Brookfield values asset management spinoff at US$80 billion

Brookfield Asset Management Inc. said it plans to publicly list one-fourth of its asset-management business in a transaction that would value the new entity at US$80 billion.

The company expects to publicly distribute 25 per cent of the asset manager to its shareholders before year-end, chief executive Bruce Flatt said in a letter to shareholders as the firm issued first-quarter earnings.

The special distribution of shares will be around US$20 billion, or US$12 per share, he said.

The spinoff will separate the company that manages assets on behalf of investors across its portfolio of real estate, infrastructure, credit, private equity and renewables from Brookfield’s own investment capital of US$75 billion.

The move makes Brookfield “asset-light,” a model preferred by investors.

“Having a new security or ‘currency’ that is well understood and appreciated by the public markets will maximize optionality for us as we continue to scale and diversify our asset-management platform,” Flatt said in the letter. Brookfield will own 75 per cent of the new entity.

The shares fell 2.99 per cent to close at US$45.43 in New York trading Thursday.

The impact of higher inflation on Brookfield’s expenses is mitigated by rising margins, “which means that inflation has a positive impact for owners of real assets and real return businesses,” Flatt said.

The Toronto-based company has a history of building businesses and then listing them.

Last year, it spun off Brookfield Asset Management Reinsurance Partners Ltd. through a special dividend to shareholders.

It did the same thing with its private equity unit, Brookfield Business Partners, and its renewable-energy operations, Brookfield Renewable Partners, among others.