There's two other things that factor into it. Number one is that there's approvals for 4,000 units of residential density we're building in the highest value residential market in the world. Secondly, I think there will be probably many more apartments that we will be able to add into that portfolio over time. The build-out is very substantial of this residential portfolio in London, and that's an extremely valuable asset to the company.
Second, the East End of London continues to get closer to the center of the city. With the Crossrail, when it comes in at the end of next year, it will bring the center of the city even closer. That is going to increase values in the East End of London very dramatically. Second, we bought a big portfolio of wind assets in Portugal, and we've integrated them into our business, and they're extremely attractive group of assets. In France, we bought a telecom tower business for $4 billion. We'll talk a little later about just the markets, but this was a very attractive infrastructure asset. We bought a part of a big business in Brazil on the logistics side. The team at Brookfield Infrastructure Partners will talk about that later.
We have a transaction in Australia, which is in the markets now and should hopefully will close in the next couple of months. We continue to also invest in all of the businesses we have organically across the businesses to enhance the values. This is what I was talking about, just organic investments. We continue to do as was mentioned in the property presentation, build out a number of commercial property developments. We continue to build our renewable power portfolio, both wind and hydro. Many of the infrastructure assets we have organic developments within them. Which has led to an expanding business that we have and has led to pretty good returns for the common shareholder of Brookfield Asset Management. I think the only comment I'd make is the returns for the past 20 years are pretty good.
I don't know whether we can sustain those in the future. They may go down. I can tell you that I think we have a franchise which is incredibly more valuable today than it was before. The transactions that come to us, the institutional clients that come to us, and Leo will talk about that in a minute. The maturity of that franchise is vastly different than it was 10 years ago. I think that's important to long-term growth of the business. Just turning generally to the markets. I guess we have a few comments. Maybe the punchline is that volatility creates opportunities. Just generally, I'd say from our perspective, capital markets are fully functioning. We don't believe the investment cycle is over. We think that actually volatility is good because complacency is a terrible thing.
We were possibly getting to the point where people were getting complacent. Those comments probably accept the fact that if you're in a commodities business or you're in an emerging market, it's not fun right now if you're in either of those. Our view is that interest rates, if they go up slowly, and if we stay in a generally low interest rate environment, which I'd call 3% to 4.5%, 3% to 4% to 5%, real assets will perform extremely well. Our global reach we have continues to present us opportunities. In North America, we're using that environment to recycle capital, sell out of mature assets, harvest capital to be able to put into our investment opportunities. In Europe, the opportunity is not really growth. It's about cash on cash returns and unbelievably valuable leverage, where we can finance 10-year terms at under 2%.
The combination of relatively stable to a little bit growing cash flows and 2% leverage is a very powerful real asset return. In Asia, we're methodically building out the business. We're looking for value investments. We think there will be more to come. In Brazil, and South America in general, we think that the good countries that we do invest in will continue to emerge. They're in a tough spot right now, but they will recover, and it doesn't give us any pause that long term, these countries are going to be powerful countries in the world. There are incredible opportunities which are surfacing, just given the markets. Leo's going to cover this in a bit, but at a high level, we continue to see flows of real asset investment capital at a very significant pace into all of our areas of investment.
I think I would say that even greater than 2007, we see more money coming into real assets today than we've seen ever. Sometimes people worry about that, but in 2006 and 2007, most of the capital that drove the markets was driven by high leverage and structures that finance on finance. Most of this money today is from sovereign and institutional funds, which is a much safer amount of money. Institutional fund capital continues to grow. We've shown you this slide today. We still believe that these funds are going to become enormous in the world, and they continue to allocate a greater portion of their assets to the real asset space. I guess it's really simple why, and there's nothing complicated about this, but you all know that bond yields are 2%.
You might stay with your 2%, or you might lose money if rates go up. Equity yields are volatile in many sovereign plans, and they probably will earn 8%. Maybe if you're good, you'll earn 15%. Probably with all of you, it's 20%. But real asset yields, we can earn 7%-15%, sometimes upwards of 20%, on a relatively low-risk basis, and not very volatile returns. As a result of that, people continue to put money into it. We still believe that institutional allocations will go to 30%. They continue to increase. Some institutional clients are past 50% today, but we think on average, they'll go 25%-30%. That's an enormous amount of money looking out.
The one question we often get is what happens when interest rates go up, because not only will values of assets possibly deteriorate, but also there will be institutional clients who don't want to invest in real assets anymore. I guess we'd say four things. Number 1, that interest rates will only rise if the economy's getting better. Global growth is slow, therefore, our view is that it looks like we're going to continue in a relatively low interest rate environment. When I say that, in our mindset, we think of a relatively low interest rate environment, which is probably 5% on the long bond on the upside. Therefore, we think that normal borrowing costs are in the 3%-4% range on a U.S. Treasury.
Real assets in that environment continue to retain all the characteristics that I mentioned on the last slide, and in fact, may even become more valuable because what it means is that it's just longer into the duration of them expecting rates to go up. Every year, we continue to see more people coming to real assets because they've, I'll call it, capitulated to some degree that we're in a low for long interest rate environment. What it should leave for us is larger funds, Brian's going to talk about this later, but the funds continue to get bigger. For us, it essentially means that we're well-positioned to deploy the capital, given our global reach, our operating capabilities, our market knowledge, the capital we have, the track records that we have, and the execution capabilities within the franchise.
We continue to remain focused on our value investment thesis because we think that's paramount. I guess I'd say five things other than the punchline on the bottom there, which is nothing ever gets done without execution, and it's incredibly important for us to continue executing within every business that we have. We're focused always on acquiring great assets, paying a little more for them than others might pay but owning the best in the world. Investing that we may own those assets forever. At minimum, it changed the mindset of what you do. Even if you don't own them forever, it makes you buy great things. Third, buying a replacement cost we've always found is one of the great ways to not make mistakes in the real asset business. Making sure that we finance them properly is paramount.
Generally, what that means is that the greatest time to buy them is when capital is scarce. It indicates to you that usually the currency is down in a country, and when FDI isn't happening, and the flows of capital are down and usually offers some incredible opportunities. I'd end off with just a few comments, Our major priorities are really fourfold. Not that these are the only things going on in our business, but are mainly fourfold. We have $20 billion of private funds in the market. We need to complete all those funds to continue to grow the business and have the capital to deploy. We need to get that done. We need to support the list of partnerships we have, BPY, BREP, and BIP, and ensure that they are successful, and if they are successful, that we will be successful.
That means that the underlying fundamentals of the business are good and growing, and that the stock prices eventually are reflected in the values of the business. We need to launch Brookfield Property Partners, which Cyrus will talk to you about in a little bit, and continue to harvest mature investments across strategies. There is a number of things that we're doing in our funds to expand the business, I'm not going to talk about these because some of them are going to be covered as we go on. I guess I would say probably the one thing that is often underlooked at in great businesses, and it's something you can't really describe what can happen.
What we believe is that in our business, keeping access to enormous amounts of liquidity from both on our balance sheets, in our private funds, and in our listed entities is a very valuable thing. Not because I can describe to you what will happen with that excess capital. In the short term, it probably costs the shareholders something to hold. In fact, I know it costs the shareholders something to hold. What's very important to us is that capital allows us to capitalize on those unknown transactions which sometimes come available, and if you're ready to capitalize them on it's very important for the franchise. We continue to prepare ourselves and ensure that we're in a position to be able to do that.
Bringing it all together, I would say five things, just to end on my section is that, one, we should be able to compound our invested capital on our balance sheet at 12%-15%. That's an amalgam of what's in the businesses plus some of the other capital that we have up at our parent level. Number 2, our asset management business cash flows are increasing towards $3.5 billion of annualized cash flows as you look out. We continue on that track, and Brian will put some numbers to that later. In 10 years from now, Brian always does five-year calculations. As some of you know, I like to do 10 because nobody can really track it back. If you just do the math, and Brian will show you some of this later, but it should be $150 stock in 2025.
Who knows whether it will be, but as we do our mathematical models on how we can build the company, that's the way we think about it. The biggest risks in that are three-fold. Number 1, interest rates go up a lot. That's not going to be fun. It won't kill us, but it's not going to be fun. Number 2, real asset allocations by institutional clients. If they reverse and go the other way, it's not going to be helpful to the franchise. Number 3, and maybe most importantly, if we mess up the execution of our business plans, that's a problem. I'd say those are the three biggest risks we have. The biggest upside is what I just talked to you about. As we keep building the franchise, people bring us things. As our name and brand get known better, people bring us things.
That's a very valuable thing for the company. That was my 28 minutes. I have two minutes left to take one or two questions, and then I think I have to turn it over to Craig or we're going to be behind schedule.
Andrew Kuske, Credit Suisse. Bruce, is one of the limiting factors in your model really just the amount of capital that Brookfield can put in as the funds get bigger and bigger on the private side? Because one of your calling cards is truly investing a lot of your own Brookfield money alongside your clients. Let's just get to the hypothetical where you've got three fundraisings, each $10 billion plus. That's a good spot to be, but do you start to then change your model and maybe not have as much of Brookfield capital in those funds?
Yeah, it's a good question. We're not there yet. I think we can probably be 20%-25% of the funds, any fund we have, and be a legitimate "owner" of the business and beside every one of our clients, especially because the quantums get so big. Everyone understands 50% of $1 billion is $500 million, and 30% of $10 billion is $3 billion. They understand $3 billion is a lot of money. What's really important is $3 billion is larger than any client commits to any one fund. I think being much larger in our major flagship strategies than any one client. We've never had anyone commit more than, I'm looking at Leo, $600 million to a flagship fund of ours as one individual client to one fund. I think as long as we're much larger than that, people treat us as legitimate.
I think the limiting factor isn't going to be that. It's how prudent can we invest that amount of money in a period of time. Because remember, these are invested in two, three years. I think the franchise, the way we've built it, will be able to handle all of that, and it won't be a limiting factor. We'll have to see. Okay. Craig Noble.
Great. Thanks, Bruce. I'm going to go over four main topics today. First, give you a high-level introduction into our Public Markets Group, describe our investment strategies and how we fit into Brookfield, talk about our client base and our growth, both our historical growth and the outlook going forward. We are a leading investor in real asset securities globally. We have $19 billion of assets under management. We invest in liquid securities, so stocks and bonds of real asset companies. We have both long only as well as hedge fund strategies. Hedge funds having the opportunity for performance fees as well as the base fee. We've experienced strong growth over the last few years, primarily within our flagship investment strategies of real estate and infrastructure. We have about 130 employees globally, located here in New York, Chicago, and Toronto primarily. We have a long-term client base.
It's historically been primarily institutional clients, but increasingly includes retail and retail platforms over the last several years. We've organized ourselves for future growth. We've established the staff, the people, the technology, the infrastructure in order to run the business today, but to be scalable for the future. Given that the Public Markets Group may be newer to some people, I'll spend a minute just on how we fit into the broader Brookfield. An obvious focus is real assets, which is important. By offering real assets but within a public securities liquid wrapper, we're broadening the overall product offering to our institutional clients.
What we found is increasingly institutional clients are considering liquid real assets as a complement to their portfolio in order to get still access to the underlying cash flows and attributes of infrastructure in real estate and other real assets, but to do it in a liquid manner. This has led to a collaborative approach in terms of marketing, sales, and servicing our clients. Lastly, there's benefits from employee development. We've had lots of examples of people moving across platforms, and that's helpful to us on a day-to-day basis in running our business, and also a very helpful development tool over the long term. Loyal long-term clients are one of the key reasons for our success. We work with over 100 clients globally.
It includes sovereign wealth funds, public and private pension plans, foundations and endowments, financial retail platforms where we're selling on a financial institutional platform, and also high-net-worth investors. Geographically, you can see about 70% of our AUM comes from the U.S., which is not surprising given that's where we've spent most of our focus over the last several years. Increasingly, we're looking to grow our assets in international markets in Europe and Asia in particular. One of the strengths of our business is not only the diversity of a client base, but also the diversity of our investment funds or the investment vehicles that clients can access. We have 27 funds today. That includes U.S. mutual funds here in the U.S., UCITS funds in Europe for more international and European investors, commingled pool vehicles, closed-end funds, and also hedge funds. We also have many institutional accounts.
In fact, you can see 35% of our assets come from institutional accounts, separate accounts rather. Lastly, the breakdown of our assets across our main investment strategies. You can see our flagship strategies of real estate and infrastructure securities together represent about two-thirds of our business. Real asset debt is about a quarter. The final segment, more multi-product, multi-asset income strategies is the smallest piece, but I do expect that to be higher growth going forward. One of the reasons we have solid client relationships is our strong investment performance over the long term. We have several portfolio management teams of analysts and traders who are focused on this every day. You can see the results here of our flagship products, which represents the vast majority of our assets.
The track records go back 14 years for our initial U.S. REIT strategy and roughly seven years for the others. There's a few different ways to think about performance. One would be on a nominal or absolute basis. That's the middle column, which generally mid to high teen returns annualized since we launched these products, which is pretty good. The second way to think about performance is on a relative basis. Are we outperforming our relative benchmarks? Generally, if we can outperform the appropriate benchmark by 2% or three percentage points a year, then our clients are very, very happy. As many of you may know, that's difficult to do over the long term. The far right column shows that relative performance where we've exceeded those targets over the long term.
We really have a dual focus in our business of growing our existing products and focusing on those investment returns, also secondly, developing newer real asset strategies that we have conviction in over the long term, and which can drive profitability. Here are 5 of our newer investment strategies, 2 of which diversified real assets and real asset debt we've launched over the last 6 months, and we're proactively marketing to clients. The other 3 are up and running also with dedicated investment teams but are earlier in their development, and while we have the ability to receive capital from early adopters, we're not yet aggressively marketing. I'll come back to 1 of these to profile in a little bit, the diversified real assets. I'll spend the next few minutes talking about growth. Historically, looking forward, and also mix, as not every $ of AUM is created equally.
We'll start with a snapshot of our growth over the last 3 and a half years. You can see pretty steady, consistent growth over that period. Most of it's come from our flagship real estate and infrastructure strategies. It's been both institutional clients, existing clients, as well as new clients, and also positive investment returns have helped. Net, we've been growing just under $1 billion a quarter. Come from both institutional and retail clients, and while institutions have been the earlier adopters of real assets, we raised over this time period about $4 billion from retail channels. When we talk about AUM and growth, we need to talk about mix and profitability. We're very aware that different products and channels and geographies have different fee structures and bottom-line profitability.
Over the last 3 years, we've been very focused on growth, but profitable growth and higher margin products. This, in some cases, mean actually turning down business that doesn't meet our targets or exiting areas that don't fit our mission. Our higher margin business includes our hedge funds, our closed-end funds, and some of our proprietary vehicles. While we've grown our assets over this time period from $7 billion-$19 billion, over $4 billion of that growth has come from what we deem to be higher margin products. The implication here is that we've dramatically grown our average base fee. In fact, our average base fee has grown by 55% over this time period. That's a direct result of focusing on higher margin and profitable growth.
Importantly, this includes roughly $2 billion of hedge funds, which have a higher base fee, but also the potential for performance fees based on performance. Going forward, our growth will come from 2 sources. 1 is our existing flagship investment products, and secondly, the newer real asset strategies that I described. From a macros perspective, we continue to be very optimistic about capital flows into the asset class. We think that investors will continue to look for and seek income with growth potential, and clients that we talk to, and consultants, continuously are focusing on the lower correlation, lower volatility, and inflation hedge of the real asset class. We get a lot of questions about interest rates specifically, which Bruce touched upon. Interest rates are flat to declining in most parts of the world.
Here in the U.S., as fundamentals improve, no doubt interest rates will go up at some point, which I think will continue to be very supportive of real assets. It may add to the shorter term volatility, we've certainly experienced some of that over the last couple of months. Lastly, we believe that we're in the early stages of this shift towards real assets, we're continuously hearing this from our clients and pension plans that we're talking to, of looking for ways to get access to those real asset cash flows. Earlier, you heard about five of our newer strategies. This is a profile of one, diversified real assets. We launched this late last year in a U.S. fund and European fund structure.
It really evolved from client demand, where clients initially were asking us to manage one sleeve, a real estate allocation, then an infrastructure allocation, then also real asset debt. Eventually, they were asking us to take over the asset allocation decision and to manage it as one commingled product. It consists of a strategic allocation to the 4 main real asset categories: real estate equities, infrastructure equities, real asset debt, and natural resources, all in the public securities market. We have the ability to tactically increase or decrease those allocations depending on valuations, relative attractiveness, where we are in the business cycle. Still very early days for this product.
Generally takes several years to get a new product up and off the ground, we've been very encouraged and excited about the type of reception we've got, first from the existing clients, and also some of the institutions that we're talking with. Given that we have a focused business model, it's important for us to concentrate on our top priorities. First and foremost is always strong investment returns over the long term. Second, we will continue to be thoughtful and develop new real asset investment strategies. This growth will continue to come from North America, but an increasing focus on Asia and Europe in terms of growing our assets. Our operating platform, the staffing, the systems, the technology, is all in place to support that growth. It's very scalable with a lot of operating leverage.
This is all underpinned by our specialization in real assets, where, again, we think we're in the early days of the shift in the increased allocation of real assets. With that, I think we've got some time. I'd be happy to invite some questions.
Adil Khan, BMO Capital Markets. I'm wanting to ask, how do you see the growth in fee-bearing capital over the next couple of years in public markets? I mean, you've been successful in increasing it over time. What kind of blended fee rate would you see this business running at moving forward?
In terms of assets growth, as I said before, we've been growing a little bit less than $1 billion a quarter. It will be lumpy, no doubt. The volatility that we've seen always impacts investor sentiment, but we've got a robust pipeline for existing flagship strategies as well as some of the newer investment strategies. It's difficult to predict exactly what that looks like quarter to quarter or year to year, but we're really optimistic that we can continue to grow the business over the long term. In terms of the type of fees that we have, we've really got a combined approach where some of our long only strategies, it's just a base fee, whether that's in a mutual fund or a separate account for an institution.
Those are our quote-unquote market fees, which depending on the exact mandate and how specialized it is, our fees, I would say, are high in terms of what you might look at in terms of some broad averages. We're certainly not looking to be the cheapest. We're very specialized. It's going to be less than 1%, but a very healthy base fee. Our more opportunistic strategies, which fall into a hedge fund structure, have an even higher base fee plus the opportunity for performance fees.
How much crossover is there between investors that are invested in your securities funds and the investors that are looking in the direct real assets? Can you compare maybe how your fees stack up versus the fees that would be for direct investment in the real assets?
Sure. In terms of the crossover, I don't have the exact number. I'm not sure if Leo does. There is significant crossover, and we have done this analysis in the past. We can maybe follow up on that question to get you a more specific answer. It's a different investment strategy or a different investment structure. The fees are, as I described on the long only side, something less than 1%, and then on the hedge fund side, a higher base fee plus performance fee. The more opportunistic hedge funds I would expect would compare to be more similar to what the private funds are. Different structure, though, in terms of the calculation and when they're paid, but directionally.
Hi, it's Cherilyn Radbourne from TD Securities. I wonder if you could just address the resiliency of your AUM over the last 6 months in the context of the volatility we've seen in the public markets.
Sure. We've seen some volatility, certainly. I think we've got great clients. Most of our clients are drawn to us because of our longer-term investment approach. We're not traders, but we're looking for long-term value, and at least thinking a 2 or 3-year investment horizon in the liquid investments that we're making. What we've seen with our institutional clients is that they've been very resilient. We're spending a lot of time talking to them about our observations in the market and the opportunities that we're seeing. Anecdotally, I'd say our clients have been more inclined to be adding exposure into increasing the assets as opposed to taking assets off the table. I'll maybe contrast that to some of the more retail platforms, where that tends to be a little bit more subject to what's happening in the current capital markets. Maybe 1 more question.
Hi. Just wondering about the capacity, particularly on the hedge fund side, as you're seeking to push growth in the higher margin products, the tension between that and then the capacity and the potential detriment to returns. Is there any reluctance from existing LPs pushing back against this continued growth in AUM?
Any time somebody has a more specialized investment approach as we do, capacity is part of the discussion. Broadly speaking, within the business, we do have capacity to be growing significantly over the next several years. However, there are pockets of the business. Our real estate hedge fund, for example, in the past, we have closed for that exact reason. We have a history of closing strategies when we feel we're reaching those capacity constraints, and we will continue to do that. It's one of the reasons that we're so excited about developing some of these newer products, which gives us this tremendous runway in order to grow, but still staying within the real assets concentration. Great. With that, I'll hand it over to Leo.
Thanks, Craig. Good afternoon, everyone. It's my pleasure to give you an update on our private funds business. I'm going to keep it fairly high level because I'm restricted in some cases to talk about our funds in the market, but I'll, at the end, try and answer some questions. We've experienced some significant growth in the last few years. I thought I'd highlight today what are the key drivers that I believe will continue our growth. Firstly, I believe we have a compelling range of products. The cornerstone of our offerings are our three flagship funds, investing in property, infrastructure, and private equity. Secondly, we have a rapidly diversifying and expanding investor base. As we talked about with Craig and Bruce, we are in an asset class where we're seeing significant demand from investors with increased allocations to real assets.
We are targeting significant growth in our private funds business and have already laid the foundation to achieve our growth targets. Supporting our AUM growth are the funds we currently have in the market and additional funds we expect to launch. Again, while I'm restricted to go into any particular detail on our funds, I can say that we have five funds in the market today targeting $23 billion, of which we've raised $8 billion in the last 12 months and expect to raise another $4 billion in the next quarter or so. In the next 12 to 16 months, we expect to raise an additional $10 billion-$12 billion. As well, over the next 12 months, we expect to launch an additional three funds targeting another $5 billion in aggregate. Our flagship funds are growing in size and scale and are considered leaders in their respective space.
While for us, it's not about just being the biggest, the fact is our size, our scale, and the flexibility of our funds do give us a competitive advantage to be able to deploy capital on a global basis and invest in the most attractive opportunities. To put some of the size in context of our funds, our last infrastructure fund was one of the largest ever raised. We expect the successor fund to be even larger than the last, and again, one of the largest in the industry. As an asset manager, we rank second globally in terms of size. Much of the same can be said about our real estate business.
Our current infrastructure, our real estate fund, I should say, is going to be one of the largest in the industry. We again, consistently rank in the top three real estate managers globally based on size. As Bruce mentioned, underpinning the growth of our flagship funds and our ability to raise capital is our consistency in returns and our ability to hit our performance targets. From time to time, a number of you have asked us, what is it about our flagship funds that investors like? I thought I would highlight a couple of things that I think resonate with investors. In the world of real asset investing, we distinguish ourselves by investing in high quality, best-in-class assets.
We are particular about the assets we invest in and look for investments or assets that are critical, irreplaceable, long-life, with high barriers to entry, and that produce predictable and growing cash flows. This is also what investors are seeking, which puts us in strong alignment with them and makes us an ideal partner for them. I believe what is unique to Brookfield as an asset manager is that we are experts in the operations of the assets we buy. Due to our heritage, we think and act like an owner-operator. We have teams that go in and operate the assets, and we understand how to add value, where to grow cash flows. Importantly, we've also demonstrated that we are able to consistently deploy capital in great opportunities while many others have struggled to put money to work.
This is evidenced by our flagship funds, which are returning to market, in some cases 2 years sooner, allowing us to not only raise additional capital, but to raise larger sums of capital for these flagship funds. Finally, as I've mentioned and we've mentioned previously, we are consistently meeting our performance targets, and our investors are very happy. As well, in the last 12 months, we've added specialized funds that leverage our core competencies and invest in areas where we see opportunities and market demand and where we have conviction. We've raised approximately $1 billion in the last 12 months on several specialized funds. In the next 12 months, we expect to launch additional specialized products with an aggregate of $2 billion in aggregate of capital. The part I'd like to talk about now is growing our investor base.
I can definitely say that today we are in more markets connecting with more investors. In fact, globally, we are contacting and speaking with over 2,000 investors, which is a hard number to believe, but given the size and scale of our team, we are able to do this. In the last few years, we've been developing new geographies and diversifying into various investor segments, like corporate pension plans, smaller public plans, and high-net-worth channels. At the same time, to support our growth, we continue to build out our customer support so that we can provide excellent customer service to our investors. Our investor base continues to grow, and we now have over 320 investors in large critical mass. In the last 12 months, we've added 40 new investors. In the next 12 months, we expect to add at least 160 new investors.
Interestingly, 40% of our investors have invested in either multiple successor funds or have invested with us across different platforms. As well, 81% of our investor commitments in the past 12 months have come from existing investors, showing that our investors continue to support us. In other words, we have sticky money. Not to be complacent, we continually push and look to diversify our investor base. Today, I would say it's nicely diversified, not only by type but across geography. We never want to be dependent on one investor segment or one geography. Our investor base in North America continues to be solid and is performing well. We're also seeing growth in other markets like Europe, Asia, and the Middle East. In the last 12 months, we've had a 13% year-on-year growth.
Now, in fact, as an example, in Asia, we cover 110 institutional investors across three countries. We're also looking to push into new channels, like I mentioned, and are targeting high-net-worth investors, family offices. We're doing that both through our internal sales team, but also partnering with private banking channels. High-net-worth investors today represent roughly 5% of our asset base, but we expect that to double over the next five to 10 years. As well, we are targeting wealth managers who control large pools of capital. Today, they roughly allocate about 4% to alternatives. We expect that to double, if not triple, over the next five to 10 years as well. I wanted to also briefly touch on the consultant market. This has been a market that we've had a concerted effort in over the last few years, which is really paying off.
We are now consistently approved and are given buy rating by many of the industry's leading consultants. As an example, in our last real estate fundraise, over 20 consultants endorsed our fund, which led to over $1.5 billion of capital coming from 34 different investors. What's also important to point out about the consultant market is that they provide us access to a market that would otherwise be fairly inefficient to access, which is smaller corporate pension plans, DC plans. Through these consultants, we are deepening and diversifying our investor base with what I call Main Street investors. Again, as Bruce and Craig mentioned, we believe that investor allocations to real assets will continue to increase as investors seek portfolio diversification, stable, predictable returns. Of the institutional investors that have invested in real assets in the last three years, 60% plan to increase their allocations over the next 18 months.
This chart also demonstrates the continued demand for the long-term trend for investor allocations to real assets, with 44% of infrastructure investors and 34% of real estate investors planning to increase their allocation. What's unique about Brookfield in the real asset space is that we are a dominant player both in real estate and in infrastructure. As the demand increases for real assets, we are taking advantage of our market position and able to accept that capital, given the size and scale of our flagship funds. I wanted to conclude my presentation on the point that you can have confidence that our brand is only getting stronger in the real asset space, which will enhance our fundraising efforts. Because of our reputation as a market leader, we are increasingly sought out by investors looking to deploy capital. That concludes my presentation. Any questions?
Paresh Kanzaria, BMO Capital Markets.
Hi. You mentioned earlier that you'd expect to raise $10 billion-$12 billion over the next 12 months.
Yes.
My question is, what % of that would represent third-party capital? Historically, you've been successful in raising similar amount of money on a year-to-year basis. Do you expect that to sustain over the next few years?
Sure. Well, two parts to that question. The first is roughly 20% will come from Brookfield, the balance from third party. The extent to which we believe that'll continue really is driven by our flagship strategies. They are, in themselves, able to grow in size, and therefore we're able to raise, we think, that capital because of our ability to raise capital, our brand, and our continued strong performance. We're pretty excited about the next few years and at least growing our assets per year by at least 20%.
Andrew Kuske, Credit Suisse. Could you give us some insight into your Middle East client base?
Sure.
In particular, I ask the question because there's an interesting dynamic where there's a desire to diversify away from their existing economy, but you've also got a pullback in commodity prices, which creates a clear tension in less wealth than they had before. The other issue that they face is you have the Saudi government doing a bond offering and other domestic opportunities to invest capital into.
Well, we've been making efforts in the Middle East probably at least six or seven years. Today we have a very strong position. These are not new investors to Brookfield. These are investors that we've had now five, six, seven years. Of the major investors in that region, we have relationships with at least 80%-85% of those. In hard times, they tend to stay with their proven managers. We benefit from that. I'd also say in times of increased market volatility, they do look for sort of safe harbors, and we're certainly seeing that today, where they're looking for stable real assets, real buildings with real tenants generating real cash flow, owning essential assets that will endure difficult times, that'll continue to generate assets. Our flagship funds are truly a benefactor.
I think certainly in this year, next year, given the market volatility, we think we'll be recipients of that capital, even in places like the Middle East, where they are, in some cases, slowing down. All right, one last question.
Can you give us a view on trends with fees, given that real assets are becoming more and more accepted with institutional investors? Is there a push to reduce fees over the past few years, or are fee levels pretty stable?
The quick answer is our fee levels are very stable. We've been able to resist that. I would say that, again, it's because of our track record and that, in fact, investors are increasing their allocation. We have not felt at all any kind of fee compression, and we don't expect that, at least in the next several vintages of funds we plan to launch. I'd also add, we've been pushing into smaller investor segments where typically they pay higher fees as well. You'll see our fees, if not grow. Thank you.
Good afternoon. I wanted to cover two things off today. One, I wanted to update you on our private equity activities generally over the last year. Then I want to talk to you about Brookfield Business Partners, which for those of you who didn't see it, we announced this morning.
Just an overall reminder of our private equity group and our strategy. First and foremost, we are a value investor. You're probably getting sick of hearing that word today as I sit here listening to it. We look for situations where we can add value in often out-of-favor sectors, underperforming businesses, or distressed situations.
Second, we look for high-quality businesses, and to us, that means companies that have low-cost positions or very strong market positions. Third, we are heavily involved in the operations of our portfolio companies. In fact, we have an operations team that gets deeply involved in turnaround situations we invest in, and typically that's when a company needs a change in strategy or better execution of their strategy. Our private equity group is located alongside other Brookfield platforms around the world, North America, Brazil, U.K., Australia, and India. Our primary source of capital for new investments is private funds, where, as you've heard from Leo, we continue to have great success in sourcing capital. I'm not going to spend much time on this because you just had an entire presentation on it.
I think all I wanted to say is we are finding an increasing number of LPs interested in our private equity strategy of value investing, particularly because of a high level of frothiness that existed in the markets until pretty recently. They also recognize that our distressed capabilities has been very successful in deploying capital during periods of dislocation. Our business strategy and our track record over a long period of time now has enabled us to pretty dramatically increase the size of each successive fund, and we're hoping that will continue into the future. Our private equity group manages a growing portfolio of businesses across services, industrials, and residential development. This page lists our primary business lines within these core sectors, and each of them continues to grow.
Those businesses today have very significant scale with more than $16 billion of assets under management, more than $9 billion of total combined revenue, and $500 million of FFO for Brookfield. Many of these businesses are global. Over the last year, we've invested more than $2 billion in a variety of transaction types with different investment characteristics. Commodity-related businesses are very much out of favor, creating great opportunities in what we believe is an overlooked market. We took advantage of this backdrop to complete a privatization and a corporate carve-out. We recapitalized two companies that lost confidence of the capital markets, and we had the conviction to do this because we knew we could source great management teams to run them.
We had the opportunity to buy the other half of a great business we already had a stake in, completing a corporate carve-out and providing valuable certainty to the seller. We continued to build our platform companies where we could on a value basis. A pretty wide variety of transaction types. I did want to touch on one relatively new driver of transaction flow for us, and that is the growth in activist investors and capital available to them. About 15% of hedge fund flows today are moving to activist strategies. Activists today have a record amount of capital at their disposal. A large part of their playbook is to agitate for companies to sell their non-core assets, non-core divisions, or to focus on certain geographies. This is becoming a great transaction catalyst for private equity in general.
Over the last year, we acquired three businesses, and two of them were the result of shareholder pressure that enabled us to act as a solution provider to management and boards. We're seeing a lot more of this. We acquired Apache Corporation's Western Australian oil and gas assets. We privatized GrafTech Corporation, and we acquired 50% of Johnson Controls facility management business in Canada and Australia. I'd like to give you a little more detail on each of these investments. The first one is Brookfield Global Integrated Solutions or BGIS. This is an integrated facilities management company with operations in Canada and Australia. It manages 250 million sq ft of facilities for its clients and more than $3 billion of spend on behalf of its clients. The business has 4,000 employees operating more than 10,000 client sites. We like this business a lot.
It has very high customer retention rates, strong historical growth. It requires very minimal capital. It is by far the industry leader in its geographies. It has a terrific management team and strong free cash flow generation. This was a proprietary transaction as a result of our joint venture with Johnson Controls, they sold us the business so they could simplify the sales process for the rest of their global business. We bought this business for $500 million or about 8.5x EBITDA. EBITDA today is about $60 million. Within the existing business, we plan to increase EBITDA over the next 3-5 years by $20 million to achieve our targeted returns. We're going to do this by winning new business. There is a continued trend to outsource, we think we'll win new business.
We can drive additional services through our existing client relationships, we can insource select services where we think we have a competitive advantage. Our target returns for our investments in our private equity group are generally 20%. That return, in this case, does not include any expansion into other geographies like the U.S., and we are pursuing that very aggressively, or any Brookfield-directed work through the 300 million sq ft of real estate we own. The next company I'd like to speak about is a company called Quadrant Energy. We acquired the Australian oil and gas business of Apache Corporation for an enterprise value of $2.1 billion. We did this in a joint venture with Macquarie. The business has 4 substantial operating offshore gas fields, 3 operating offshore oil fields, and very significant associated infrastructure.
It also has one of the largest exploration portfolios in Australia, with more than 40,000 km of exploration area. Quadrant is the largest supplier of gas into Western Australia, with about 40% market share. It has approximately 250 million barrel of oil equivalent, 2P reserves. 80% of that is weighted toward gas. It's currently producing about 55,000 BOE per day. The reserves of this company are very low cost and very long life. We've got a 15-20 year reserve life. We have a very experienced management team, and the business generates substantial cash flow. This was an opportunistic acquisition from a very motivated seller in a very challenging environment. What made this transaction particularly interesting is that Alcoa needed to secure virtually all of Quadrant's natural gas output to run their aluminum business.
As part of the transaction, we were able to sell virtually all of our gas to them on a take-or-pay basis for 12 years at a fixed price, inflating over time. They were willing to pre-fund $500 million of this purchase. That had an enormous impact on our returns. We also hedged, thankfully, almost all of our oil output when we closed the transaction. Virtually none of our existing reserves are subject to any commodity price movements. We recently privatized a U.S.-based company called GrafTech Corporation. GrafTech had been locked in a proxy battle for the last 2 years, this created the opportunity for us to acquire it. The company is struggling from operational underperformance and oversupply in the graphite electrode industry. Over the past decade, GrafTech lost focus on its core electrode business.
They started investing a lot of money into new technologies, they dramatically overpaid for a strategic acquisition, and they overbuilt their inventory across their platform. Due to overcapacity in the industry, electrode pricing is at the lowest level since the last period of oversupply in 2002. Their stock price declined very dramatically over the last couple of years and started looking interesting to us. We like this business because it is the global market leader, it is the low-cost producer, and it has a global production footprint. Graphite electrodes are a critical consumable in electric arc furnace steel production. They only represent 2% of the production costs. Their performance has a very significant impact on operating performance of a furnace. The incentive for steelmakers to switch core electrode suppliers is very limited.
We acquired this company for $1.25 billion, and that's about half of its replacement cost. The current EBITDA is only $100 million, trend EBITDA over a long period of time is $250 to $300 million. We have a business plan to refocus the company on its core operations, our operations team has identified operating cost savings, which should increase earnings by $80 million annually, irrespective of what happens to pricing in the market. The electrode industry has become oversupplied multiple times over the past 30 years, in each of those prior downturns, the industry has rationalized, which has resulted in more normalized pricing and profitability and very strong long-term trend EBITDA. I have one last investment to tell you about. It's smaller than the others, it's interesting.
Once in a while, we find an opportunity to make a loan on a very compelling basis, we recently provided U.S. Steel's Canadian subsidiary with $150 million loan. Some of you may know the steel industry is struggling with a lot of overcapacity, U.S. Steel put its subsidiary into bankruptcy so it could reorganize itself under bankruptcy protection. Our loan is a DIP loan, which is a debtor in possession loan, it is provided to fund its operations while it reorganizes its affairs. We wrote this loan on the basis that we would get repaid even in the worst case, where the company's working capital is liquidated. Our loan is acknowledged by the court to be senior to virtually all other obligations of the company. We expect to earn about 25% on this loan over a year. We thought a pretty neat risk-return trade-off.
I'm going to keep it brief because I do want to talk about Brookfield Business Partners. We are really excited about this. At the end of this, I'm happy to take questions on anything. We're setting up a public vehicle to fund our private equity business in addition to the private equity funds we raise, it's going to be called Brookfield Business Partners or BBP. BBP's objective will be to generate strong long-term capital appreciation, we will target returns of at least 15% on our capital invested. BBP will be the primary vehicle through which Brookfield will operate its private equity business. BBP will use the same structure as our other public vehicles, BIP, BREP, and BPY, it will be a Bermuda-listed limited partnership with Brookfield as the GP.
BBP will acquire businesses alongside Brookfield's institutional partners, which are often LPs in our private funds, it will have control over the businesses it acquires. We think it's the right time to launch BBP, given the growth in our private equity business, there are several benefits for our business. BBP should enable us to broaden the spectrum of investments we can make, as pure private equity investing limits us to investments we need to sell within a fund's life. Owning a great business in perpetuity gives us the opportunity to compound returns over many, many years. BBP will also give us access to the public markets, having permanent capital in difficult times will be very valuable to our private equity franchise.
For Brookfield, it provides a potential source of liquidity, provides transparency for its shareholders to our private equity business, it furthers our asset management strategy. Shareholders will have the opportunity to participate in our private equity business directly. We will shortly issue a prospectus outlining the spinoff to Brookfield shareholders. In summary, BAM will spin off BBP in the same way it did for BIP and BPY. BAM shareholders will receive a dividend of about $500 million or $0.50 per BAM share in the form of BBP units. This will leave BAM with about 65% of BBP at the outset. BAM will earn fees of 1.25% on BBP's market cap annually, plus 20% of the increase in value of BBP units. Our peer group is going to be investment holding companies and other permanent capital companies.
There are a number of them that have very strong reputations in capital allocation, as a result, they've been able to raise substantial capital over many years. Some of them are externally managed like BBP will be. BBP will adopt the business strategy of our private equity group, that is to make opportunistic acquisitions focusing on control situations, primarily in the mid-market, but from time to time, we'll also pursue large-scale transactions. We'll operate our companies with a view to maximizing cash flow and value over the long term, we'll recycle capital when it makes sense. Unlike our private equity business, BBP can be a permanent home to companies, in particular, for management teams that don't want to be public on a standalone basis. We think this should lead to enhanced opportunities for our business.
BBP's initial sector focus will be business services and industrials. BBP will own most of BAM's businesses in these sectors. The single largest operation within BBP will be our global construction business operating under the brand Brookfield Multiplex. BBP will have an opening net asset value of about $2 billion, the companies we're putting in generated FFO of about $200 million last year. We have a very strong pipeline of opportunities for BBP. With that, I am happy to take any questions.
Is it reasonable to assume that the kinds of businesses you would want to own permanently, which would be something you can't do today and you will be able to do in the BBP structure, might graduate up the quality scale from businesses that needed high levels of work and more turnaround situations?
Yeah, I think it's safe to say that private equity is very competitive, and we've made a lot of money by giving a lot of attention to our company. I think you're spot on, and I think we may focus on companies that have more durable cash flows over a longer period of time. They're going to be more expensive than a company that needs fixing. I think we'll always do a little bit of both, for sure, we have the opportunity to buy a different type of asset compared to what we would within our private equity vehicles today.
Adel Cancel, BMO Capital Markets. Just a question on BBP. You say about $200 million FFO. My question is, which business segment would you say represent the biggest % of that FFO?
Today it will be our services business. It's actually split pretty well, 50/50 between the two. We are going to issue a prospectus shortly, I think you'll get a pretty good idea when you go through the materials. It's all outlined in a fair bit of detail. I should mention one thing. Craig Laurie is going to be our CFO. Craig, you are here somewhere, I think. There he is. You can ask him the real tough questions afterwards. No more questions? Oh, one more.
Hi, it's Cherilyn Radbourne from TD Securities. Just in the context of some of the turmoil that we're seeing in commodity markets, I'm curious whether you have any limits to your total exposure to commodities in general within your private equity business and to specific commodities.
We don't have any limits within our documents, if that's what you mean. Where our limited partners limit us, typically the funds are limited to 20% of a fund per investment. Beyond that, we don't have any industry concentration limits. As I said, our investors recognize that we are going to gravitate toward areas that are in trouble or struggling and need capital. I think they're quite comfortable with that.
You mentioned that the companies that don't want to be standalone public entities, that would be a good vehicle for this BBP. What will be the difference? Will we get disclosure at that level? Is the only difference the G&A expense related with being a public company? Second, could we see infrastructure or real estate assets trade into the private equity portfolio? Can we see assets that are held in the private equity BBP be sold to other Brookfield platforms?
We're not going to buy real estate or infrastructure, and we're not going to be selling private equity assets to our infrastructure platforms or real estate platforms. There's sort of no motivation or reason to do that. I didn't quite understand your first question. I apologize.
Yeah, no, I was just interested. You had said that the benefit of BBP was some companies that might not want to be, for whatever reason, might not want to be a public entity. I'm wondering-
Why?
What's the difference? You're going to be a public company.
Right.
You're going to have to disclose everything anyway.
I met, in the last little while, two CEOs. One of them has private equity investors, and it's time to sell, and they're giving him a real hard time, and he doesn't want to go through it again, and he doesn't want to be public. We had a discussion with him. Another one is a public company CEO. He just went through a real tough time with some activist investors over a two-year period, and the board is tired of it, and the management team's tired of it. For a company that just wants to make money and operate and run their business and not have to deal with shareholders thinking about their own short-term returns, this could be a great platform for them.
Alfredo Charab, SBN Securities. In this new vehicle, do you plan to pay a distribution? Does the business model lend itself now or in the future to distribution? If not, why?
Look, I think at this stage, what we'll probably do, and we haven't completely landed on it, we'll probably just pay a very modest dividend. A lot of the businesses we have are more private equity-like. As I said, we're going to focus more on capital appreciation. I think we're short on time. I'm getting the hook here. We're happy to answer questions afterwards. Brian, I'm going to turn it over to Brian.
Thanks. Good afternoon. For those of you who were at the Brookfield Properties presentation earlier, I am the third Brian. I'm also the last scheduled presenter before Bruce comes up to close things out, and we head down for a reception. Recognizing that's a somewhat precarious position to be in, there were three things I wanted to cover. One of which was just update you on the financial results and how things have gone since the last time we were here last year, and we're quite pleased, very pleased with how that's played out. Also to talk about the growth profile that we see going forward.
Bruce and Leo and Craig and others have focused on a number of areas here, there are a few other characteristics that I think are conducive to us achieving accelerated growth, continuing to expand the business at quite a good clip. Then just to share some thoughts with you on how we see potential future share values. First of all, we did significantly expand the business over the past year focusing on one of the key metrics for us, which is the fee-bearing capital. As Bruce mentioned, we're now up at around $100 billion. What's particularly rewarding in that regard is you'll see we had good growth across all of the major categories, the listed partnerships, the private funds, and the public markets.
What that led to was a 29% increase in fee related earnings on an LTM basis, that's one of the key metrics that we use to really tell you about the profitability of the business. I'll come back and just talk a little bit about how a 20% growth in fee bearing capital can translate into a 30% growth in fee related earnings. With that expansion of capital, this is another important metric that we share with you periodically, which is our annualized fee base and target carry. Really speaks to the kind of fees and carry opportunity that should be accruing to us on an annual basis based on the capital that we have in place at that point in time. Again, it's grown quite nicely as well.
All of that pulled together, if you take a pretty simple model as to how you might value an asset manager, what we think about based on the growth profile of our business is, let's say, a 20 times multiple of that fee related earnings. That's now taken us up to close to $9 billion in that regard and 10 times the net target carry, which is another $3 billion, about $12 billion. Again, that's up from $9 billion this time last year, we're quite pleased with how that's rolled out and see that growing quite substantially down the road. With that, on the growth side of it, wanted to just talk about a few things that give us a lot of confidence on the growth side of the business.
One of the things that gives us a high degree of visibility on our fee streams and the amount of capital that we can manage within the business is the fact that over 80% of the capital is very permanent in nature or perpetual. It's either perpetual or long term. To pick up on Leo's phrase, it's very sticky. Gives us a lot of stability in the fees and the capital. Also, just want to share with you a couple of things about how we see that capital compounding at quite a good clip. One of the things at the stage where we are launching, I'll say, larger and larger funds, that's fairly typical pattern that you see in an asset manager. What happens is that you get this compounding up because these are 10 plus year funds.
You launch the one, then two to three years later, you launch the next one, the next one. What you see is this increasing amount of capital under management, all of which is generating us fees, whether it's on the invested capital or the committed capital. That's why you can see our fees growing, the capital on the private side growing at really almost an exponential rate. On the listed side, we've got multiple opportunities to expand that capital as well. Part of it is as we continue to grow the FFO in the business based on our distribution policies, that enables us to increase the distributions. Higher distributions should translate based on the yield into a higher capitalization value of the business for all unit holders, that impacts us as well positively.
We also periodically will issue equity when we can do that on an accretive basis to fund investment activity. I'll come back to the various levers that we have to pull on with respect to sourcing capital for the business, really to reinforce the point that Bruce was making earlier. Finally, it can be a very attractive currency for large scale M&A. There's been a couple of examples for us, whether it's in BPY or BIP with Asciano. That again, gives us a very good growth profile for this category of funds for us. As a result, we continue to expect at least a 10% annualized growth in our fee-bearing capital. It's pretty consistent with what we've shown you in previous years. I think we'll also come back and show you how we generally have performed in that regard as well.
We feel pretty good about our ability to exceed that down the road. Now, I mentioned before that we had 20% growth in fee-bearing capital and yet 30% growth in fee related earnings. There's a couple of things that lead to that, really it all comes back to the ability to increase the level of fees that we can earn on a dollar of capital. First of all, Leo would have mentioned in his presentation, you've seen a shift in our private funds. A lot of the flagship private funds are more focused on value-add or opportunistic type strategies, and those yield higher fees than a core type strategy. Second, with respect to the listed partnerships, they generate 125 basis points on the incremental capital.
In a couple of the funds, we had a base fee, which was a lower fee on the initial capitalization. That is attractive for us as well. In terms of the growth rate, as Craig mentioned, we are shifting the public securities business so that it's generally a larger fee, higher margin business as well in those equity strategies. The other thing, we've talked about this a couple of times in the past, the incentive distributions do have a very attractive growth profile as well based on our ability, and it was all predicated on our ability to increase the FFO and increase the distributions to unit holders, which is obviously to their benefit. That does lead to a very attractive growth profile for the IDR.
For example, even on the base case, that's about a 35% compound growth over the next five years. All of that, if you just run the maths, it's really a pretty simple model. Capital scales out at about 10% over the next five years, which should drive fee related earnings up to in excess of $1 billion, which is about a 20% growth rate. We thought we'd share this one with you, which we're quite pleased with. Going back to really the first time when we put a, I'll call it an illustrative model out there for Pete, for us just to try and explain the business unit and the various dynamics of it. We have managed to outperform in each year, you sort of say this with dread that you're jinxing it.
I don't think I am, because it all is pretty much, as I said, it's a very stable and growing business. We're quite pleased with our ability to outperform the previous projections in that regard. One of the parts of the business from a financial perspective that's a little bit more challenging to draw out from the financial results. Also just at this stage, given the recent vintages of some of our larger funds, is the carried interest potential that we have in the business. A number of you would recall we had quite a substantial quarter a year and a bit ago, where it was a half a billion dollar carry. Otherwise, it's been generally pretty small in the financial results.
I just wanted to talk a bit about that and why we use a couple of different metrics to talk about carry, which hopefully will enable you to better understand the relationship between the financial statements and reported results and the value that we see ourselves creating in the business. First of all, I should almost start at the bottom and go up. I will. The realized carry is what we report in our financial statements. For us to be able to report it in our financial statements, because we follow a pretty conservative methodology in that regard, it has to be earned, and there could be no clawback. What that means is you're generally looking at booking the carry pretty close to the end of the fund. When you're dealing with a 10-year fund, that's a long way out there.
For us, that really doesn't sound like a very good way to convey the performance of the business, but we're kind of stuck with it. What we do do is tell you in our MD&A every quarter. We tell you how much carry we generated. What that is, it's based on if you wound up all the funds at that time based on the actual performance to date, how much carry we would be entitled to earn. That, I think today it's around $700 million of accrued carry that would be payable to us pre-expenses. Then the number that I referred to previously is what we call target carried interest.
The reason why we think that's important is, again, in the early life of a fund, I'm not going to get into the J curve or anything like that, but the carry does tend to just build up towards the mid-cycle to the end of a fund. What we wanted to do was to give investors some insight into the value opportunity that we achieve by getting a fund out there that we can then go and invest and earn the returns and earn that carry. What target carried interest is if you take the carry that we should earn on a fund over the life of the fund and just straight line it, just really simple. That's what we refer to as target carry. It's generally around 200 and some odd basis points annualized in terms of return.
That's really the 3 metrics that we use. Having delved into the weeds a bit on that, but I think it's important because this is a part of the business that I think is harder for people to grasp, and it's a bit of a challenge sometimes to explain it. A little bit of context and history. Over the past 5 years, we've generated about $1.2 billion of carry, and we've paid out about $600 million to date. It's starting to come, and it's starting to become more visible. As we grow the private fund capital, then that opportunity to earn the carry increases.
If today it's around $475 million on an annual basis based on the private funds in place, we would see that based on the 10% growth rate that we're talking about increasing to about $875 million in 5 years hence, and net of expenses around $570 million. That's about 13% growth rate in that regard. When you come down to how it's actually going to hit the statements. With this slide, the dark blue is based on the existing funds. Assuming we hit those kind of performance metrics that we posted earlier, this is how we would expect it to actually show up. This is why it's important for us to talk about carry and try and explain that to you, because if you just went on the financial statements, you really wouldn't see much come in over the next three or four years.
That value is being created in the business. We think it's really important to convey that to you. Of course, if we are successful in holding to those returns, then we will see a lot of carry coming in down the road. We think there's enormous potential in this regard that can be sometimes tough to work into a model, let's say. Just trying to pull it together, as Bruce mentioned I was going to do, and translate that into what we call our base case value based on this illustrative model, I'll call it. First of all, if you take the growth in capital and fee-related earnings and target carry that we talked about and apply those same multiples to it, we would see the value of the manager going from $12 billion to $27 billion over the next 5 years.
About 18% compound return. There's about 1 billion shares outstanding. If there's $12 a share there today, $27 a share down the road, just to put that into context. We shouldn't lose sight of the fact that we also have $28 billion of capital invested in our various funds, mostly in the listed funds, but also into the private equity, and Cyrus talked a bit about what's happening in that regard as well. Those investments contribute to growth as well, and there's a couple of ways that they do that. I'll come back to just rate of return. One of the things that we feel has been very important in the development of the business and our competitive advantages in working with clients and in pursuing transactions and creating value is the scale of capital and liquidity that we have across the business.
Just focusing on a couple of metrics that we talk about periodically. There's core group liquidity of $6 billion. That's financial assets and undrawn available credit facilities. We also have just shy of $10 billion of committed capital from our clients to our private funds that's available as well. That's there to deploy in very short order. The other area that we can draw from as well is really twofold. Out of our capitalization, we can be accessing the debt capital markets or the equity capital markets. I think the point's been made a couple times here today that what's also important for us is that we have the ability to access capital that already exists on our balance sheets in the form of investments in mature and very well-valued assets.
We have that ability to rotate capital from one part of the balance sheet, from a mature investment into a new opportunity and step up the yield, compete for new transactions, and scale up the returns. Plus, if the circumstances are favorable, we can go and access the capital markets as well. The important thing is we don't have to do that. We can do that. We can pick our spots when it is really nice and accretive for everybody. That's an important point for us to be able to conduct a business with a lot of confidence. Also broadens those range of opportunities. We've talked about expanding our business, let's say, directly on our own balance sheet, stock buybacks, I think a big part of it is that ability to execute those strategic transactions as well. It's a very important part of it.
We also think we've got quite an attractive growth profile with the existing capital. Historically, we've targeted a 12%-15% return. I think historically, you've seen us exceed that. We don't scale our return expectations up and down with what the government bond's trading at. We do this on a long-term basis, which is how we do just about everything. That would scale up that capital quite nicely from $28 billion-$52 billion. I'll just post these numbers because I'm going to come back and add them up on this slide. What that would lead us to in our annual base case value would be $27 billion for the manager. You've got that $52 billion in terms of invested capital. There's a little bit of carry that's accrued by then and some leverage.
That takes us to about $75 billion for the capitalization of the business, about $74 a share. That's a 20% compound annual growth rate on the current stock price. As we pointed out in prior years, we will point out again, we think there are a number of pretty modest assumption changes that we can make to expand the fee-bearing capital and the value substantially. First of all, fee-bearing capital, if we increase the growth rate there from the 10%-15%, we expand the margins. That can lead in a nice pickup in the potential value of the manager. Second, we have a history of outperforming on the investment return side. That then would step up those returns there nicely.
if you pull it all together, while there is the $74, 20% return, we do think that there are scenarios where we could significantly outperform those metrics. Really just in closing, just a couple of points that give us a lot of conviction in our ability to continue to grow the business and enhance the values on the asset management side. It's really the diversified long-term duration of the funds that accelerated growth profile, the ability to increase fee rates at an attractive clip, and the future carry potential, which we think is significant. There's the balance sheet flexibility that should enable us to really capture some great transactions and build towards that outperformance.
With that, I'd be happy to take maybe a couple of questions on the financial side, but also I'll hand it back to Bruce for some closing comments and perhaps the last few Q&A. Bruce, I think perhaps you're up.
I'll take questions from anyone. I had three additions that I was just going to add to the question list that was asked throughout the day, just additional nuances, just a couple of things. Firstly, just on the question on the public entities and what we can do for the businesses down below. I think what the subtle point that's really important here is that many management teams of mid-sized businesses spend their whole life worrying about who's going to take them over and bother their business plan. They can't invest for the future because they think they're going to be taken out in the opportune time. We've had the luxury, in our business, to be able to think about this for 25 years. I think the results speak for themselves partly due to that.
By folding a business underneath us, they might have to report the results in our structure, but what they don't have to do is worry about ever having to sell the business when we or they together don't want to sell the business. That's one amazing thing that we offer to our management teams all across our businesses, whether it be infrastructure, property, renewable power, or our private equity businesses. We offer them an incredible opportunity to come to us, and we, and you will decide when we sell this business, if ever. That's a very, very valuable thing, and I think that's what we can do in the private equity spin-out. Second, just on the fundraising, I was going to add just one thing that either Leo or I didn't say.
The real payoff that we're seeing, it's only starting now, we think it'll even increase over the next 5, 10 years, is that many institutional clients are coming to us and saying to us, Craig partly hit on this, Leo partly hit on it, but it crosses across now all of the businesses. What they're saying to us is, "We only have 20 people in our investment department. We want to put $5 billion into real assets. Why don't we give you $2 billion of it? Will you allocate it to a bunch of your private funds? Do co-investments for us, do direct investments for us, and put this money to work properly." You can only do that once you've invested money for people, and the people at the organization trust you.
I guess what's increasingly important to us is having that trust of those organizations. As we do it, because of the broad spectrum we have, if you only offer one fund in one area in one country or one product, you can't do it. Because of our broad spectrum, we can offer that to institutions. It's becoming increasingly important, especially as these funds grow in size. Many of them have people only in one part of the world, and many of them are small organizations. That's a really important thing, and increasingly that's becoming important to us. The only third thing I was going to add, it was just on some of the questions I heard on BPY and Brookfield Property Partners earlier. I guess I'd just add from a Brookfield Asset Management perspective, this is an incredibly valuable business.
I'm positive it's the best real estate business in the world. We have three amazing franchises inside this company. One way or the other, it's going to trade at proper value. Whether we liquidate over time the assets in the company, and we use the money to buy back all the shares, and we're just left standing, owning all the shares from the inside. That may happen. I doubt it. This is an amazing, valuable franchise. We have $15 billion invested into it. It will trade at the proper value. What the great thing about, sometimes the nuances get lost, is that we have three amazing businesses, or maybe more, but three in particular, BPO, Canary Wharf, and GGP. The fundamentals of those businesses are really good today. Secondly, there is enormous amounts of capital in the world that wants to own these type of assets.
Fundamentals of the business, both on the business side and on the capital availability side, is really, really strong. That is way better than having a stock price that's overvalued in a bad business. I guess we continue to think that way about the business, and it's one of our top priorities. With that, I'll take any questions. If that was your three questions, I just answered them.
Bruce, there have been a lot of changes in currencies in the last X number of months. Most of them have gone down versus the US dollar. The Canadian dollar is way down. Could you tell us how Brookfield is dealing with currencies and if it's affecting your profits and values?
Currencies. I guess I'd say we pay a lot attention to currencies, not because we think we're currency traders, but because as a global investor in 25 countries, it's really important to get currencies at least partially right. Because you can make a great investment, and if currency goes down 30%, it's really hard to retrace your steps. We spend a lot of time working on currencies. A couple of things I'd say. One, we try to go to countries on a value basis, and what they usually means is that the FDI is low, that the people aren't going to the country. Foreign direct investment isn't going to the country, which usually means currencies are low. Which often means we can buy assets at a time when they're cheap on a replacement cost in the country.
If you look at the currency in global terms, it's relatively cheap compared to whatever you measure yourself in. I'll call it the US dollar. Therefore, we try to use that to our advantage when we're making investments. We don't always get it right, but we try. Second thing I'd say, we had a strong view that the US dollar was going to be very positive over the last number of years, and therefore, a lot of the currencies we've hedged. We were hedged in Canadian dollars, meaning back to US. Hedged in Australian dollars, largely back to US. Hedged in pounds back to US. Hedged in euros back to US. Which would be our four biggest exposures. Most of the assets outside of the country for the last 18 to 24 months have been hedged to US dollars.
Our view is that a lot of the strength of the US dollar has run its course. That's not to say it's going to go down, but there's not as much upside to keep large hedge positions. We have been scaling those hedge positions back. The one that we didn't get right is the Brazilian currency, and it's really hard to hedge because of the cost of it. That's hurt us a bit. The good news about Brazil is it's a country where many or most of the assets in the country have inflation-based escalators and contracts. Over a relatively short period of time, the cash flows escalate very rapidly to get your currency declines back. We've always had that view and been benefited by it over the decades and therefore think we'll get most of it back.
We could have picked that one a little better, possibly. Hopefully, that answers your question. Andy? Question right there, but I'll take this one over here.
Pat Dorsey, Dorsey Asset. A couple of years ago, at one of these sessions, you mentioned that one of the things that keeps you up at night is, as Brookfield moves around the globe, especially in the new geographies, maintaining the Brookfield culture and maintaining the central attitude of the employees there to do the right thing every day, especially when you might be seeding. At the time, you used the example of India, seeding that with a small number of longtime employees and then building it out. If you can talk a little bit about how that's changed or evolved as Brookfield has continued to expand geographically.
Yeah. I'd say, look, bottom line, it is people and their compensation are the toughest thing to do in business. I'm sure all of you will agree. They're the toughest thing. Not only are they the toughest thing, if you get them wrong, they can really, really mess up a business. We spend a lot of time on it. I guess I'd say I'm pleased, and we're pleased that while we have a broad business, we've been able to grow the business with the culture and I think keep it on pretty well where it is. Hopefully, the slides, Cyrus joked that everybody put up here and had value investing in their slides. The fact is, I'm really happy about that. The culture is that way.
What I think is really important is that most of the people have been here a very long period of time. Most of the people that we hire in think that they're going to be here a very long period of time, and therefore, the culture maintains itself through the evolution of those people through the organization. I can tell you, it's never easy. As you go to more foreign places that don't speak English and don't have the same upbringing of culture, it's more difficult all the time. I think just doing it slowly and methodically has been a good thing. Where we've made mistakes, we just had to retrench for a while and try it over again. I can tell you, in Europe, we tried three times with management teams.
I think we've got it right today. We learn each time we do it in a different place. Thank you.
Bruce, back a few months ago, you raised a substantial amount of capital through common share issuance of Brookfield at a higher price. The price has unfortunately gone down since. If I follow insider trading, the corporation's bought back and canceled over 1 million shares in the last few weeks. Am I right? Is there a comment?
You are right. You do follow your insider filings. I'd just say we did the equity offering, as I think we explained to most people who asked us at the time, because for really two reasons. One, we thought relative to the world at large, it would be good to have more capital versus less on the balance sheet because we thought, A, we had a number of transactions in front of you. The infrastructure group shortly thereafter announced the Asciano transaction. At that time, we didn't know how much capital we needed to support that transaction. We do now. We just felt we needed more money around to do that and a number of other things in the business.
Secondly, we felt that the price, if you look at the numbers Brian showed you, it will be very stupid to have issued those shares in hindsight 20 years from now. Having said that, our view is having capital available is always good. We just felt it was a reasonable time to issue stock, and we had reason to do it, to have extra capital around, in particular. The offering was for $1 billion, and we did $1.250 billion. They exercised the greenshoe, et cetera. I guess with the weakness in the stock, we just felt that, look, at the extra money we raised, we may as well be buying back stock. It's cheaper, and it's a good deal, and we could buy it back. I guess we're in the business of making investments just like all of you.
Some of the short-term things went out of the way. Secondly, we just think it's a good investment. I don't have any other great comment other than that.
Bruce, I had two questions. One is related to the share issuance, not specifically about the shares that were issued earlier in the year, but just the growth of the business and the outlook and kind of what Brian had in his slides. As you think about how the business can grow and how BAM wants to retain 20% or 25% ownership of funds and investments, does that mean that issuance of capital is a more regular event for BAM over the next five or 10 years than it was the past 10 years or so? Then related to that, you've mentioned in the past, you want to be a good corporate sponsor of the listed entities. Is there a cost to BAM shareholders for doing that or is it positive returns but it just happens to be that it's also beneficial to the subs?
On the first question of share issuance, I don't want to be held to this, exactly held to the words, but our business, if you look at it today and look at the funding model and how much capital we have and how the business grows and with the entity set up down below, there shouldn't ever be a need in the foreseeable future, meaning five to 10 years, to issue equity. That's not to say we won't because there may be opportunities where we find something else or we do a merger or something happens. We may issue equity. If you look at the business plans, there is no real need for capital in the business and therefore on a standalone basis, it's possible we never issue a share.
I guess we've found over 25 years of the current management team running this business that the best thing to do is to never issue a share in the business and buy back as many at an undervaluation as possible, and that was the best thing to drive value in the company. There are sometimes things that come up that add incredible value to the business and having capital available is a good thing and therefore I can't say that we won't do it, but generally I think the business as we lay it out and certainly as Brian laid it out in his business plans and gave you the five-year numbers, there's no issuance of stock and there won't be issuance of stock in that model. The second question on corporate sponsorship.
I guess we have said, I will say it again, is that we believe that these entities that we have that we own part of and we manage are incredibly important to the franchise. We set them up specifically to build the business with. As a result of that, we think that we can use our capital to support them and by doing so, we will earn greater returns out of the capital we have invested and out of the fees we generate from them. We do get paid for them and therefore we deliver many things to those entities to be able to help them do things which other entities of similar scale or size could never do. Does that cost the shareholder of BAM something?
I would say if you did the sheer mathematics, there is no doubt it costs Brookfield Asset Management something to hold capital available for them to put money in at prices which we supported the transaction to do Asciano for BIP invested at a price at the market knowing that probably the stock price was going to go down. In the short term, nobody else might have done that, but we can because we think of it long term. In the short term, it may cost the Brookfield Asset Management shareholder something. In the long term, it will be high. I see no other questions. It is 5:17 P.M. We were supposed to be done by 5:15 P.M. That is fantastic. Thank you. The last thing I would just say is A, thank you for coming.
B, on a housekeeping matter, any of you that are staying for the cocktail reception it is in the Winter Garden downstairs. People out here will show you where to go. Keep your badges because those badges will get you into the cocktail party with your name tag. Otherwise you may not be able to get in. Thank you.