Brookfield Asset Management Ltd. (BAM) Presents at Morgan Stanley U.S. Financials, Payments and CRE Conference (Transcript)

Brookfield Asset Management Ltd. (NYSE:BAM) Morgan Stanley U.S. Financials, Payments and CRE Conference Call June 13, 2023 12:00 PM ET

Company Participants

Bruce Flatt - CEO

Unidentified Company Representative

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Okay. With that out of the way, we're thrilled to have with us here Bruce Flatt, CEO of Brookfield Asset Management. Bruce has been with Brookfield for over 30 years and has been the CEO for the past 21 years. Under his leadership, Brookfield has developed a leading global investment and asset management platform operating in more than 30 countries around the world during which time the stock has delivered a compound annual growth rate of 20%. In December of last year, Brookfield spun out from its alternative assets -- spun out its alternative asset management business as a pure-play publicly traded company with -- and adopted the name Brookfield Asset Management, and trades under the symbol BAM.

Today, it is one of the largest alternative asset managers with over $825 billion of assets under management across renewable power and transition, infrastructure, private equity, real estate, private credit, giving it a unique and interesting perspective on what is happening throughout the global economy. Bruce, thank you for joining us. Welcome.

Bruce Flatt

Thanks for having me.

Question-and-Answer Session

Q - Unidentified Analyst

Welcome to our Morgan Stanley Financials Conference. All right. Well, let's begin. A lot to talk about here today. With over $800 billion asset footprint, Brookfield has a unique view on the global economy. So, with hundreds of portfolio companies throughout the supply chains, thousands of real estate properties. So through that lens, I'm sure many of us in the room would be keen to hear your perspective in terms of the state of the global economy, and where you see some of the greatest opportunities and risks?

Bruce Flatt

Yes. So, look I -- a lot of you know all of this, but I'll just state it in short form. The Fed needed to crush inflation. And they -- because they pumped too much money in the system. They had to do that. But they raised interest rates really fast. And it clearly has worked. And you can just see businesses have slowed. We've been seeing it for three, four months, businesses have slowed around the world, but not in a really significant way. They've just -- I would say they've almost -- it's possible they're going to engineer exactly what they wanted. And they've done a really, really good job because what they've done is just engineer globally a slowdown, but unemployment is still good, businesses still pretty good, and interest rates are high, but clearly they're topped off. And for a period of time and let's say it started in July last year, you couldn't get a loan anywhere for anything. And that started to loosen up. Even on the buyout side, private equity buyout side it started to loosen up like we were funding through that whole period for renewables infrastructure and things. But on the buyout side, it started to loosen up.

And I'd say, that's generally -- and you’d all know this, it's generally because when things rapidly go up, people think, wow, if it goes up another 500 basis points, what do I do? So, they just do nothing. But now that it's -- rates have sort of settled, whether they go down in the short term, the medium-term, in the longer term, at least they're settled. And so, I think that's actually been really helpful to bringing just transaction activity to start back in the market. And that's what's occurring today.

So I guess, I'd say we're positive about the environment, just because we're going to have a soft recession. And we're going to all come out of this. And I'd say the only other thing I'd add is sitting here in New York, U.S. investors and U.S. individuals and U.S. institutions mostly see the world through a lens of the United States. I travel a lot around the world, and it looks a lot better from outside. The biggest issues are in the United States, and therefore the negativity is the strongest in the U.S.

I was in Australia last week, and Australia is very positive, Asia is positive, Middle East is very positive. So, you can just -- you go through the list, it really comes down to the U.S. has had more issues than most of the world.

Unidentified Analyst

And just given that backdrop, you guys have $79 billion of dry powder, maybe let's talk about the opportunity set that you see to put capital to work here. Overall activity levels are down across the industry, yet for Brookfield, I think I total up at least five public to private takeouts that you guys are involved with from Network International, to Origin, Triton, Duke Renewables, Data4 that aggregates $40 billion I think of EV, [ph] so pretty impressive. What's driving that sort of strength on the deployment side where other folks are talking about a slowdown?

Bruce Flatt

Yes. Look, here, I would say, firstly, our business is -- it's not -- I won't say it's better or worse. It's just different than most other managers. We started as an industrial business that was heavy into infrastructure and renewables. And today, if you're in tech and growth stocks, and private equity, it's not so easy to raise money or deploy. But if you're into industrials, that's what's coming back. Renewables and infrastructure have been highly efficient, and you've been able to do things in them. So, those businesses have been strong. Most of the things you mentioned, are either in renewables or infrastructure.

And our -- I guess, our posture today is get greater returns than we would have asked for before but keep investing because I'd say what we're buying today will be exceptional investments in the longer term. And I guess in thinking back over periods of stress, over the past more than 30 years I've been at Brookfield, some of the great, great investments have been either new businesses we purchased, and then we're able to add for the next 25 years on to them or tuck-ins that we're doing within our businesses.

For example, we now have data center businesses globally on every continent. And that will be a build out over the next 25 years as the digitalization of everything continues to occur. So, I’d just say it's our -- look, our strengths and what we bring to the table is we're larger than almost anyone or as large as the top few. We are in 30 countries and have been for long periods of time. We are very operationally focused. Most of our return does -- never comes from financial leverage, it comes from operational excellence. And those three things combined, plus our large relationships with both financing institutions and with limited partners, which we’ve had long, long tenures with, and plus our own capital that we have in our own sovereign fund, which is what we split off from, just gives us a special advantage, compared to most others purchasing things. So, we can still keep pushing through tougher times, which we’ve been doing over the last while.

Unidentified Analyst

So active on infra and renewables, is there anything you're avoiding from a deployment standpoint?

Bruce Flatt

No. Look, I would say, it's -- those ones have been more active than -- and I’d put credit in there as well, our credit business, which is both done under the Brookfield brand, but also the Oaktree brand. Real estate and private equity have just been less -- there has just been less to do, because sellers -- there were no sellers. And if there were sellers, they weren't at the price the buyers were at. And so, the situation is just a little slower in those businesses, but it will pick up.

Unidentified Analyst

Okay. And with meaningfully higher interest rates here, potential for recession, higher inflation, although easing a bit. How is your underwriting criteria evolved and hurdle rates as well? Some suggest the -- an era that relied on cheap financing and expanding multiples to drive returns is over. And if that's right, how do you drive returns going forward?

Bruce Flatt

Look, I'd say, first off, we never changed our returns when interest rates went down. In real estate, we’ve earned in our fund series 22% for 25 years, private equity 28%, infrastructure 15%, renewables, 14% or 15%. Those returns on a levered basis are -- have been that way for a long period of time, and they will be into the future. We got lucky on a few financings because you clipped 200 basis points off the bottom end, you financed for 20 years. That was just luck. No one should have expected it. And anyone that made acquisitions based off the fact that interest rates were going to be zero forever and if they didn't lock the financing in, shame on them and they'll have a problem. But -- so I'd say just for us, our underwriting never changed. And we are just back to where we were before. And our financing has never impacted the long-term returns of a business. It's about operating these businesses better and strategically repositioning them to capture optionality of the upside. And so, it's not -- I'd say, it almost -- it doesn't matter. And that's not a whole was true, because if you can catch the multiple at the bottom when somebody -- when interest rates are really lower, multiples are high, you got lucky. But on balance, when you have as much stuff as us, you can get lucky a few times, but you can't hit it all the time.

Unidentified Analyst

That’s a bold statement that it doesn't matter. But maybe what gives you the confidence in sort of the ability to hit those sort of returns going forward, mid teens? Any sense on return objectives?

Bruce Flatt

No, I've been answering this question for 30 years. And…

Unidentified Analyst

We still want to know the answer.

Bruce Flatt

And I’d just -- I would just say these businesses -- remember, we just buy private businesses and we own assets. And what's happened in the world is that the distractions, the public markets are -- they go up and they go down, they never trade at the fair value of the business usually. Once in a while -- the value goes like this, once in a while the price hits value. And if we can pick points in time, arbitrage, you said -- and you said it, we just did, have done and are doing now or have done 5. But if I go back over the last 10 years, we've probably done 50 take privates. And we've taken things public at other points in time. And what we're trying to do is pick the points in time when the value of the business under our assumptions is not the price. And if we can pick the price off in the market, when it's lower than value, it gives you a very good entry point. And because of that we've been able to earn excess returns from what and run the businesses better, but we've been able to earn excess returns over what you might earn in the stock market. And so, I don't think -- I really don't think the -- in fact, I'd say it gets -- it gets easier as you get bigger. And that doesn't -- that doesn't exist in many things. But what we do is buy large businesses and infrastructure. And what comes with larger businesses is better management teams, more global businesses, more durable businesses, and the cash flows, which can grow. And that's, I guess, we found that over the long periods of time.

Unidentified Analyst

I think what a lot of people maybe are skeptical is on the return persistency. But I think we you outlined there is around timing, the investments being an important dynamic.

Bruce Flatt

Yes. Look, timing is important. Having said that, we buy everything such that -- we buy everything such that we're going to hold them forever. Like, we will not buy a business assuming that we can get out of it in three years or five years. Sometimes we do. And we do have funds, many funds have 12-year durations on them. But everything we buy -- because when you think about it, even if you have 12-year duration on a fund, what we're trying to do is to run an operate a business. And by the time we turn it over to somebody else, we want it to be an exceptional business with amazing growth profile, such that they will pay us for the future. And that means you can never have short-term decisions when you're running those businesses.

Unidentified Analyst

Okay. Why don't we take a step back here and talk about your process for sourcing investment opportunities? How does that sort of differ as you look across your different asset classes? Where might be you looking to enhance or expand your sourcing? And how do you leverage the unique perspectives that you have across the firm?

Bruce Flatt

So, we have 2,000 people in the asset manager, the 1,000 of them are investment people. Within the franchise, there's 200,000 people in our different businesses to 250,000 people, depending on the week. That's an amazing sourcing mechanism on its own. We deal with 2,000 limited partners, most of them -- many of them the most sophisticated on the planet. We deal with every financial institution in a very substantial way. I'd say we're the top five customer of virtually every financial institution. And therefore, if we're in a business, we almost see everything. And, last night I had a call -- and this morning I had a call with -- and this is just me. I'm one of 1,000 people in the company. And I had two calls, two businesses. Somebody wanted us to purchase. One was CEO thinking about whether they wanted to deal with their options and the other was somebody on behalf of a company thinking we might deal with them. And that's an initial screening, our teams will look at it and we go along. But it's various, various ways and we have -- and often it's our partners bringing us transactions. The business network we just bought in the Middle East, we have a number of Middle East partners, we've been there for decades doing business in the countries. And as a result of that, they bring us a lot of things that we do with them around the world.

Unidentified Analyst

Maybe switching gears a little bit, to talk about BAM structure. Historically, you've had more of an asset heavy business, but you've spun off the asset light money manager, it's now been about six months or so roughly, since the spin off, the stock has traded well, it’s about 10% or so since the beginning of the year, versus the U.S. listed GPs that are about flat on the year. So, what's been the feedback? And remind us what were you trying to achieve with the separation and how has that fared versus your objectives?

Bruce Flatt

Yes. So the -- everybody that runs company always thinks they should have a higher price. But I would say the initial launch market cap is around $55 b, $60 billion in total. We distributed 25% of it to the shareholders of Brookfield Corporation, which is the parent company, our shareholder -- we didn’t IPO, we didn't take any new money, we just distributed 25% to our shareholders, which some of you may know this, but we've done that 8 times over the past 20 years. So, we like giving things to our shareholders for free. And the business now listed, it trades at a pretty good multiple. It has an excellent growth profile. It's very differentiated with the strategies that we have. They're very long-term and many of the strategies are perpetual. And it’s had a good -- I'd say it's had a good start.

We did it for two reasons. Reason number one is -- and there is going to be -- there is and there is going to be more consolidation in this industry. And having security that's more properly valued and in the industry, exactly what everyone thinks about when they think about asset management. And it's now -- it’s a little bit different, but it's similar to all the others. We can then have it as an opportunity to use that if we so choose, I don't know if we'll ever use it. But we could use it and having options is always good in business life, whatever you want to call it. The second reason is that the security up top that basically what we did over 30 years. We collected all the capital and created our own sovereign plan and make it really simplified, and we have $140 billion of capital up top. And what we do with our sovereign fund, called Brookfield Corporation, is that we invest in all the things that we do -- the BAM manages, but we also do buy other businesses and I'd say take outsized investment decisions, and over long periods of time have been very successful at it. But the business changes all the time.

Right now we're building out an insurance business. And I think it'll be highly, highly successful over the next 15 years, but, it's possible it's not. And therefore that -- there were a lot of people that wanted to just own our asset manager. So, by having a pure-play asset management business, we thought we had created one of the best ones out there by having it trade separately, it just opens, gives opportunities for investors to own that -- it's own and not take the risk or reward with us in our other investment strategy. And we can still -- because we still own 75% of the manager, we can still invest into all the things it does and just have a different shareholder group.

Unidentified Analyst

So with the 25% flow, 75% owned by Corp., I guess, are there any plans to increase that 25% flowed over time? Any thoughts on Corp.’s potential for selling down that stake? What's the long-term intent, would you say?

Bruce Flatt

Yes. So, the Corp. balance sheet has close to a $150 billion of assets, $10 billion of liabilities. So, it needs no money. The only time we would ever -- and the BAM business in our view is an unbelievable business, and it will double and double and double over the next 5, 10, 15, 20, 30 years. So, it's an excellent investment. And I don't -- we have no intentions of selling down anything because it's a phenomenal investment, and therefore, we’ll just keep riding it. If there was something to do with that business where we got diluted down, and as long as it's additive to Brookfield Asset Management, then we would allow ourselves to be diluted down. In the absence of that, it's possible from time-to-time there's other things that we could do, but we have no intentions of doing anything at the moment.

Unidentified Analyst

Okay. Why don't we shift and talk about fundraising? You raised $94 billion last year, which was a record year. And you've said that you’d expect to raise a similar amount this year. I guess, what's striking is that your peers have been revising their targets lower, while you guys have doubled down on your targets. And so, that's raising some questions in the marketplace around what gives you the confidence to hit those targets, what's on the mind of your LPs these days and maybe can you remind some of the strategies you are raising?

Bruce Flatt

Look, if you're in fundraising -- in the fundraising world, if you have access to global institutions, if you are running infrastructure funds, if you are running renewable funds, if you are running transition funds, if you are in private credit, things are pretty good. If you have access to global institutions, things are good. If you are large and can deal with big sovereign funds, things are pretty good. If you are in -- on the other hand, if you are in the United States only, if you are mid market buyouts, if you are in technology or growth, it's not bad, but it's not so good. And I would just say, our confidence in continuing to fund raise comes from the fact that we are dealing with our institutions every day. They are continuing to come into funds. And we continue to see most of our things are in this category. We got lucky. The story might be different if we weren't global, if we didn't have infrastructure, if we didn't have transition, if we didn't have credit. But this time, it's possible we hit four of the best sectors to be in at this point in time.

Unidentified Analyst

Maybe touch upon some of the key strategies that you guys have in the market raising.

Bruce Flatt

So, look, I think the most interesting one is our transition strategy. We didn't have a transition strategy three years ago. We decided that as an adjunct or step out from our renewables business that we would raise transition. Most people didn't know what that meant. I'll admit to you, when we first considered it, we exactly didn't know what we wanted. But we landed on something that is really, really interesting. We raised $15 billion for the first fund. We've deployed all of it. We're out raising the second fund as we speak. We hope it will be larger.

And what our strategy we hit on and this is -- part of it was getting in the right spot, part of it is, we had the technical expertise, and the operational experience to be able to do it and most don't. And we're building renewables in that fund, but what we're -- for customers, Amazon, Google, Microsoft, global companies. But in addition to that, we're buying, for example, utilities, which are laden with coal and gas. And over the next 10 years, we will convert them to renewables. And this is a huge undertaking to do it, but we have the capabilities to do it. And by virtue of being laden with coal and thermal generation today that they deliver to customers, they trade at very low multiples.

So, not only is the strategy good for the less carbon in the world, but it's also very lucrative, just because of the entry point that you start at. And that's really exciting. Our infrastructure business continues to be a great business. We're on our fifth fund. I think we've raised $24 billion already. It'll be larger than that. We'll close off towards probably the third quarter of this year, the final fund.

And basically, we've been building out infrastructure for long periods of time. And I’d just say, it's the backbone of the global economy. But the backbone of the global economy changes all the time or what requires money changes all the time. For years, it was railways and pipelines and today, it's the digitalization of the economy. What's behind your smartphone is incredible. And the amount of build-out of datacenters, telecom towers, fiber to the home, and all the things that sit behind your phone is amazing, the amount of capital that has to get invested. And so, that's a huge undertaking. And with AI, we've seen the take-up of clients or data centers go like this. And so, it's -- there's very significant amounts of for digitalization, deglobalization, we funded an Intel plant in Arizona, recently. And just decarbonisation of a lot of different things across the board. So those are big mega trends that are going to play out over the next 10 years. Those are two really exciting funds.

Unidentified Analyst

Great. Why don't we shift and talk about real estate? While your asset management business does not have principal exposure, you do have a $270 billion footprint from office buildings to malls. Arguably, the pandemic has accelerated the number of trends from e-commerce to work from home and then you layer in higher interest rates. And it has led to some concerns around the future of CRE and what this could mean for real estate values? So, how do you see this all shaking out and what is your long-term plan for your real estate business at Brookfield?

Bruce Flatt

Yes. So, for Brookfield Asset Management, the business is -- look, we have a significant number of things we manage. The biggest series we -- funds we manage our -- is our BSREP series, our private equity series for real estate. And that group of funds has performed exceptionally for a long period of time. I don't think this will be any exception. We have -- just for the record, we have very little office exposure in any of those funds. And -- because basically, when you own office and retail, you need to have it where you can go through any period of time. These are cyclical businesses. And therefore, all the office and retail we have is owned in perpetual funds, or on the balance sheet at the end. So, these are long term assets. And I've found, over time, that this is one of the most cyclical businesses in the world. These periods of time pass. We can all reflect back. Everyone in this room, I'm sure it will reflect back to 2009, when 400,000 jobs in the financial services industry were lost in nine months. It isn't anything like that today.

And there's a lot of things in real estate that are actually pretty good.. Hotels, booming; multifamily, very good; retail actually is strong in the United States. The big -- the outlier's office and I would say premium office. Premium office in this city, in New York, is very, very strong. Rents are 50% above where they were pre-pandemic. If you own commodity traditional office, it's bad. Even our business, 95% of it is in premium, premium office and it's very good. 5% is terrible, and you work those things out. The good news is most of course, real estate's funded one by one by one. The only thing I would say is I don't buy the stories that this is going to cause any major issues for banks. Because what happened this time is that the system actually worked. Most banks buy, I'll take Morgan Stanley as an example. They buy real estate package and sell CMBS into the market. Hence, the problems have been dispersed around the world in CMBS products. And the losses have already been taken. They've been marked. And people have already taken most of the losses.

They may have in some cases taken more losses than what they need to -- will need to. But that's not to say that there aren't issues in traditional and commodity office, people that own that type of office. It's not good.

Unidentified Analyst

Okay. I'm sure some folks in the audience may have some questions on this. But we'll come back to that towards the end.

Moving on to insurance, you have $24 billion of fee bearing insurance assets. And you've identified that as a key growth driver. Can you talk about your strategy within the insurance channel? How it might differentiate from others and some of the steps we're taking to accelerate growth there?

Bruce Flatt

So our -- as the asset management business, we identified years ago that what we wanted to do was continue to build out the products we have for insurance channel. These products that we -- the alternatives businesses are exceptionally good for insurance companies. The risk weighted capital are very good for infrastructure, credit and real estate particularly. And so, what we do is very good for them. What we weren't very good at years ago was understanding how to tailor those products to put into the insurance businesses. And three years ago with our balance sheet up top, we've now bought three insurance companies, not BAM, but we are managing capital for those three insurance companies. But for the manager, what it's done is it's allowed us to really understand how to tailor these products for insurance businesses.

So, I think, firstly, the money we’ll manage for the Brookfield insurance companies will increase very substantially over the next number of years. But also, I think we are going to be a way, way better counterparty because we truly now understand the insurance channel, how to create products for them, how to partner with them, and how to bring them investments. And I think that will be exciting all around.

Unidentified Analyst

Why don't we shift and talk about your existing portfolio of operating investments that you have today? Maybe just give us a sense of what sort of growth trends you are seeing. And how do you expect that to evolve into 2024 as you look across your portfolio?

Bruce Flatt

Look, our -- so in our private equity business, it's mostly service, industrial -- service and industrial businesses. Increasingly, we’ve been getting into, I call it, late stage technology. And so we just bought -- we bought a company last year in the payments space. We just are buying another one or have offered to buy another one called Network International in the UK. It's a UK-listed business, but it's a Middle Eastern business. So, that's sort of our area of expertise. These are all durable global businesses, which produce -- generate large sums of cash, and generally trade at relatively modest multiples and are highly cash-generative. And in this environment, they’ve still been -- with a few exceptions, they’ve still been highly cash generative.

As you may know, we own Westinghouse Electric, which operates -- owns the technology for and operates 50% of all nuclear plants in the world. This is an amazingly durable business, which we bought on a blow-down scenario where you would just run them off over 50 years. And with energy security the way it is today, the renaissance of nuclear is back, and it's I think going to be exciting for the next number of years. We own one of the largest battery companies on the planet. We produce 40% of all car batteries in the world, the lead acid batteries. And they go into every car, including electric cars. It's 160 million batteries in the world, 85 countries. These are amazing businesses. You could spend your -- sometimes I think, I could spend my life on each one of them, because they are incredible businesses, but that isn't exactly what we are doing here as a living.

Unidentified Analyst

Fair enough. I do want to touch upon private wealth. That's an area of interest for many these days. So maybe you can just expand on -- update us on Brookfield's initiatives within the private wealth channel. Maybe just give us a sense of the products that you currently offer. And how are you thinking about the opportunities out there?

Bruce Flatt

So, I'm going to put it this way. I started out trying to get money from institutional clients 30 years ago, none of them gave it to me, and none of them gave it to me, and none of them gave it to me, and then it finally changed. And we convinced institutional clients to go from 0% to 2% to 5%, 7% to 10% to 12%, 15%, 20%, 22%, 25%. Some are now at 60%. They’re doing that because you get a greater return for giving up liquidity and because -- and I'd say more importantly, you get rid of the distractions of the public market on what you own. I think, the same thing is going to occur now over the next 30 years with investors. And the fact is any money one has, if you can buy a private business versus own it in the public markets, you should buy a private business. And you get paid more because you don't have liquidity and secondly, you lose the distractions. If you and I own a business, we don't care about how it trades every day, it doesn't trade. We just get the cash flow and we think you get $100 in this year, should we reinvest it in the business or should we take it out as a dividend? That's it.

And so, I think increasingly, as we evolve our -- and we don't have it perfect yet but as we evolve our structures, such that we can accommodate some liquidity for investors, it will be very interesting. And I think it'll continue to grow to very large sums of money in certainly super high net worth, high net worth and even moderate net worth individuals.

Unidentified Analyst

Maybe you could touch upon the product set that you have in the retail channel. You recently launched retail infrastructure related products and get that differentiated than others in the marketplace. Maybe talk about what the early reception has been on that, how do you think about growing it, and then the opportunities you see for other products in the retail channel?

Bruce Flatt

Yes. So, we have a product that is -- it's called Brookfield Infrastructure Income Fund, it's sold in high net worth. We're raising -- it’s $1 billion size, we only started this year. We raised $100 million, $200 million a month. It's the best of all infrastructure that we invest into. So, it takes a piece of all the deals that we do in our opportunistic fund, our core fund, our debt, credit fund, and they all go -- and other things that we do and infrastructure and it all goes into this fund, the small piece of it goes into the fund. So it's highly diversified. It’s global. It targets 5% in income and a 10% total return. It's a really exciting product. And I think it has the potential to be very large. But with all these strategies, and in this whole sector, we've been very careful to ensure that none of them get too big and none of them we take too much money that we can't deal with all the issues that go along with that. And so, we're very, very careful. And we have been and we are very careful with that and we'll continue to be.

Unidentified Analyst

Great. Maybe pivoting now to M&A. The BAM spinoff was arguably M&A of sorts. And you've talked about how that gives you optionality for inorganic growth. As the business stands today, what types of acquisitions would be most accretive to your platform at this point?

Bruce Flatt

Well, anyone that's listening -- you asked how do we get deals. Anyone that's listening, I guess, look, we -- anything that we do would have to be as good as what we have because we don't have capital within the business. We pay out 90% of our cash flows. We don't have any debt, I guess we could raise some debt. We have $3 billion of cash. So, that's the envelope of what we have. Therefore, we would -- to do anything meaningful, we would have to issue stock. We have an amazing business and we know the growth profile over the next 5, 10 years. Anything we have would have to be equal or close to that. And it would have to be additive from a platform perspective that we can't easily create it on our own. And it would have to be with people that we believe we can get along with. And when we partnered with the Oaktree team to take Oaktree private, we bought the public out of it and ended up with 65%, we're now 70% of the business. The management team owns 30%. We support their business, but they run it themselves. And it's been a great partnership to have. So, it would have to fit all three of those things, or wouldn't fit for us.

Unidentified Analyst

Great. Why don't we open it up to the audience? In the few minutes we have remaining, any questions in the room? Quiet group. Here we go.

Unidentified Analyst

I'd like to give you an M&A idea. Howard Marks obviously was one of the Oaktree founders, that's been a great deal for you guys. Back in the 80s and 90s, he seeded a real estate platform called Cohen & Steers. Those founders are now getting up there in age. And that might be an interactive additive platform for you to look at in the real estate vertical. Thank you.

Bruce Flatt

Thank you very much. I haven't looked at the stock recently. I know Marty and Bob from many years ago. So I'm going to go look at it afterwards. Thank you. Call number three for the day.

Unidentified Analyst

So, people really do approach you there. Any other question? If not, maybe just continuing with the M&A topic, just maybe you talk about the pipeline, in terms of how active is that today from an M&A standpoint? What are some of the deals that are coming across your desk? How are you seeing valuations in the private markets for potential transactions?

Bruce Flatt

I’d just say over the past -- we bought Oaktree five years ago -- or we bought in Oaktree five years ago, I think. In the last five years, we probably seriously looked at five, we've been approached on 25. We've done none. So, these are very -- this is about people. It's not easy to do M&A in asset management, because this is all about people. You need to have culturally fit with the organization. And so, it's -- I wouldn't say, it's something that happens all the time. But, what I would say is, this period of time that we're in now and people are going to experience in the next while is there's been a slowdown in a lot of their fundraising. And therefore there's going to be more reasons for people to look for options for the future.

Unidentified Analyst

And now that the spin off has been complete, I imagine that occupied a lot of your time. I guess, maybe talk to where you and the management team are spending a lot of your time today and what would you say are your top priorities?

Bruce Flatt

Well, first, we have $800 billion worth of stuff. There are problems every day. But I would say from a strategic standpoint, we're really just focused on how do we build out the businesses that we have, how do we continue to globalize them? How -- maybe, I would say with our most strategic clients, how do we create bespoke arrangements and customizations for them that allows us to differentiate ourselves that nobody else can compete with us.

And you are just a private equity manager, just a real estate manager, just infrastructure manager, just a credit manager, you cannot do what we can do for some of these institutions. So, we are increasingly spending more and more time on XYZ clients, we will bring you seven different funds over the next 12 months. We will bring you significant co-investments. We'll co-underwrite with you on different strategies. We'll, by virtue of that, bring your fee down and please give us this amount of money committed to those strategies. It just makes us different than everybody else and very, very few people can bring that to institutions. So, it quite differentiates us.

Unidentified Analyst

So we're just about out of time. So final question. Over the last 40 minutes or so here, we've covered a lot of attractive opportunities for BAM, including some of the secular tailwinds. So Bruce, what's your vision for Brookfield? Where do you see the firm going in the next three to five years? And why is it now a good time for investors to buy shares of BAM?

Bruce Flatt

Look, I think private assets are going to -- forget the -- I was saying some people can't raise money, come can. That will pass. The denominator effect will go away. This is all going to pass. And private assets for alternatives have grown from here to here. It hasn't stopped and it's going to be much, much, much bigger because global institutions are low in allocations to what they should be generally. And I think individuals and insurance companies are going to continue to push money into alternatives. So, I think the growth in this whole sector is significant, is very significant over the next 10, 15, 20 years. Once we hit 20 years from now, it may have peaked. You may be where traditional managers are today, or banks are today. You have a certain amount of customers, and unless you're in an emerging market and you're really good at it, you're not going to grow. You're just going to steal market share back and forth, but alternatives aren't there yet. They may be there in 20 years from now.

Unidentified Analyst

Great. We'll have to leave it there. Thank you very much, Bruce. I appreciate it.