Brookfield Asset Management (BAM) Q1 2016 Earnings

Brookfield Asset Management (BAM) CEO Bruce Flatt categorized the market opportunity set as “good but not great” 
For all the noise you hear right now both the headwinds for stocks our view is that the markets are pretty good, not great but overall conditions are positive for most companies. Rates remain very low; North American banks have never been in better shape as a result liquidity is excellent with few exceptions in specific industry. Corporate balance sheets across North America again with a few exceptions are very strong and companies are expanding certain sectors.”
Low interest rates are forcing institutional investors to look to other asset classes outside of equities and bonds to invest
Turning to fund raising, as Brian mentioned against the backdrop of low interest rates and the volatility in stock markets we believe our real asset strategies have significant appeal in particular for institutional investors. Property, infrastructure and private equity are excellent places to commit capital for those investors with long liability such as pension plans and sovereign wealth funds. We spent the last decade building out our global scale in all of our businesses and has allowed us to be heading to close $30 billion of capital for our current round of funds.
Brookfield Asset Management (BAM) CFO Brian Lawson said they’ve raised a substantial amount of capital and thus have a lot of dry powder to deploy to buy assets
So turning to our asset management results, fee bearing capital was $104 billion at the end of the quarter, up $11 billion over the last 12 months. And subsequent quarter end capital raised in our private funds added an additional $10 billion of fee bearing capital bringing the total to $114 billion, and increased our annualized fee revenues and target carry to nearly $2 billion. The increases in fee bearing capital came from a final close on our $9 billion flagship property fund along with commitments of approximately $12 billion to our latest infrastructure fund and more than $3 billion to our private equity fund.”
Customers keep coming back to re-invest
We are targeting an additional $6 billion of capital on our marketing efforts which also include three niche fund. In our strategies we have seeing the vast majority of investors in the last generation of funds coming back as participants in our successor funds.”
Beginning to see attractive investment opportunities
And at the same time our capabilities to put this capital to work and manage the assets has never been stronger in terms of our global scale and operating capabilities and we are seeing a wide range of attractive opportunities. To that end we have already investor or committed more than half of the capital in that $9 billion property fund I mentioned that we just closed.”
Attracting more capital from Asia
And probably the second biggest change over the years has been Asian institutional investors have continue to put money into real assets and into funds and into investments outside of Asia. And so those commitments have been growing. Probably both because our name is known and our relationships are better, but also because there is more significant amounts of capital coming from those types of groups today.”
Brookfield Asset Management (BAM) CEO Bruce Flatt highlighted the company’s size and large asset base as a competitive advantage
We try to focus on transactions that we have a competitive advantage with and I guess we try to focus on three things, number one is and often people heard us say that it’s size of capital we have more money than most people to invest in transactions and that just allows us to do things, which a lot of others can’t do just because of the size of transaction and we bought the Columbian Hydro Company recently for $5 billion and they are just weren’t too many people that could fund $5 billion to do that transaction. So size just helps us to eliminate ourselves from the crowd or separate ourselves from the crowd.”
Seeing Chinese companies buying international assets should not fully be mistaken for a dash to get out of the Yuan currency
The one thing that we are seeing is very significant amounts of capital being invested from China to other more developed markets. And again the story gets confused because most people interpret that that as people taking money out of China and wanting to have it out of China. And that’s possible some of the money is that. But a lot of it is that the institutions in the country have been encouraged to invest outside of the country. And they’re starting to go from they initially where zero percent outside of the country for example in the insurance companies and over 3% now they’re allowed 15% foreign investment. China now is going from 0% to 15%. You may never see that 100%, but that will continue to increase overtime. And the size of the amounts of money is very, very significant in these institutions.”