Brookfield Asset Management Ltd. Q3 FY2024 earnings call

Key Themes - Private credit, AI infrastructure, and energy transition are critical growth areas. The global trends of Supercycle, Decarbonization, Deglobalization, and Digitalization require trillions of dollars, and private capital is well-positioned. - Brookfield is at the forefront of these themes, with investments in private credit, AI infrastructure (e.g., semiconductor plant with Intel, large data center portfolio), and energy transition (renewable power and nuclear with Westinghouse). ### Monetization and Deployment - Had active monetization with over $17 billion signed or completed in the past four months, and expect monetization to accelerate in 2025. - Deployed nearly $50 billion over the past year, including $20 billion in the third quarter, with over $100 billion of uncalled capital available. - Highlighted specific transactions: strategic funding partnership with Infinium, acquisition of offshore wind assets in the UK, acquisition of telecom sites in India, acquisition of Network International, and an offer to acquire a European logistics REIT. ### Partnerships and Capabilities - Acquired a 51% stake in Castlelake, a leading alternative asset manager in asset-based private credit. - Completed acquisition of SVB Capital through Pinegrove Venture Partners. - Raised $1 billion in a separately managed account from a large U.S. life insurer for the insurance SMA strategy, targeting $50 billion of external partner capital over five years. ### Financial Performance - Fee-related earnings were a record $644 million, up 14% year-over-year. Distributable earnings were a record $619 million, up 9% year-over-year. FBC grew 23% to $539 billion. Closed a $750 million revolving credit facility, with $2.1 billion of liquidity at quarter-end.

In the third quarter, fee-related earnings reached a record $644 million, or $0.39 per share, up 14% year-over-year. Distributable earnings were a record $619 million, or $0.38 per share, up 9% year-over-year. Fee-bearing capital (FBC) grew to $539 billion, a 23% increase from the past year. Credit accounted for over half of the $21 billion raised in the strong fundraising quarter. The renewable power and transition business raised $2.2 billion, including an initial close of the Catalytic Transition Fund for $2.4 billion with $1.4 billion raised in the quarter. The infrastructure business raised $1.4 billion, with $500 million for the supercore infrastructure strategy. The private equity business raised $2 billion related to the acquisition of Network International. The real-estate business raised $1.6 billion, including $500 million for the 5th vintage of the Opportunistic Real Estate Fund. Revenue contribution details weren't explicitly broken down by product segment in terms of percentage, but the financial performance across segments was highlighted.

Forward-Looking - Expect strong earnings growth to continue. - Anticipate monetization to further accelerate in 2025. - Confident in hitting fundraising targets for various funds, including the Catalytic Transition Fund. - Expect fundraising to be more positive in 2025 than 2024, with strength continuing into late 2024. - Aim to double the business over five years via fundraising expansion, growing complementary strategies, and growing credit to reach $1 trillion in FBC.

Risks - Forward-looking statements are subject to unknown risks, and future results may differ. - Uncalled commitments: Bulk don't expire until after 2028, with confidence in deploying capital before expiration. - Market conditions can impact monetization and deployment plans.

Q: On AI infrastructure and its relation to the flagship infrastructure product, is it a focus for BAM?

A: AI infrastructure is a focus, near the top of new product development list, focused on the infrastructure side of AI and aligned with the flagship infrastructure product.

Q: On margins, how does the credit business compare to the corporate average?

A: Credit is lower margin, but with Brookfield's business build-out and operating leverage, margins are expected to continue improving.

Q: On renewables fundraising, why slower and when to expect fee run rate?

A: BGTF II turned on later in Q3, but it's a high-class problem with confidence in hitting the fund target, and catch-up fees mean timing slips don't affect economics.

Q: On corporate structure change, thoughts on S&P 500 eligibility?

A: Changes to increase U.S. index eligibility, but made regardless of S&P 500 outcome.

Q: On insurance, public vs private mix and FRE lift?

A: AEL portfolio is in early stages of long-term allocation, with uplift in fees from allocating to private funds taking time.

Q: On uncalled commitments and outflows, potential fee risk and inflows?

A: Fee risk is modest, with bulk uncalled commitments expiring later, and outflows from monetization are net positive as capital returns in new commitments.

Q: On fee related revenues and earnings build-up, details on drivers?

A: Drivers include flagships, complementary strategies, and credit build-out, with further upside opportunities.

Q: On wealth infrastructure fund sales and wealth franchise next steps?

A: Sales driven by investor demand, with focus on launching new wealth products in private equity and credit subsegments.

Q: On BPG management fees reversal, cause?

A: Driven by funds raising money and catch-up fees from bringing capital on, plus buying more equity base and moving assets to BWS.