01—Abstract
Summary
Summary of the 40-F filed March 19, 2024. Cited figures are marked; the original filing is the authoritative source.
Brookfield Asset Management Ltd. (BAM) reported a steady 2023 as a pure-play alternative asset manager.
Fee-Bearing Capital (FBC) grew 9% to $457 billiona, driven by flagship fundraising (including the fifth infrastructure and sixth private equity flagship funds) and insurance-solutions capital, with 86% of FBC long-dated or perpetual in nature. Fee Revenues rose 8% to $4.4 billion, and Fee-Related Earnings increased 6% to $2.2 billion. Distributable Earnings, the company's primary performance metric, reached $2.2 billion (up 7%).
The Manager's own net income was $451 millionb, or $1.15 basic EPS, but this reflects only its roughly 25% equity interest in the asset management business, so the Manager has no independent revenue source. Investors should note the structural characteristics: the Manager's sole material asset is its 25% stake in Brookfield Asset Management ULC, and Brookfield Corporation controls the remaining ~75% along with key governance rights and fee/carry economics. Related-party arrangements are extensive, including Operating Recoveries, a $500 million credit facility from the operating company ($256 million drawn), and carried interest sharing (Corporation gets 33.3% of carry on new funds and 100% on mature funds).
The company also disclosed that management assessed internal control over financial reporting as effective with no material weaknesses, and Deloitte issued an unqualified opinion on ICFR and the financial statements, with a critical audit matter on the equity-method investment. Note that this 40-F incorporates the MD&A and financial statements by reference from exhibits. Looking ahead, management declared a quarterly dividend of $0.38c per share (up 19% year over year), announced a normal course issuer bid for up to ~10% of public float (no shares repurchased as of March 4, 2024), and disclosed a pending AEL acquisition by Brookfield Reinsurance that would lift the Manager's ownership of the operating company to ~27%.
Post-period, the company agreed to acquire an additional ~4.5% of Oaktree for $523 milliond, raising its stake to ~72%. A CFO transition (Hadley Peer Marshall succeeding Bahir Manios effective May 31, 2024) was also announced.
02—Key points
Key Highlights
- Fee-Bearing Capital rose 9% to $457 billion, with 86% long-dated or perpetual, supporting revenue stability; inflows of $73 billion were led by flagship fundraising and credit/insurance solutions.
- Fee Revenues increased 8% to $4.4 billion and Fee-Related Earnings rose 6% to $2.2 billion, driven by base management fees (up 9%) and incentive distributions (up 13%).
- Distributable Earnings of $2.2 billion (up 7%); the Manager targets paying out approximately 90% of Distributable Earnings quarterly.
- The Manager's net income was $451 million ($1.15 basic EPS), derived almost entirely from its ~25% equity interest in the asset management business, which is accounted for under the equity method.
- Quarterly dividend raised to $0.38 per share (19% year-over-year increase); 2023 distributions totaled $1.28 per share, and the NCIB authorizes repurchases of up to ~10% of public float through January 2025.
- Structural dependence on Brookfield Corporation: it holds ~75% of the operating company, controls perpetual affiliates (BEP, BIP, BBU, BPY), receives 33.3% of carry on new funds and 100% on mature funds, and the Manager's credit facility with the operating company was $256 million drawn at year-end.
- Internal control over financial reporting was assessed as effective with no material weaknesses; Deloitte issued an unqualified opinion, though the 40-F notes the operating company is not independently subject to SOX requirements.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed March 19, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $4.06B— | — |
| Operating Expenses | $402.00M$39.00M | +930.8% |
| Interest Expense | $9.00M$0 | — |
| Net Income | $2.14B$19.00M | +11147.4% |
| EPS (Basic) | $1.15$0.05 | +2200.0% |
| EPS (Diluted) | $1.13$0.05 | +2160.0% |
| Shares Outstanding (Basic) | 391.70M396.20M | −1.1% |
| Shares Outstanding (Diluted) | 396.50M400.90M | −1.1% |
05—Questions
Frequently Asked Questions
How is the Manager's financial performance different from the asset management business's performance?
The Manager's income statement reflects only its ~25% equity share of the operating company's earnings, less its own compensation and interest costs, so its net income ($451 million in 2023) is not comparable to the operating company's $2.1 billion net income. Investors typically track Fee-Related Earnings and Distributable Earnings of the asset management business ($2.2 billion each), which better represent the economics that flow to shareholders via the Manager's dividend.
What drives growth in Brookfield's fee revenues?
Growth is driven by expanding Fee-Bearing Capital from new flagship fund closes (infrastructure, real estate, private equity), capital deployment across complementary strategies, and increases in incentive distributions from BEP and BIP. Some offsets came from lower market capitalizations of listed permanent capital vehicles and redemptions in liquid strategies. Note that the $47 billion of committed but uninvested capital will generate about $470 million of future fees once deployed.
What are the main risks for Manager shareholders?
Key risks include reliance on Brookfield Corporation for capital, fees, and governance (the Corporation holds ~75% of the operating company and has discretion over fee-bearing capital it provides); volatility in carried interest and performance income; lower fee revenue if listed vehicles' market capitalizations decline; the Manager's status as a newly formed company with limited standalone history; and tax restrictions limiting certain strategic transactions for a period following the December 2022 spin-off.
What corporate actions could change the share count or ownership structure?
The Manager's buyback program (NCIB, up to ~34.6 million Class A shares, running January 2024 to January 2025) had no repurchases as of March 4, 2024. The pending AEL merger would deliver Class A shares to AEL shareholders through a share purchase arrangement with the Corporation, increasing the Manager's public float by roughly 10% and its operating company stake from ~25% to ~27%, without dilution to existing shareholders. Separately, the company agreed post-period to buy an additional ~4.5% of Oaktree, increasing its stake to ~72%.
06—Continue