The firm expects to publicly distribute 25% of its asset-management business to its shareholders before year-end
Author of the article:
Bloomberg News
Layan Odeh
The Brookfield Place building in Calgary. Photo by Gavin Young/Postmedia files Brookfield Asset Management Inc. said it plans to publicly list one-fourth of its asset-management business in a transaction that would value the new entity at US$80 billion.
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The firm expects to publicly distribute 25 per cent of the asset manager to its shareholders before year-end, Chief Executive Officer Bruce Flatt said in a letter to shareholders as the firm issued first-quarter earnings. The special distribution of shares will be around US$20 billion, or US$12 per share, he said.
The shares rose 4.6 per cent in premarket trading in New York.
The spinoff will separate the company that manages assets on behalf of investors across its portfolio of real estate, infrastructure, credit, private equity and renewables from Brookfield’s own investment capital of US$75 billion. The move makes Brookfield “asset-light,” a model preferred by investors.
“Having a new security or ‘currency’ that is well understood and appreciated by the public markets will maximize optionality for us as we continue to scale and diversify our asset-management platform,” Flatt said in the letter. Brookfield will own 75 per cent of the new entity.
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Highlights of the plan:
The new entity will pay out approximately 90 per cent of its annual earnings in dividends.It will trade on the New York and Toronto stock exchanges. Brookfield will set its annual dividend at a lower level.
More On This Topic Rosenberg: Alberta’s economic turnaround is the real deal, and it’s about more than just energy Welcome to The Upside Down market, where strange things are the norm Vicious stock reversal is a symptom of the Fed’s feedback problem The impact of higher inflation on Brookfield’s expenses is mitigated by rising margins, “which means that inflation has a positive impact for owners of real assets and real return businesses,” Flatt said.
The Toronto-based firm has a history of building businesses and then listing them. Last year, it spun off Brookfield Asset Management Reinsurance Partners Ltd. through a special dividend to shareholders. It did the same thing with its private equity unit, Brookfield Business Partners, and its renewable-energy operations, Brookfield Renewable Partners, among others.
Here are Brookfield’s earnings results:
The company reported funds from operations of 96 cents a share, beating the 85 cents estimated by analysts in a Bloomberg surveyFee-bearing capital came in at US$379 billionTotal assets under management reached US$725 billion
Brookfield shares have declined 22 per cent this year.
Bloomberg.com
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