Brookfield Asset Management

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Brookfield Asset Management Inc.
TypePublic
IndustryFinancial services
Founded1899; 123 years ago (1899)
Founders
HeadquartersBrookfield Place, ,
Canada
Area served
Worldwide
Key people
ServicesPrivate equity
RevenueIncrease US$76 billion (2021)[1]
Increase US$12.4 billion (2021)[1]
AUMIncrease US$725 billion (2022)[2]
Total assetsIncrease US$391 billion (2021)[1]
Total equityIncrease US$134 billion (2021)[1]
Number of employees
c. 180,000 (December 2021)[3]
Subsidiaries
Websitewww.brookfield.com

Brookfield Asset Management Inc. is a Canadian multinational company that is one of the world's largest alternative investment management companies, with over US$725 billion of assets under management in 2022. It focuses on direct control investments in real estate, renewable power, infrastructure, credit and private equity.[5] The company invests in distressed securities through Oaktree Capital, which it bought in 2019. Brookfield has its headquarters in Toronto, and it also has corporate offices in New York City, London, São Paulo, Mumbai, Shanghai, Dubai, and Sydney.[6][7]

History[edit]

The company was founded in 1899 as the São Paulo Tramway, Light and Power Company by William Mackenzie and Frederick Stark Pearson. It operated in the construction and management of electricity and transport infrastructure in Brazil.

In 1904, the Rio de Janeiro Tramway, Light and Power Company was founded by Mackenzie's group.[8]

In 1912, Brazilian Traction, Light and Power Company was incorporated in Toronto as a public company to develop hydro-electric power operations and other utility services in Brazil, becoming a holding company for São Paulo Tramway Co. and Rio de Janeiro Tramway Co.[9] In 1916, Great Lakes Power Company was incorporated to provide hydro-electric power in Sault Ste. Marie and the Algoma District in Ontario.[10]

In 1959, Edper Investments, founded by brothers Peter and Edward Bronfman, acquired Brazilian Traction, Light and Power Company for $15 million. In 1966, Brazilian Traction, Light and Power Company changed its name to Brazilian Light and Power Company, and again in 1969, changed its name to Brascan Limited.[9] Brascan is a portmanteau of "Brasil" and "Canada".[11]

During the 1970s, the company began to sell its Brazilian interests, and invested more heavily in industries such as a real estate, timber and mining.[12]

In 1979, the last of the company's Brazilian assets were transferred to Brazilian ownership (Eletropaulo and Light S.A.), the company meanwhile having diversified to other areas.[9] The company provided electricity and tram services in São Paulo and Rio de Janeiro, and the Brazilian side after a later restructuring still operated as Light S.A., short for Brazilian Traction, Light and Power Co. Ltd.[13]

In 2002, Bruce Flatt was appointed CEO of Brascan.[14] In 2005, after 37 years, Brascan Corp. was renamed to Brookfield Asset Management Inc.[15] Between 2013 and 2018, the company and its subsidiaries invested approximately $10 billion in Brazilian energy, infrastructure and real estate developments, including acquisitions of oil pipelines from energy companies such as Petroleo Brasileiro SA.[16]

By 2018, Brookfield's major public subsidiaries included Brookfield Infrastructure Partners, Brookfield Renewable Partners, Brookfield Property Partners, and Brookfield Business Partners.[17] In August 2018, Brookfield purchased Westinghouse Electric Company, a manufacturer of large nuclear reactors, out of bankruptcy for $4.6 billion.[18]

On March 13, 2019, Brookfield Asset Management announced that it had agreed to buy most of Oaktree Capital Management for about $4.7 billion, creating one of the world's largest alternative money managers.[19] On 31 July 2019 the sale of Vodafone New Zealand Limited to a consortium comprising Infratil Limited and Brookfield Asset Management Inc. was settled.[20]

In a deal in October 2019, Brookfield bought The Leela Palaces, Hotels and Resorts, an Indian luxury hotel chain located in New Delhi, Bengaluru, Chennai, Udaipur, in a US$530 million settlement, marking the entry of Brookfield in India's hospitality market.[21][22][23]

In 2020, in response to the COVID-19 pandemic, Brookfield's CEO Bruce Flatt assessed that the economic fallout was "much more manageable" than previous meltdowns.[24]

In October 2020, Mark Carney, departing Governor of the Bank of England, became a vice-chair of Brookfield, leading the firm's environmental, social and governance (ESG) and impact fund investment strategy.[25][26]

On April 25, 2022, it was announced the Brookfield and Simon Property Group are set to offer to buy Kohl's.[27]

Reactions and lawsuits[edit]

In September 2010, a group called Birch Mountain Shareholders for Justice filed a lawsuit with the Superior Court of Justice in Ontario, Canada, against Brookfield Asset Management, challenging an acquisition and transfer of assets.[28] Birch Mountain had run into financial troubles and accused Brookfield of financial engineering that resulted in Brookfield acquiring the company's $1.6B limestone quarry for $50M. According to Birch Mountain, Brookfield had made use death spiral financing and insider trading. After five years of litigation the case was dismissed, based on the fact that Birch Mountain had failed to present credible evidence.[29] In May 2015, the plaintiffs filed a notice of appeal, but their case was likewise dismissed two years later.[30]

In 2009, Brookfield sued financial and insurance giant American International Group (AIG) in a Manhattan federal court, alleging that AIG's collapse caused default provisions in interest-rate swaps. The suit stemmed from AIG's acceptance of a $182.3-billion bailout package from the federal government, which Brookfield argued overturned AIG's bankruptcy protection. The insurance firm countersued, claiming that Brookfield was trying to get out of its $1.5B debt to AIG. The litigation ended with Brookfield paying $905 million to settle the lawsuit.[31]

In March 2013, the Southern Investigative Reporting Foundation called into question Brookfield's makeup. The analysis written by Roddy Boyd accused the company of using a pyramidal control structure, alleging that a small group of shareholders hold outsized power and may easily utilize the capital of other investors without risking their own.[32][33]

In 2013, a Brazilian prosecutor filed charges against the company's local division, alleging the company paid bribes to local officials, which is also a violation of U.S. federal criminal law. The bribes were allegedly used to pave the way for Brookfield to build a shopping center in São Paulo. The U.S. Securities and Exchange Commission also opened a formal investigation into the company about the bribery charges. The company denied the charges. The U.S. Department of Justice also opened a criminal investigation into the company regarding these allegations, and did not end up making any arrests.[34][35] According to the Stanford Law School Foreign Corrupt Practices Act Clearinghouse, which studied the case, the investigation and filing of charges was initiated by a whistleblower and anonymous tip. Later it was revealed that the whistleblower was the former CFO of a Brookfield subsidiary. She claims she was fired for refusing to participate in Brookfield's bribery scheme.[36] The company disclosed the investigations on several 6-K forms between 2013 and 2015.[37]

In August 2018, Brookfield signed a 99-year lease on the financially troubled 666 Fifth Avenue skyscraper, of Donald Trump's son in law Jared Kushner. The deal raised suspicions that the Qatar Investment Authority, a major investor in Brookfield, was attempting to influence the Trump administration.[38][39]

In November 2020, it was revealed that Brookfield might be partnering with telecommunications giant Rogers Communications to introduce condominiums to the site of the Rogers Centre, halving the space available for sport. The original multi-purpose stadium and its land cost $570 million, significantly funded by taxpayers, yet was sold 15 years later to Rogers for just $25 million.[40]

In February 2021, Mark Carney, Vice Chairman and Head of Impact Investing and ex Governor of the Bank of England, had to retract an earlier claim that the $600 billion Brookfield Asset Management portfolio was carbon neutral. He based his claim on the fact that Brookfield has a large renewable energy portfolio and "all the avoided emissions that come with that”.[41] The claim was criticized as an accounting trick, as avoided emissions do not counteract the emissions from investments in coal and other fossil fuels responsible for a carbon footprint of about 5,200 metric tons of carbon dioxide.[42] The company is actually aiming to be net-zero by 2050,[43] which is decades behind leading companies.[44]

Finances[edit]

For the fiscal year 2018, Brookfield Asset Management reported earnings of US$3.584 billion, with an annual revenue of $56.771 billion, an increase of 39.2% over the previous fiscal cycle. Brookfield Asset Management's shares traded at over $38 per share, and its market capitalization was valued at over $40.8 billion in November 2018.[45]

Year Revenue
in mil. USD$
Net income
in mil. USD$
Total Assets
in mil. USD$
Price per Share
in USD$
2005 5,256 1,662 26,058 7.61
2006 6,897 1,170 40,708 12.17
2007 9,343 787 55,597 16.74
2008 12,868 649 53,611 13.22
2009 12,082 454 61,902 9.33
2010 13,623 3,195 78,131 13.76
2011 15,921 3,674 91,030 16.72
2012 18,697 2,747 108,644 18.69
2013 20,830 3,844 112,745 22.42
2014 18,364 2,956 129,480 27.22
2015 19,913 2,207 139,514 32.47
2016 24,411 1,518 159,826 32.10
2017 40,786 1,317 192,720 38.17
2018[46] 56,771 3,584 256,281

See also[edit]

References[edit]

  1. ^ a b c d "Brookfield Reports Q4 2021 Press Release" (PDF). Brookfield Asset Management. Retrieved 13 February 2022.
  2. ^ Picker, Leslie; Shah, Ritika (2022-05-20). "The CEO of the world's second-largest alternatives firm is optimistic about a light recession". CNBC. Retrieved 2022-05-26.
  3. ^ "Brookfield Asset Management Inc. Annual information form". U.S. Securities and Exchange Commission. 31 March 2022. p. 25.
  4. ^ "Schedule 13D/A". U.S. Securities and Exchange Commission. Retrieved December 2, 2013.
  5. ^ "Bloomberg Markets". Bloomberg.com. Retrieved 2017-05-01.
  6. ^ "Global Presence". www.brookfieldproperties.com. Archived from the original on December 7, 2017. Retrieved 2017-05-03.
  7. ^ Kiesche, Liz (2018-09-26). "Brookfield Asset Management sees excess cash ~$60B over 10 years". Seeking Alpha. Retrieved 2018-10-01.
  8. ^ Regehr, Theodore. "Mackenzie, Sir William". Dictionary of Canadian Biography. Retrieved 8 December 2013.
  9. ^ a b c "Brascan Corporation History". International Directory of Company Histories. Retrieved 8 December 2013.
  10. ^ "Industries: Business History of Utilities". Business History. Retrieved 8 December 2013.
  11. ^ Kandell, Jonathan. "In the Epic Battle Between Brookfield and Blackstone, Who Wins?". Institutional Investor.
  12. ^ Santoli, Michael (February 24, 2007). "A Different Kind of Buyout Firm". Barron's.
  13. ^ "Brazilian Traction Light and Power Company Ltd". Bloomberg L.P. Archived from the original on December 5, 2013. Retrieved 4 December 2013.
  14. ^ "Canada's Richest People: Bruce Flatt". Canadian Business. December 24, 2015.
  15. ^ Won, Shirley (2005-09-16). "What's in a name? Plenty if it's Brascan". Globe and Mail. Archived from the original on 2016-04-22. Retrieved 2020-04-16.
  16. ^ Bautzer, Tatiana (May 21, 2018). "How Canada's Brookfield snatched bargain assets amid Brazil panic". Reuters.
  17. ^ Brewer, Reuben Gregg (16 September 2018). "Better Buy: Brookfield Infrastructure Partners L.P. vs. Brookfield Asset Management Inc". The Motley Fool. Retrieved 1 October 2018.
  18. ^ Deveau, Scott (27 March 2019). "Brookfield Shuns 'Eat-What-You-Kill' in Private Equity Build-Out". Bloomberg. Archived from the original on 29 March 2019.
  19. ^ "Brookfield to Acquire 62% of Oaktree Capital Management". NASDAQ.com. Retrieved 2019-03-14.
  20. ^ "Bell Gully". www.bellgully.com. Archived from the original on 2019-08-02.
  21. ^ "Hotel Leelaventure Limited completes sale transaction with Brookfield". www.theleela.com. Retrieved 2021-08-24.
  22. ^ Sapam, Bidya (2019-10-22). "Hotel Leelaventure completes sale of assets to Brookfield". mint. Retrieved 2021-08-24.
  23. ^ "Most beautiful 5-star hotel in Udaipur, Leela gets sold, Brookfield purchases for 2.13 billion". News Track. 2019-10-26. Retrieved 2021-08-24.
  24. ^ Deveau, Scott (2020-03-23). "Brookfield CEO sees coronavirus market meltdown as 'manageable' | Financial Post". Financial Post. Retrieved 2020-05-12.
  25. ^ "Mark Carney, ex-head of Bank of Canada and Bank of England, joins Brookfield Asset Management". CBC News.
  26. ^ "Former central banker Mark Carney joins Brookfield to lead environmental, socially driven investing". Retrieved 2021-01-20.
  27. ^ Stein, Sanford. "Simon and Brookfield Pursue Kohl's to Join Rival J.C. Penney". Forbes. Retrieved 2022-05-11.
  28. ^ Gray, Jeff. "Squeezed-out Birch Mountain shareholders take on Brookfield",The Globe and Mail, Canada, 15 November 2011 Retrieved 22 July 2012
  29. ^ McDonald v Brookfield Asset Management Inc Archived 23 September 2015 at the Wayback Machine, 2015 ABQB 281
  30. ^ "Former Flame Lanny McDonald's investment fight doused by Supreme Court". CBC. June 1, 2017. p. 1.
  31. ^ "AIG, Brookfield End Litigation Over Financial Crisis". Insurance Journal. 2013-09-24. Retrieved 2020-05-28.
  32. ^ Boyd, Roddy (2013-03-11). "The Paper World of Brookfield Asset Management". The Foundation for Financial Journalism. Retrieved 2022-02-13.
  33. ^ "Is It Fair to Attack Brookfield - GuruFocus.com". www.gurufocus.com. Retrieved 2022-02-13.
  34. ^ Trevisani, Craig Karmin And Paulo (2013-03-08). "Brookfield Brazil Unit Draws SEC Scrutiny". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-05-12.
  35. ^ "Brookfield's Brazil mall operator charged with bribery". Reuters. 2013-02-05. Retrieved 2020-05-12.
  36. ^ "Brookfield: Notable Aspects of Corruption in Brazil". FCPAméricas. 2013-02-15. Retrieved 2022-02-13.
  37. ^ "Foreign Corrupt Practices Act: Investigations Dataset". fcpa.stanford.edu. Retrieved 2020-05-12.
  38. ^ Levin, Bess (12 February 2019). "Qatar Shocked, Shocked to Learn It Accidentally Bailed out Jared Kushner". Vanity Fair. Retrieved 21 January 2020.
  39. ^ Vandevelde, Mark (5 February 2020). "Brookfield: inside the $500bn secretive investment firm". Financial Times. Retrieved 2020-05-12.
  40. ^ "Rogers Centre", Wikipedia, 2022-03-08, retrieved 2022-03-12
  41. ^ "Mark Carney Walks Back Brookfield Net-Zero Claim After Criticism". Bloomberg.com. 25 February 2021. Retrieved 2021-03-04.
  42. ^ Simon Lewis (3 March 2021). "The climate crisis can't be solved by carbon accounting tricks". the Guardian. Retrieved 2021-03-04.
  43. ^ "Brookfield's Net Zero Commitment". Brookfield. Retrieved 2022-02-13.
  44. ^ "RE100 Members". RE100. Retrieved 2022-02-13.
  45. ^ "Reports & Filings". bam.brookfield.com. Retrieved 2018-11-07.
  46. ^ "Brookfield Asset Management". Fortune. Retrieved 2019-08-02.

External links[edit]