How did BAM's core earnings perform in Q2 2024?

Fee-related earnings were $583 million ($0.36 per share), up 6% year over year, and distributable earnings were $548 million ($0.34 per share), up 4%. Over the trailing twelve months, FRE was $2.28 billion and DE was $2.25 billion, up 4% and 3%. Management noted that annualized run-rate FRE and DE, which include the partial-quarter AEL mandate, reached $2.5 billion and $2.4 billion.

Why are fee-bearing capital and fundraising important to investors?

Fee-bearing capital drives management fee revenue, which is the core recurring income of an asset manager. Fee-bearing capital reached $514 billion, up 17% year over year. The $68 billion raised in the quarter, most of it from the AEL insurance mandate, supports future fee growth, and the $107 billion of uncalled commitments provides a pipeline of capital that will earn fees once deployed.

What do the Neoen and GEMS Education transactions mean for BAM?

Neoen is a renewable development business that BAM agreed to acquire a majority stake in, held through its Global Transition fund, with closing expected by Q1 2025. GEMS Education, a $2.0 billion equity investment in a Middle East private education provider, is expected to close in Q3 2024. Both deals add to assets under management and deploy capital that can generate future fees and carried interest, but they also carry execution and closing risk.

Is BAM's dividend secure, and what should investors know about the structure?

BAM declared a quarterly dividend of $0.38 per share, payable September 27, 2024. Because BAM's only material asset is its roughly 27% interest in the asset management business, its dividend depends on that business's earnings. Its net income ($124 million for the quarter) is much smaller than the business-level figures, and it has no independent revenue source. The filing also notes that the financial statements are unaudited, and that FRE and DE are non-GAAP measures.

What are the main risks highlighted in the filing?

The forward-looking statements section lists risks including BAM's dependence on Brookfield Corporation and potential conflicts of interest, reliance on fee-bearing capital growth and fundraising, interest rate and inflation sensitivity, currency exposure, volatility in BAM's share price, and the variability of earnings that could affect the dividend. Investors should also watch deal closing timelines, such as Neoen and GEMS Education, and the deployment of uncalled commitments.

BAM 8-K SEC Disclosure

01—Abstract

Summary

Summary of the 6-K filed August 7, 2024. Cited figures are marked; the original filing is the authoritative source.

Brookfield Asset Management Ltd. (NYSE/TSX: BAM) reported second-quarter 2024 results with fee-related earnings (FRE) of $583 million^a ($0.36 per share), up 6% year over year, and distributable earnings (DE) of $548 million ($0.34 per share), up 4%.

Over the last twelve months, FRE was $2.28 billion^b ($1.40 per share) and DE was $2.25 billion ($1.38 per share), up 4% and 3%. Fee-bearing capital reached $514 billion, up 17% from a year earlier, and the firm raised $68 billion in the quarter, $49 billion of which was insurance capital from American Equity Life (AEL). Annualized FRE and DE at quarter-end were $2.5 billion and $2.4 billion, up 11% and 12%, a figure that includes only about half a quarter of fees from the AEL mandate.

The filing is labeled an 8-K in the request, but the document is a Form 6-K (foreign private issuer report) that attaches an earnings press release. The quarter's results for BAM itself, the publicly traded holding entity, were net income of $124 million^c ($0.30 per share) versus $109 million a year earlier. BAM owns about 27% of the asset management business, and Brookfield Corporation owns the remaining 73%.

Management highlighted strength in credit and renewable power and transition, the Neoen acquisition, and data center growth. The board declared a quarterly dividend of $0.38^d per share, payable September 27, 2024, to holders of record on August 30, 2024. Investors should note that the financial statements are unaudited, and that FRE and DE are non-GAAP measures that differ from GAAP net income.

02—Key points

Key Highlights

Fee-related earnings rose 6% to $583 million ($0.36/share) and distributable earnings rose 4% to $548 million ($0.34/share) for the quarter, with LTM FRE of $2.28 billion and DE of $2.25 billion.
Fee-bearing capital reached $514 billion, up 17% year over year and up 12% sequentially, and roughly $1 trillion of total assets under management was reported.
The firm raised $68 billion of capital in the quarter, including $61 billion in credit (with $49 billion of AEL insurance capital), $4.0 billion in renewable power and transition, and $1.1 billion in real estate.
Uncalled fund commitments totaled $107 billion, of which $51 billion is not yet earning fees but could generate about $510 million of annual fees once deployed; BAM held $1.9 billion of cash on its balance sheet.
About $20 billion was deployed or committed in the quarter, including the agreement to acquire a majority stake in Neoen (expected close by Q1 2025), the $2.0 billion GEMS Education acquisition (expected close in Q3 2024), and the $850 million nVent electrical thermal solutions acquisition announced after quarter-end.
BAM's own net income was $124 million ($0.30/share), up from $109 million, and BAM raised its stake in Oaktree by 5% to roughly 73%.
The board declared a $0.38 per share quarterly dividend, payable September 27, 2024, to shareholders of record as of August 30, 2024.

03—Questions

Frequently Asked Questions

How did BAM's core earnings perform in Q2 2024?
Fee-related earnings were $583 million ($0.36 per share), up 6% year over year, and distributable earnings were $548 million ($0.34 per share), up 4%. Over the trailing twelve months, FRE was $2.28 billion and DE was $2.25 billion, up 4% and 3%. Management noted that annualized run-rate FRE and DE, which include the partial-quarter AEL mandate, reached $2.5 billion and $2.4 billion.
Why are fee-bearing capital and fundraising important to investors?
Fee-bearing capital drives management fee revenue, which is the core recurring income of an asset manager. Fee-bearing capital reached $514 billion, up 17% year over year. The $68 billion raised in the quarter, most of it from the AEL insurance mandate, supports future fee growth, and the $107 billion of uncalled commitments provides a pipeline of capital that will earn fees once deployed.
What do the Neoen and GEMS Education transactions mean for BAM?
Neoen is a renewable development business that BAM agreed to acquire a majority stake in, held through its Global Transition fund, with closing expected by Q1 2025. GEMS Education, a $2.0 billion equity investment in a Middle East private education provider, is expected to close in Q3 2024. Both deals add to assets under management and deploy capital that can generate future fees and carried interest, but they also carry execution and closing risk.
Is BAM's dividend secure, and what should investors know about the structure?
BAM declared a quarterly dividend of $0.38 per share, payable September 27, 2024. Because BAM's only material asset is its roughly 27% interest in the asset management business, its dividend depends on that business's earnings. Its net income ($124 million for the quarter) is much smaller than the business-level figures, and it has no independent revenue source. The filing also notes that the financial statements are unaudited, and that FRE and DE are non-GAAP measures.
What are the main risks highlighted in the filing?
The forward-looking statements section lists risks including BAM's dependence on Brookfield Corporation and potential conflicts of interest, reliance on fee-bearing capital growth and fundraising, interest rate and inflation sensitivity, currency exposure, volatility in BAM's share price, and the variability of earnings that could affect the dividend. Investors should also watch deal closing timelines, such as Neoen and GEMS Education, and the deployment of uncalled commitments.

04—Continue

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