Nick Goodman, CFO of Brookfield, stated “Financial results in the first quarter were very strong, and thanks to our extensive global holdings of inflation protected cash-generating assets, our results are accelerating in the current macro environment. Distributable earnings were $1.2 billion, supported by growth in our asset management franchise and strong underlying performance across our businesses. Fundraising momentum remains strong, with fee-bearing capital standing at $379 billion at the end of the first quarter. We also expect material fund closes in the second quarter and balance of 2022.”
He continued, “We will separately list and distribute to shareholders, a 25% interest in our asset management business, that we expect to complete by the end of 2022. This will be done on a tax-free basis to both Canadian and U.S. shareholders (and potentially others).
We are proceeding with our plan to publicly list and distribute to our shareholders a 25% interest in our asset management business.
The special distribution based on our estimate of value will be around $20 billion or $12 for each share that you own today. We expect to complete the distribution by the end of the year on a tax-free basis to at least Canadian and U.S. shareholders. The split and distribution of our shares will be structured so that it’s distributed tax-free to U.S. and Canadian shareholders, and we are currently working through the tax impact for other jurisdictions.
The structure of the manager will be same as our structure now. It will be a Canadian C-Corp that will be dual-listed on the New York and Toronto Stock Exchanges.
The manager will have a high payout ratio, 90% or higher, as it does not require much capital going forward, and it will have minimal day 1 leverage. It will, in our view, have an approximate equity value of $80 billion based on a midpoint of current market valuation multiples and subject to the allocation of carried interest, and therefore, a free float of around $20 billion.
For our asset management business, our plan is to more than double our fee-bearing capital over the next 5 years to over $800 billion, which will in turn more than double our fee revenues.
Our $75 billion of capital currently provides us with $3 billion of annual cash distributions and has generated an approximate 15% return over time. Going forward, we plan to continue recycling and investing our capital and compounding value at north of 15% a year over the long term.