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February 11, 2022

Brookfield explores spin-off of asset management unit

Canada’s Brookfield Asset Management is considering a spin-off of its asset management arm into a separate public company, Reuters reported, citing a letter sent by the firm to shareholders.

A new spun-off company could be valued between $70bn and $100bn, according to the letter.

Brookfield’s asset management arm, which invests on behalf of institutional customers, is said to oversee $690bn in assets across real estate, infrastructure, renewable power and transition, private equity, and credit.

Brookfield CEO Bruce Flatt noted in the letter that a spin-off of the unit in the public or private market could offer the company new growth options.

He also said that a separate public company could also attract the interest of investors who do not prefer exposure to Brookfield’s other units including its recently launched reinsurance business.

Commenting on the move, Flatt told Financial Times: “The financial markets have evolved. What people like are asset-light models. It appears that there is an enormous amount of shareholder value to be unlocked.”

The news comes as alternative-asset managers see a demand from institutional investors for higher returns than those offered by stock and bond markets.

Brookfield’s flagship real estate fund and its first transition fund are garnering high investors interest, according to a Bloomberg report.

The firm’s opportunistic fund closed at $16bn in the fourth quarter, the largest fund to date for the strategy.

Last year, Brookfield spun off its reinsurance arm, Brookfield Asset Management Reinsurance Partners through a special dividend to shareholders.

The firm has historically broken off several of its other business, including its private equity arm, Brookfield Business Partners, and renewable energy arm, Brookfield Renewable Partners.

Meanwhile, the Canadian alternative asset manager reported a 74% increase in its Q4 profit applicable to common shareholders to $1.12bn.

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