Brookfield Asset Management Ltd.’s earnings rose in the fourth quarter as it wrapped up a record year of fundraising that has given the firm more than $90 billion to invest. 

The Canadian alternative asset manager reported distributable earnings of $569 million, or 35 cents a share, up 6% from the prior year. It’s the first quarterly report for Brookfield Asset as a public company after it was spun out of parent Brookfield Corp. in December. 

The company raised a record $93 billion in capital last year. “Our fundraising outlook remains strong,” Chief Executive Officer Bruce Flatt and President Connor Teskey said in a letter to shareholders. “In 2023, we expect to have three flagship funds in the market, along with several complementary perpetual strategies and other long-term funds.”

Brookfield Corp. spun off a 25% stake in the division in an effort to gain a higher valuation by separating the money-management business from its own investment capital. Brookfield Asset managed $418 billion in fee-bearing capital at the end of December across asset classes including real estate, infrastructure, credit, private equity and renewable power.  

The Toronto-based company plans to more than double that to $1 trillion by 2027, driven by ambitious plans to grow in private credit and insurance. Some of the growth may come through acquisitions, Flatt suggested at a conference in December.  

Eoin Treacy's view

$93 billion raised during a bear market for stocks and amid rising yields is an impressive feat. Blackstone is also chasing the moniker of the first alternative asset manager to reach $1 trillion under management.

The success of private firms in attracting capital is a direct cause of the regulatory changes that took place in the aftermath of the global financial crisis. The If Big Bang in 1986 represented the beginning of the deregulation trend, Dodd Frank in 2010 was the beginning of the regulatory handcuffs on banks which created an opening for private capital.

Brookfield Asset Management (BAM) announced an initial dividend today with an indicated yield of 2.79%. If dividend growth is anything like Brookfield Corp it can be considered a reasonably attractive position for an income investor. The share is a little overbought in the short-term but closed at a new high today.
Brookfield Corp continues to test the region of the 200-day MA.
Brookfield Renewable Partners remains in a downtrend and will need to hold the recent lows to confirm support building is underway.

The challenge for investors is the private asset management sector is opaque. I have heard the retort from more than a few investors that it is pointless to question the valuations of assets inside private portfolios because they get to assign whatever value they like to them. That might delay a reckoning but it will not avoid it entirely. The long rates stay high the greater the risk of a market to market challenge for private structures. Perhaps Brookfield will avoid this event but I have little doubt there will be bankruptcies in the private capital sector during a recession .