Brookfield Asset Management crosses $1 trillion in AUM in big Q2

Main takeaway: Brookfield Asset Management hit the big $1 trillion mark in assets under management during the second quarter as the firm continues to expand.

Executives met with Wall Street analysts Wednesday to tout its growth and future profit-generating potential. In particular, BAM made three big acquisitions this summer, said President Connor Teskey.

• In June, the firm acquired a majority stake in Neoen, a global renewable development business. This transaction is expected to close by the first quarter of 2025 and represents “a key strategic investment” in the second vintage of BAM’s global transition flagship fund.
• BAM purchased GEMS Education later in June, a premier private education provider based in the Middle East, with its founder representing $2 billion in equity. Teskey called the Middle East a “high-growth region” and one to which the firm will remain committed. The deal is expected to be completed in the third quarter.
• Just after the end of the quarter, BAM acquired nVent Electric’s electrical thermal solutions business for $850 million of equity. This business is a leading designer and manufacturer of electric heat trace systems and products.

Brookfield raised $68 million in capital during the second quarter, Teskey noted. The firm is coming off strong fee growth posted during the first quarter.

“We now have approximately $1 trillion of assets under management,” he said. “This reflects the dedication and talent of our over 2,400 investment and asset management professionals and nearly a quarter-million operating employees around the world, and is a testament to our commitment to serving our clients and delivering attractive, consistent risk-adjusted returns over the long term.”

Additional takeaways

Brookfield Reinsurance took control of American Equity Investment Life Holding Co. in May. Last year, Brookfield Re announced it was to acquire AE for $4.3 billion, on the heels of several years of significant investments in the annuity issuer.

Given that AE was fully a part of BAM for less than half of the quarter, executives spent little time on its contributions. American Equity remains a big seller of fixed-indexed annuities.

BAM has taken control of more than 60% of the AE portfolio and will begin rotating a portion of those securities into the firm’s funds, Teskey explained.

“When we do so, that will not only drive returns for that portfolio, but also drive additional fee revenue on that capital,” he added.

One analyst asked Teskey whether the public markets have “overreacted” to a batch of negative economic data.

A pair of bad data points Thursday — the lowest U.S. manufacturing activity since November 2023 and the highest weekly unemployment claims reading in about a year — sparked a selling spree on Wall Street.

“The last seven to 10 days have seen some volatility,” Teskey acknowledged. “It is not at this point in any way causing us to waiver from a very constructive view of the market, and one that's going to see more transaction activity, and we would suggest increasing valuations across the sectors that we invest in.”

Management Commentary

“As markets have become more favorable, having access to among the largest pools of capital globally is one of our competitive advantages which enables us to pursue large-scale transactions away from the more commoditized parts of the market. And with deal activity increasing, we see further momentum on the deployment front across all of our businesses, putting us in a prime position, given our more than $100 billion of available capital.”

-Connor Teskey, president of Brookfield Asset Management

Financial Overview

Total Revenues: $916 million ($985 million in Q2 2023)

Fee-related Earnings: $583 million ($548 million in Q2 2023)

Net Income: $495 million ($455 million in Q2 2023)

Earnings Per Share: 34 cents (32 cents in Q2 2023)

Dividend declared: 38 cents

Stock price movement: down about 3% to $38.94 at the end of Wednesday

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.