Brookfield considers spinning off asset manager

Brookfield Asset Management Inc. is considering spinning off its asset management business as a separate company that it believes would have an equity value in the range of US$70 billion–US$100 billion, the Toronto-based firm said on Thursday.

“Our asset management business is now one of the largest and fastest-growing scale alternative investment businesses globally,” said Bruce Flatt, CEO of Brookfield, in a letter to shareholders. “This, together with the added benefit of having the longest duration of annuity-like cash flows of any asset manager, means that it could now simply be separated from our capital.”

The projected equity value of the spun-off asset management business excludes US$50 billion net in equity capital that Brookfield has invested in its businesses, Flatt said.

“Separating a part of our [asset] manager in the public or private market, while ensuring it still benefits from the capital we have at overall Brookfield, could open up growth options to us that do not exist today,” Flatt said, adding that as Brookfield’s “reinsurance and investment operations grow, separating a part of the manager might make sense in order to allow investors who only want exposure to the manager to own a separate security.”

Brookfield also announced it had raised its dividend as it reported its fourth-quarter profit rose compared with a year earlier. Brookfield, which keeps its books in U.S. dollars, says it will now pay a quarterly dividend of 14 cents per share, up a penny from 13 cents.

The increased payment to shareholders comes as Brookfield says its net income attributable to common shareholders rose to US$1.12 billion or 66 cents per diluted share for the quarter ended Dec. 31, up from US$643 million or 40 cents per diluted share a year earlier.

Revenue totalled US$21.79 billion, up from US$17.09 billion in the fourth quarter of 2020.

Funds from operations for the quarter totalled US$1.73 billion or US$1.04 per share, down from US$2.1 billon or US$1.34 per share a year earlier.

Brookfield says its distributable earnings were $1.3 billion, down from $1.63 billion a year earlier.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.