Brookfield Considers Spinning Off $100B Asset Management Operation

Brookfield Asset Management is mulling a spinoff of its asset management operations that would create an entity with an equity value of between $70B and $100B, according to Brookfield CEO Bruce Flatt in a letter to shareholders released with the company's fourth-quarter earnings report.

Such a separation would "open up growth options to us that do not exist today, as we dislike ever issuing shares at less than what we believe to be at least their full fair value," Flatt wrote.

The spinoff would allow the remaining Brookfield operations to become more "asset light," a circumstance that Chief Financial Officer Nick Goodman said the markets have a clear preference for.

"We listen to the market and we often look to respond accordingly, and we believe that spinning out a part of the manager would allow investors ... access to just that asset-light part of the business," Goodman said on Brookfield's earnings call Thursday.

Brookfield is betting the move would capitalize on investor eagerness for such sectors as real estate and private credit. Alternative-asset managers are seeing strong demand from institutional investors looking for better returns than from equity markets, Bloomberg reports.

Brookfield on Thursday said that it had $690B in assets under management as of Dec. 31, including real estate, infrastructure, private equity and credit. The total was up 6.2% from the quarter before and 15% higher than in Q4 2020.

Brookfield stock dipped slightly on Friday, though it was up more than 40% over a year ago.