Brookfield Asset Management Inc · NYSE:BAM
Brookfield Asset Management — Investor Day (September 2023)
128 slides from Brookfield Asset Management's investor day presentation, September 2023
Slide 1: Brookfield Asset Management
Brookfield Brookfield Asset Management +t tte ee tt eee EE ee + + tot $b HEE + + + + + oF + + + + $$ + 4 4+ + + - bos . + + + + - + + + + . + + + + $+ + $$ oH Ht + tt tH HH tH $+ + + + + + + + + + + + + + + + + t+ + + t+ + + + + + ot + tot + + +
Slide 2: Agenda
Agenda 10:30 AM Introduction Bruce Flatt 10:45 AM The Brookfield Ecosystem Connor Teskey 11:05 AM Panel: Global Fundraising Trends Moderated by Craig Noble 11:50 AM The Private Credit Opportunity Milwood Hobbs Jr. 12:10 PM Financial Plan & Corporate Finance Strategy Bahir Manios 12:30 PM Panel: Glob
Slide 3: Introduction
Introduction Bruce Flatt, Chief Executive Officer Information in this presentation is qualified by the Notice to Recipients and Endnotes included in this presentation
Slide 4: Brookfield Asset Management has achieved significant scale
Brookfield Asset Management has achieved significant scale $850B $440B $4.3B AUM Fee-Bearing Capital Fee Revenue Growth Since 2002 283x 321x 250x See Notice to Recipients and Endnotes, including endnote 1. 4
Slide 5: We have built one of the leading global asset managers
We have built one of the leading global asset managers Market-leading platform Robust liquidity position Strong growth profile Flexibility of capital Diversified and resilient Substantial synergies within the business model broader Brookfield Ecosystem 5
Slide 6: What has enabled our success?
What has enabled our success? Operational Global Reach Large-Scale Winning Expertise Capital Culture 6
Slide 7: Operational Expertise: owner and operator of assets
Operational Expertise: From day one, we have been an owner and operator of assets and businesses providing critical services 100+ Years of Operating Expertise ~200,000 Operating Employees 7
Slide 8: Global Reach: long-term local relationships in key markets
Global Reach: Our long-term local relationships in key markets around the world give us access to unique investment opportunities 1,200+ Americas Europe & Middle East Asia Pacific Investment Professionals $569B $164B $117B 810 Investment 170 Investment 240 Investment Professionals Professionals ~300
Slide 9: Large-Scale Capital
Large-Scale Capital: Our ability to tap into multiple streams of large-scale capital positions us as a partner of choice for transactions Insurance Global Institutional Permanent Banking Client Capital Capital Relationships Brookfield Permanent Private Corporation Capital Wealth Balance Vehicles Cap
Slide 10: Winning Culture
Winning Culture: As we’ve continued to grow, our approach and culture have stayed the same and are more valuable than ever Collaboration and Entrepreneurship Investment Partnership Discipline 10
Slide 11: It's not about where the tide is now, but where it will rise next
It's not about where the tide is now, but where it will rise next
Slide 12: Leading participants in the largest and fastest-growing parts of the economy
We have established ourselves as leading participants in the largest and fastest-growing parts of the global economy
Slide 13: The world is changing, trillions of dollars will be needed
The world is changing, demographics are shifting, and trillions of dollars will be needed to help businesses adapt Decarbonization Deglobalization Digitalization Our assets live at the epicenter of these decades-long megatrends 13
Slide 14: Trillions needed to drive decarbonization
Many, many trillions are needed to drive decarbonization, which will benefit most of our real asset businesses Opportunities Wind Solar Nuclear Business Battery Emerging Transformations Storage Solutions 14
Slide 15: Trillions needed to support deglobalization
Many, many trillions are needed to support the trend toward deglobalization, which is benefitting most of our real asset businesses Opportunities Semiconductors Supply Chains Batteries Pharmaceuticals Power Liquid Buildout Markets Natural Gas 15
Slide 16: Trillions needed to enhance digitalization
Many, many trillions are needed to enhance digitalization, which will benefit most of our businesses Opportunities Sustainability Digital Data Process Financial Enterprise Transmission & Storage Processing Software Solutions 16
Slide 17: Large amounts of capital will be needed in these areas
Large amounts of capital will be needed in these areas, which should propel our businesses for the next 30 years 17
Slide 18: Billions already invested into these three trends
We have already invested billions into these three trends across a range of financial structures Strategic Public-to-Private Structured Partnerships Transactions Securities 18
Slide 19: Fundamentals for strong businesses have remained intact
Fundamentals for strong businesses have generally remained intact, despite public market volatility and higher interest rates… 19
Slide 20: While many investors are stuck in place, we have been active
…while many investors are stuck in place, we have been extremely active across our businesses 20
Slide 21: $50 billion committed to investments this year
This year, we have committed to investments around the world worth $50 billion… 21
Slide 22: $15 billion monetized
…and monetized $15 billion… 22
Slide 23: On track for a record year raising close to $150 billion
…and are on track for a record year, raising close to $150 billion of capital 23
Slide 24: Market concerns play to our strengths
Some of the biggest concerns about the market today play to our strengths Our investment strategies are Inflation positively correlated with inflation We invest across global Interest rates businesses that generate resilient and growing free cash flows Our access to diverse sources of capital at sca
Slide 25: Organic growth combined with selective, strategic acquisitions
Our success has been driven by strong organic growth combined with selective, strategic acquisitions 25
Slide 26: Our investment in Oaktree has been additive
Our investment in Oaktree starting in 2019 has been additive to our business in many ways Provided a springboard for scaling our private credit platform Allowed us to partner on a new private wealth channel Enabled growth of our insurance solutions business Accelerated the pace of our fundraising Po
Slide 27: Organically grow to ~$2T AUM over five years
Over the next five years, we should be able to organically grow to ~$2T $1T+ Assets Under Management Fee-Bearing Capital Any acquisition activity or inorganic growth will be additive to this plan See Notice to Recipients and Endnotes, including endnote 1. 27
Slide 28: An acquisition of similar strategic importance
An acquisition of similar strategic importance should take Brookfield to the next level New Asset Classes Geographical Operational Capabilities Access to Complementary LPs Technology Healthcare Mid-Market U.S. Pensions € Specialty Finance European LPs Consumer Brands Secondaries 28
Slide 29: Our platform is highly differentiated
Our platform is highly differentiated 29
Slide 30: Flagship funds have a history of strong returns
Our businesses are established and our flagship funds have a history of producing strong returns for investors Renewable Power Infrastructure Private Equity Real Estate Credit & Transition Gross IRR 13% 16% 28% 23% 22% Net IRR 9% 13% 22% 19% 16% AUM $79B $161B $141B $272B $197B Institutional Clients
Slide 31: Global fundraising and client servicing organization
We have built a global fundraising and client servicing organization Client-Facing Employees by Region 200 50 50 in the Americas in Europe & in Asia Pacific Middle East 31
Slide 32: Benefits of the spinout of our asset manager
We are already seeing the benefits of the spinout of our asset manager Better product development Investments in client coverage Dedicated management team Increased focus on scaling our most profitable strategies 32
Slide 33: It is still early days for alternatives
It is still early days for alternatives 33
Slide 34: Experience, global platform and macroeconomic trends
Experience and Capabilities Unparalleled Global Platform Key Macroeconomic Trends Ability to Raise and Deploy Increasingly Large Pools of Capital 34
Slide 35: Growth drivers: institutional, private wealth, insurance
We expect growth over the next few years will be driven by: Institutional Private Wealth Insurance Investor Capital Capital Capital 35
Slide 36: Diversifying our global client base
We will continue to focus on diversifying our global client base and expanding our crossover among fund LPs Institutional Investor Capital 36
Slide 37: Private wealth: Brookfield Oaktree Wealth Solutions
Increasing demand for access to alternative investments should drive strong growth via Brookfield Oaktree Wealth Solutions Private Wealth Capital 37
Slide 38: Private credit capabilities for insurance capital
We are expanding our private credit capabilities to service growing insurance capital flows from both BN and other Insurance Capital insurance partners 38
Slide 39: To summarize… the best is yet to come
To summarize… the best is yet to come 39
Slide 40: Key takeaways
Key takeaways The world always has challenges, We are actively developing but we are well positioned for new investment strategies whatever comes next to help meet our clients’ goals We have significant capital to deploy Our relationships are the cornerstone for the right opportunities of our franch
Slide 41: Thank You
Brookfield Thank You es ee tot t+ t+ + + + + + $+ + + + Ft t+ HH Het te + + HoH HH HHH HH HH HH HH HH HH HH HEE a a + + + + toto + + + t+ + + + + 4 + + t+ + + tot t+ tt + t+ tt tt tee et tet ee tte et . ++eeeeeeeeeeterrermrermrmrdehUmvhhUcvhhUmvhhUmvh
Slide 42: The Brookfield Ecosystem
The Brookfield Ecosystem Connor Teskey, President Information in this presentation is qualified by the Notice to Recipients and Endnotes included in this presentation
Slide 43: The benefits of the Brookfield Ecosystem
The benefits of the Brookfield Ecosystem Helping us identify themes and trends, spot pockets of value and source attractive investment opportunities Enhances intelligence and improves accuracy in underwriting Drives operational improvements and boosts returns Enables us to execute at scale with conv
Slide 44: The Brookfield Ecosystem is…
The Brookfield Ecosystem is… …the intelligence generated from the ongoing interplay between our assets, businesses, partnerships and capital flows that enables and enhances our advantages and unlocks new opportunities
Slide 45: Deep, proprietary insights into the global economy
Deep, proprietary insights into the backbone of the global economy Energy, Goods Leading Capital Supply Chains and Data Corporations Flows 45
Slide 46: Ecosystem spans core sectors of the global economy
The Brookfield Ecosystem spans the core sectors that keep the global economy running Logistics & Energy Hospitality Self-Storage Transition Housing Mixed Use, Retail & Entertainment Solar Business Services Utilities Infrastructure Office Services Transport Hydro Wind Data Technology Services Midstre
Slide 47: Knowledge and insights flow freely through the network
Our business is structured to allow knowledge and insights to flow freely throughout the network… 47
Slide 48: Directing resources and anticipating partners' needs
…enabling us to direct resources and leverage expertise across the organization to anticipate our partners’ needs, and position ourselves for the largest investment opportunities globally 48
Slide 49: Enabler for the largest technology companies
We are an enabler for the largest and fastest-growing technology companies around the world Data Centers Green Power Real Estate Strategic Capital 49
Slide 50: Global leaders in supporting advanced manufacturing
We are global leaders in supporting advanced manufacturing Life Sciences Next-Gen Batteries Semiconductors 50
Slide 51: Each business is developing a decarbonization strategy
Each of our businesses is developing a decarbonization strategy You already know: But did you know? Renewable Power Infrastructure Private Equity Real Estate & Transition 51
Slide 52: The Brookfield Ecosystem in action
The Brookfield Ecosystem in action Identifying themes Sourcing opportunities Underwriting our investments Enhancing operations Accessing capital 52
Slide 53: Identifying key themes
Identifying key themes… Seeing Trends Investing Exiting Ahead as They Emerge Decisively of the Crowd 53
Slide 54: …and investing early
…and investing early Distinguished data as the fastest-growing commodity in the Recognized the world significant capital Today, we are a leading Digitalization required to transport, owner of towers and data store and process centers globally data Invested in digitalization beginning in 2015 Saw inc
Slide 55: Sourcing unique investment opportunities
Sourcing unique investment opportunities… Clients and LPs Strategic Partners Customers and Counterparties 55
Slide 56: …through our relationships
…through our relationships $710M $1.3B $2.7B Figures represent equity invested and committed. 56
Slide 57: Underwriting our businesses
Underwriting our businesses… Tap into Proprietary Avoid Missteps Invest With Data and Information Confidence 57
Slide 58: More real-time proprietary data than almost anyone
We look beyond the headlines: We have more real-time, proprietary data than almost anyone… High-quality office continues to attract strong demand 2019 2023 (Pre-Covid) 35% (Post-Covid) Higher Rents Tower One Today Tower Two Manhattan West, NYC It’s not by luck that 95% of our offices are Class A or
Slide 59: Better information from the bottom up
…allowing us to access better information from the bottom up 2018 2023 $740M $710M 2018 2022 $1.3B $3.8B 2019 2022 2023 $476M $1B $1.4B Figures represent equity invested and committed. 59
Slide 60: Leveraging our operating platform
Leveraging our operating platform… Cross-Selling Introducing Value-Add Sharing Best Customer Products to Our Assets Practices Across Relationships Businesses 60
Slide 61: …to add value and drive performance
…to add value and drive performance BROOKFIELD LOGISTICS / 61
Slide 62: Unsurpassed access to the capital markets
Unsurpassed access to the capital markets… Liquidity Scale Speed Certainty 62
Slide 63: Continuing to transact while financing markets were closed
…allowing us to continue transacting while traditional financing markets remained ‘closed’ for many $6B 4 4 Debt refinanced in …private equity …at lower four weeks during portfolio interest rates Summer 2023 for… companies… 63
Slide 64: The Ecosystem is a perpetual competitive advantage
In summary, the Brookfield Ecosystem is a perpetual and growing competitive advantage
Slide 65: The benefits have been clear in 2023
The benefits have been clear in 2023…. $50B $15B % Investments Monetizations Record-Setting Best-in-Class YTD YTD Fundraising Returns Across the Economic Cycle 65
Slide 66: The Brookfield Ecosystem continues to get better
The Brookfield Ecosystem… Greater More Better Scale Diversified Informed Growing access More assets, people Increased sharing to capital and relationships of information and best practices …continues to get better 66
Slide 67: Thank You
Brookfield Thank You es ee tot t+ t+ + + + + + $+ + + + Ft t+ HH Het te + + HoH HH HHH HH HH HH HH HH HH HH HEE a a + + + + toto + + + t+ + + + + 4 + + t+ + + tot t+ tt + t+ tt tt tee et tet ee tte et . ++eeeeeeeeeeterrermrermrmrdehUmvhhUcvhhUmvhhUmvh
Slide 68: The Private Credit Opportunity
The Private Credit Opportunity Milwood Hobbs, Jr. Head of Sourcing & Origination Oaktree Capital Management Information in this presentation is qualified by the Notice to Recipients and Endnotes included in this presentation
Slide 69: Howard Marks quote on credit returns
“Investors can now potentially get solid returns from credit instruments, meaning they no longer have to rely as heavily on riskier investments to achieve their overall return targets.” ‒Howard Marks Sea Change, December 13, 2022 69
Slide 70: What is private credit?
What is private credit? Origination of a bilateral loan without a traditional intermediary connecting the borrower directly to the private (non-bank) lender 70
Slide 71: Private credit: one of the fastest growing alternative asset classes
Private credit should be one of the fastest growing alternative asset classes • Reduced lending by banks driven by greater regulation and decreased risk appetite • Record PE dry powder creating increased demand for debt financing • Less reliable traditional public capital markets $2.3T $1.5T $0.3T 2
Slide 72: Oaktree is an experienced player in private credit
Oaktree is an experienced player in private credit Cycle-tested platform Extensive lending capabilities Firm-wide DNA rooted in bad-outcome Investment capabilities across performing debt avoidance, with just 0.1% annualized loss ratio (liquid and private) and opportunistic debt enable a in private c
Slide 73: Oaktree's extensive private credit capabilities
Oaktree’s extensive private credit capabilities Sponsored Sponsored Non- (Senior) (Junior) Sponsored Opportunistic Hard Asset NAV Lending Description Senior capital Junior capital Capital to Capital to Loans to Private equity to private to private founder-owned companies performing firms in need equ
Slide 74: Macro factors driving demand for private credit
A broad set of macro factors is driving demand for private credit Reduction of banks from the LBO market Record growth in private equity Traditional buyers of large loans sidelined Challenges in broadly syndicated markets Limited competition in large-cap lending Source: Preqin 74
Slide 75: Reduction of banks from the LBO market
Reduction of banks from the LBO market Share of Loan Market 100% Lehman Brothers files for bankruptcy 80% Dodd-Frank Act signed into law 60% 40% 20% 0% 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Banks and Securities Firms Non-Banks (Institutional Investors and Finance
Slide 76: Record growth in private equity
Record growth in private equity Record levels of private equity dry powder Growth has outpaced public equities ($ Billion) (Indexed value from 2011) $2,500 5.5x $2,000 4.5x $1,500 3.5x $1,000 2.5x $500 1.5x $0 0.5x 2011 2013 2015 2017 2019 2021 2011 2013 2015 2017 2019 2021 Private Equity NAV¹ Globa
Slide 77: Traditional buyers of large loans are sidelined
Traditional buyers of large loans are sidelined Traditional capital sources are becoming Existing CLOs are approaching the end less reliable for large deals of reinvestment periods ($ Billion) (% CLOs) $80 45% 40% 40% $60 YE 2023 35% 30% $40 25% 26% Current $20 20% 15% $0 10% 5% -$20 0% 2Q21 3Q21 4Q
Slide 78: Challenges in broadly syndicated markets
Challenges in broadly syndicated markets Global syndicated loan new issuance has declined Private credit origination remains robust ($ Billion) (# deals) $250 120 100 $200 80 $150 60 $100 40 $50 20 $0 0 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Sy
Slide 79: Only a few managers have closed large deals
Limited competition in large-cap lending Direct lenders represent ~50% of large LBO market (% based on deal count) Only a few managers Direct Bank have closed large deals 49% 51% As of January 31, 2023 Source: Preqin 1 Figures based on deal count for transactions greater than $1 billion from January
Slide 80: What it means for providers of private credit
What does it mean for providers of private credit? Lower Leverage Wider Pricing Better Terms 80
Slide 81: The private credit opportunity today
The private credit opportunity today Area Opportunity Large-cap buyout • Bank pullback in light of new regulatory requirements and regional bank scrutiny financing • Few managers with requisite scale limits competition • Issues within legacy portfolios are limiting the ability of incumbent lenders t
Slide 82: Lending partners: Large-cap lending
Lending partners: Large-cap lending Investment Objectives Sponsor- Senior Owned Estimated Companies Loan Sizes Secured Yields of $500M+ Loans 10–12% $100M+ EBITDA or $1B+ EV Value Proposition • Speak for entire deals to facilitate better terms and increase efficiency for prospective borrowers • Fill
Slide 83: Opportunity set in core-adjacent credit strategies
There is a rich opportunity set in core-adjacent credit strategies $170B $500B Credit AUM Today Future Credit AUM Opportunity1 Corporate ABLs Venture Debt Large Cap / Middle Market Bespoke IG Credit Direct Lending Royalties Credit Asset-Based Finance SME Lending Trade Finance Consumer Finance Reside
Slide 84: Thank You
Brookfield Thank You es ee tot t+ t+ + + + + + $+ + + + Ft t+ HH Het te + + HoH HH HHH HH HH HH HH HH HH HH HEE a a + + + + toto + + + t+ + + + + 4 + + t+ + + tot t+ tt + t+ tt tt tee et tet ee tte et . ++eeeeeeeeeeterrermrermrmrdehUmvhhUcvhhUmvhhUmvh
Slide 85: Financial Plan & Corporate Finance Strategy
Financial Plan & Corporate Finance Strategy Bahir Manios, CFO Information in this presentation is qualified by the Notice to Recipients and Endnotes included in this presentation
Slide 86: Five years ago, we set high expectations for BAM
Five years ago, we set high expectations for BAM
Slide 87: 2018 plan: double fee-bearing capital by 2023
In 2018, we told you we planned to double fee-bearing capital by 2023 Fee-Bearing Capital $245B 14% $129B CAGR 2018 2023P See Notice to Recipients and Endnotes, including endnote 3. 87
Slide 88: Instead, we've more than tripled it
Instead, we’ve more than tripled it Fee-Bearing Capital $440B 14% $129B CAGR 2018 2023 See Notice to Recipients and Endnotes, including endnote 3. 88
Slide 89: Fee-related earnings above 2018 projections
Driving our 2018 five-year cumulative fee-related earnings higher than our 2018 projections ~$7.6B ~$8.3B Five-Year Cumulative Projection Five-Year Cumulative Actuals $2.2B $2.0B $1.7B $1.3B $1.1B $0.9B 2018 2019 2020 2021 2022 2023 2018 IR Day Projections Actual See Notice to Recipients and Endnote
Slide 90: Key factors behind our growth
We have achieved this growth due to a few key factors New Business Larger Oaktree Lines and Flagship Acquisition Strategies Funds Transition fund Raised largest closed-end Established scaled infrastructure fund ever credit capabilities Insurance solutions All subsequent vintages have Accelerated the
Slide 91: BAM has come a long way since Investor Day 2022
BAM has come a long way since Investor Day 2022
Slide 92: Completed spinoff of BAM in December 2022
In December 2022, we completed the spinoff of BAM as a pure-play global alternative asset manager, resulting in a: Model more comparable to industry peers Simplified business, comprised primarily of stable fee-related earnings Long-term cash annuity business Dedicated management team for asset manag
Slide 93: BAM operates with industry-leading metrics
~100% ~85% of DE is FRE Long-Term Capital BAM operates with industry- 55‒60% 15–20% Margin Growth Targets leading metrics ~90%+ No Debt Dividend Payout Asset-Light Ratio Balance Sheet 93
Slide 94: Double-digit growth of fee-bearing capital
We’ve maintained double-digit growth of fee-bearing capital as of June 30 ($ billions) 2022 2023 Renewable Power & Transition $ 50 $ 52 Infrastructure 74 97 Private Equity 39 41 Real Estate 90 98 Credit & Insurance Solutions 139 152 Total fee-bearing capital $ 392 $ 440 12% We’ve significantly expan
Slide 95: Growing key value drivers at a strong pace
Enabling us to grow our key value drivers at a consistently strong pace Last twelve months as of June 30 ($ millions) 2022 2023 Fee revenues $ 3,712 $ 4,256 15% Fee-related earnings $ 1,897 $ 2,194 16% Distributable earnings $ 1,918 $ 2,183 14% See Notice to Recipients and Endnotes, including endnot
Slide 96: Growth to accelerate in the second half
We expect growth to accelerate in the second half of the year Fee-Bearing Capital ($ billions) $530 $418 27% Year-End Year-End 2022 2023P See Notice to Recipients and Endnotes, including endnote 5. 96
Slide 97: Platform investments have scaled to a stable level
Our investments into our platform over the past 18 months have scaled to a stable level Expanded investment teams ~200 Added Investment Professionals Bolstered fundraising organization Built out private wealth distribution channels ~300 Launched numerous new strategies Added Corporate Professionals
Slide 98: Looking ahead
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Slide 99: Fee-bearing capital should surpass $1 trillion within five years
Fee-bearing capital should surpass $1 trillion within five years 99
Slide 100: Strong growth across all businesses, especially private credit and insurance
We expect strong growth across all our businesses, especially within private credit and insurance as of June 30 ($ billions) 2023 2028 Renewable Power & Transition $ 52 $ 107 Infrastructure 97 163 Private Equity 41 70 Real Estate 98 170 Credit & Insurance Solutions 152 504 18% Total fee-bearing capi
Slide 101: Growth driven by long-dated and perpetual capital
Fee-bearing capital growth driven by long-dated and perpetual capital as of June 30 ($ billions) 2023 2028 Long-term private funds $ 228 $ 474 Permanent capital vehicles 111 350 Perpetual strategies 29 90 Liquid strategies 72 100 18% Total fee-bearing capital $ 440 $ 1,014 CAGR Long-dated capital sh
Slide 102: Flagship fundraising and insurance capital to more than double fee-bearing capital
Flagship fundraising, alongside our growing pool of insurance capital, should more than double fee-bearing capital in five years Co-invests Listed Affiliates Insurance Oaktree (152) $1,014B Complementary Brookfield Strategies Return of Capital Complementary and Other Strategies 124 Flagship Funds $4
Slide 103: We expect margins to expand
We expect margins to expand Investments in the business Future fee revenue growth Operating leverage to build out our platforms is tilted towards our most in the business will scale are complete profitable strategies over the next 18 months 103
Slide 104: More than double fee-related earnings over five years
Achieving these targets will enable us to more than double fee-related earnings over the next five years 104
Slide 105: Higher revenues and margins drive over 100% FRE growth
Higher revenues and improved margins will drive over 100% FRE growth Last twelve months as of June 30 ($ millions) 2023 2028 Base fees $ 3,840 $ 8,025 Other fees 416 621 Fee revenues 4,256 8,646 Direct costs (1,927) (3,485) 2,329 5,159 Non-controlling interests (135) (314) 17% Fee-related earnings $
Slide 106: Fee-related earnings are ~100% of distributable earnings
Today, fee-related earnings comprise ~100% of BAM’s distributable earnings, as BN retained its carried interest on most existing funds prior to spinout 106
Slide 107: BAM eligible to earn carried interest on new funds
BAM is eligible to earn carried interest on new funds from spinout, which will significantly contribute to future earnings See Notice to Recipients and Endnotes, including endnote 10. 107
Slide 108: Carried interest to become a significant contributor
As our carry-eligible capital continues to grow, carried interest will become a significant contributor in the future Total Brookfield Carry-Eligible Capital Gross Carried Interest ($ billions) to BAM $527 $496 $430 19% CAGR $2B Estimated Realizations $351 in 2029 $285 $220 Growing To $465 $409 $222
Slide 109: Each key value driver should grow meaningfully
Each of our key value drivers should grow meaningfully Fee-bearing capital to exceed $1 trillion by 2028 Fee-related earnings to grow to ~$5 billion by 2028 Gross realized carried interest to BAM of ~$19 billion in total for 2029–33 109
Slide 110: Additional upside not included in forecast
Additional upside potential not included in our forecast Strategic acquisitions Launching new flagship strategies and business lines Raising third-party capital for our insurance solutions business 110
Slide 111: Strong balance sheet and focus on capital allocation
We have a strong balance sheet and intense focus on capital allocation 111
Slide 112: Significant capital resources at our disposal
We have significant capital resources at our disposal Hold $3 billion of cash on our balance sheet Capacity to take on $4–5 billion of debt, while maintaining high-grade corporate credit ratings Utilize BAM stock as a currency for strategic M&A 112
Slide 113: Strategic uses of our balance sheet
Strategic uses of our balance sheet Strategic GP Permanent New M&A Commitments Capital Vehicles Strategies 113 113
Slide 114: Strategic M&A
Strategic M&A Optionality to acquire an asset manager that can bring complementary capabilities to our existing platform Introduce new verticals: technology, healthcare, consumer brands or secondaries Expand regional capabilities Broaden distribution channels An acquisition could accelerate growth b
Slide 115: GP commitments
GP commitments Brookfield affiliates will continue to invest in flagship and credit funds BAM will fund GP commitments on other complementary equity funds We will target generating 12–20%+ returns on BAM’s investment BAM expects to invest ~$1 billion into GP commitments over the next five years 115
Slide 116: Permanent capital vehicles
Permanent capital vehicles Represent a meaningful channel for fundraising BAM will support the growth of permanent capital vehicles by participating in future equity offerings Creates long-term alignment between BAM, permanent capital vehicles and employees BAM expects to fund ~$1 billion of equity
Slide 117: New strategies
New strategies BAM has the capital to continue funding growth initiatives, such as seeding new fund strategies and JVs in new investment strategies We recently entered into a JV with Sequoia Heritage, creating Pinegrove Capital to fund product strategies in the tech and VC space BAM will continue to
Slide 118: Distributable earnings to grow to $5 billion in 2028
With these strategies in place, distributable earnings should grow to $5 billion in 2028… as of June 30 ($ billions) 2023 2028 Fee-related earnings $ 2,194 $ 4,845 Cash taxes, equity-based compensation costs and other (84) (775) Realized carried interest, net of costs ̶ 770 Investment income 73 206
Slide 119: Free cash flow returning to shareholders via dividends
…with most of our free cash flow returning to shareholders via dividends Expect to return substantially all of our distributable earnings to shareholders Targeting a dividend payout ratio of at least 90% of distributable earnings, and any remaining funds could be used for stock buybacks Should be ab
Slide 120: Key takeaways
Key takeaways We have a clear path to surpass $1 trillion in fee-bearing capital by 2028 We have built out our investment platforms and expect to benefit from operational leverage and expanded margins over the next few years The benefit of realized carried interest will be additive to BAM’s current
Slide 121: Thank You
Brookfield Thank You es ee tot t+ t+ + + + + + $+ + + + Ft t+ HH Het te + + HoH HH HHH HH HH HH HH HH HH HH HEE a a + + + + toto + + + t+ + + + + 4 + + t+ + + tot t+ tt + t+ tt tt tee et tet ee tte et . ++eeeeeeeeeeterrermrermrmrdehUmvhhUcvhhUmvhhUmvh
Slide 122: Wrap-Up
Wrap-Up The Brookfield Substantial Global fundraising Well positioned to Strong 5-year Ecosystem provides opportunities to deploy organization built capture meaningful organic growth plan significant significant capital on a partnership opportunities in with optionality for competitive across all of
Slide 123: Brookfield
Brookfield
Slide 124: Endnotes
Endnotes All data presented is as of June 30, 2023 unless otherwise noted. Totals may not add due to rounding. 1. Asset under management ("AUM") refers to the total fair value of assets managed, calculated as follows: investments that Brookfield, which includes Brookfield Corporation, the asset mana
Slide 125: Endnotes … cont'd
Endnotes… cont’d 4. 2022 fee revenues, fee-related earnings, and distributable earnings exclude the impact of performance fees. Distributable earnings is a non-GAAP measure that provides insight into earnings that are available for distribution to common shareholders or to be reinvested into the bus
Slide 126: Notice to Recipients
Notice to Recipients INVESTOR DAY 2023 – NOTICE TO RECIPIENTS Brookfield is not making any offer or invitation of any kind by communication of this document to the recipient and under no circumstances is it to be construed as a prospectus or an advertisement. Except where otherwise indicated herein,
Slide 127: Notice to Recipients … cont'd
Notice to Recipients… cont’d Where this presentation refers to growth in fee-related earnings, growth is in accordance with growth in fee-bearing capital. The management fees for BEP are based on fixed fees on initial capitalization and an additional fee of 1.25% on the amount in excess of initial c
Slide 128: Notice to Recipients … cont'd
Notice to Recipients… cont’d CAUTIONARY STATEMENT REGARDING PAST AND FUTURE PERFORMANCE AND TARGET RETURNS Past performance is not indicative nor a guarantee of future results. There can be no assurance that comparable results will be achieved in the future, or that future investments or fundraising
Brookfield Asset Management — Investor Day (September 2023) on 6ix