01—Abstract
Summary
Summary of the 6-K filed November 12, 2024. Cited figures are marked; the original filing is the authoritative source.
Brookfield Asset Management (BAM) reported record third-quarter 2024 results in this 6-K, which furnishes its interim report for the quarter ended September 30, 2024.
Fee-bearing capital rose to $539 billiona, up about 23% year-over-year, driven by $135 billion of inflows over the last twelve months, the AEL Mandate, and acquisitions of partner-manager stakes. Fee-related earnings reached a record $644 million (up 14%) and distributable earnings a record $619 million (up 9%), with FRE margin expanding to 58%. Management expects further earnings growth from fundraising in flagship and complementary strategies, and cited more than $17 billion of asset sales signed or closed recently as evidence of improving monetization conditions.
The filing also details strategic and structural steps. BAM's head office moved to New York, and starting with the 2024 annual report it will file SEC reports on the same forms as other U.S. domestic issuers. Brookfield Corporation will exchange its 73%b private interest in the asset management business for roughly 1.2 billion BAM shares on a one-for-one basis, which would leave BAM owning 100% of the business.
That transaction needs shareholder approval at a special meeting on December 20, 2024, with closing expected in early 2025. Management says the goal is broader index inclusion and says the exchange will not affect operations or the tax profile of dividends. Investors should weigh the strong growth and the long-term targets against several considerations.
The company's own results are sensitive to fund valuations and carried interest, which can swing quarterly income, and the Manager's reported net income depends largely on its roughly 27% equity stake in the asset management company. Management targets doubling the business over five years, with fee-related earnings reaching $5.0 billionc and about $2 billion of gross carry by 2029, but those are forward-looking projections subject to the risks listed in the filing.
02—Key points
Key Highlights
- Fee-bearing capital reached a record $539 billion, up roughly 23% year-over-year, with $135 billion of inflows over the last 12 months.
- Record Q3 fee-related earnings of $644 million (+14% YoY) and record distributable earnings of $619 million (+9% YoY); FRE margin expanded to 58%, more than 200 bps above Q2.
- Credit drove growth, raising more than half of the $21 billion total in the quarter and accounting for about $245 billion of fee-bearing capital, with a target of nearly $600 billion over five years.
- More than $17 billion of asset sales signed or closed across real estate, renewable power, and infrastructure, with reported blended returns such as 28% and 27% on select sales.
- Acquisitions included Castlelake (51% stake), SVB Capital (now Pinegrove Ventures, about $10 billion managed), and Network International ($2.0 billion of equity capital), adding roughly $7 billion of fee-bearing capital at BAM's share.
- Corporate restructuring: head office moved to New York, and Brookfield Corporation's 73% private stake will be exchanged for about 1.2 billion BAM shares, subject to a December 20, 2024 shareholder vote and expected early-2025 closing.
- Five-year targets include doubling the business to more than $1 trillion of fee-bearing capital, fee-related earnings of $5.0 billion, and 15%+ annual earnings and dividend growth, with long-term carry potential of about $7 billion by 2034.
03—Questions
Frequently Asked Questions
What drove the strong Q3 2024 results?
Growth came from fundraising and deployment across all business groups, with Credit the largest contributor. Fee-bearing capital rose to $539 billion, supported by the AEL Mandate, strategic acquisitions, higher market values of listed affiliates, and a fifth real estate flagship fund. Operating leverage lifted FRE margin to 58%.
Why is BAM moving its head office and restructuring its corporate structure?
Management says these steps aim to improve index eligibility, including eventual inclusion in large-cap U.S. indices. Moving the head office to New York and filing SEC reports like other U.S. domestic issuers from the 2024 annual report onward are part of that effort. The share exchange with Brookfield Corporation would make BAM own 100% of the asset management business, which management says should make it easier to value. The filing states there is no expected impact on operations, strategy, or dividend tax profile.
What is the Brookfield Corporation share exchange, and what are the key dates?
Brookfield Corporation will exchange its 73% private interest in the asset management business for about 1.2 billion BAM Class A shares on a one-for-one basis. Because new shares will be issued, shareholder approval is required, and a special meeting is scheduled for December 20, 2024. The transaction is expected to close in early 2025, subject to regulatory and customary approvals.
What risks should investors consider?
Earnings can be volatile because carried interest and unrealized valuations depend on investment performance and market conditions. Net income at the Manager level mainly reflects its roughly 27% equity stake in the asset management company, and BAM relies on fund flows and fundraising for fee growth. The filing also notes risks from interest rates, currency exchange, regulation, and reliance on relationships with Brookfield Corporation. Long-term targets, such as $5.0 billion of FRE and $7 billion of carry by 2034, are forward-looking and not guaranteed.
How is management's growth outlook supported?
Management points to a strong asset sale pipeline, falling borrowing costs of 150 to 200 bps since late 2023, a $750 million undrawn revolver, zero debt, and a flagship fundraising pipeline. Growth in Credit, with about 88% of fee-bearing capital long-dated or perpetual, is expected to add to fee-related earnings. Management expects further earnings growth in coming quarters, but these views depend on market conditions remaining favorable.
04—Continue