Okay, so for our next session, it's my pleasure to introduce Bruce Flatt, CEO of Brookfield Asset Management. About a year ago, Brookfield completed its spin-off from Brookfield Corporation, which Bruce actually hinted at our conference the year prior to that. So we'll see if we get any more interesting nuggets from you this year. But essentially you became a standalone asset management business with 100% earnings coming from FRE, which is great. So today, Brookfield is one of the largest global alternative asset managers, with $440 billion in fee-generating capital and strong alignment across several secular themes in the space, including infrastructure demand, energy transition, growth and private credit, along with many others. Despite what's been obviously a very challenging fundraising backdrop, you guys are on track to raise $100 billion of capital this year with AEL potentially on top of that, whenever that closes. So great year, and thank you again for being here. It's always great to see you. Thanks for having us. Great. So look, I'll start this conversation along similar lines that, you know, the discussion we had with a number of the CEOs today, which is around private market, asset allocation trends. And when you have this massive move in interest rates, clearly that's gonna drive some rethinking on behalf of institutional LPs on what role private markets play in their asset allocation. So would love to get your perspective on, what does the allocation of private markets look like, in a world of higher interest rates? And more importantly, how does that change the mix, of asset allocations within the sector? So, look, I think, starting more broadly, from 30 years ago, institutions globally have been working on figuring out how to have alternative products within their portfolios. That's gone through many evolutions of the financial markets, collapses in the financial system, recessions. And what is crystal clear to us is that alternatives within portfolios of large entities are very attractive to the long-term returns for those portfolios. They take away the distraction of the public markets, and they earn extra return because of the inherent liquidity within it. And, leaving aside, yearly movements, which come and go, I would say we continue on another 10 years, at least, where significant greater allocations are going to alternatives. And I'll come to specific ones, which is our second question. Yep. But if we increase, many, many funds are still at 5%, 10%, 15%, 20%. People often ask me what they should have in their portfolios, and the simple story is, anything you do not need for liquidity purposes in your most extreme business planning should get put into alternatives 'cause you don't have the distraction, and you earn a higher return. Mm-hmm. And that's what the most advanced institutions are doing. The others follow it. And I don't think this period of time of consternation in some funds, largely focused in the U.S.- Yep ... is going to stop that. We will continue for many, many years to go. Within that, we're still seeing very significant allocations to infrastructure globally. Allocations are still very, very small, and we're the large fund in that, so we're getting big, big allocations. As a subset of that transition is even smaller within portfolios because of its creation over the last little while- Yep and we're seeing big, big allocations to that. Private credit, obviously, is significant. Real estate and private equity are probably the largest in the funds today, and therefore, people are not getting money back, so they're the most strained. Yep. In particular, technology. But what I can tell you is there are many institutions in Asia that are putting very significant allocations into alternatives even today, and the Middle East- Mm-hmm ... in particular. So, while there are some institutions in the United States that are full and need time to process- Yep ... there are other institutions that are using this opportunity to scale up. So, the short story is, it's not stopping, and there are some sectors that are still pretty strong. Yep. One of the big themes you talked about, and that's something we see in, you know, covering this space, of course, as well, is consolidation of LP interest with fewer asset managers. You know, we've seen that unfold in many other verticals within financial services. It's not just new to the alts, but it is interesting because it feels like it's earlier days in the alt space. So when you look at your LP base, and you look at the variety of products that you guys provide to the marketplace, how big of a market share opportunity does that create for Brookfield? Are there specific products that are more susceptible to that consolidation of market share for you? Look, I think part of consolidation in this business, it's different than if you sell chocolate bars or- Yep ... or soft drinks. Part of it is just, the limited partners are choosing to be with certain institutions, and therefore, those get bigger, and the other ones can't really survive, so they either just go out of business or aren't relevant. So part of it is just driven by LPs. We just closed our infrastructure fund at $30 billion. We didn't have to do anything, and we're consolidating some people out of the business because they chose to be in our fund, not in somebody else's. Mm-hmm. So that's happening. Second, look, there's no doubt, the large managers, which we have the benefit of being one, have vast fundraising machines, are very global, touch every institution, and we can package products, relationships, and things with institutions and do special things with large groups that a single fund of X amount of dollars that's vastly smaller than us just can't do. They can't, they can't afford to be in Korea, as an example, with somebody in their office every morning, talking to them about how we help them. And they also just, for the big ones, they can't give them the scale. Like, our funds can take $500 million, $1 billion, $1.5 billion, $2 billion commitments. You need to be very large funds to take those size of commitments, and there's just not that many people in the world that can do that. So, I think consolidation is a combination of just the smaller going away and the larger getting the allocations. And two, there will be some niches along the way where we can add in skills- Mm-hmm ... which we may not have today. Our Oaktree acquisition- Yep ... was one of those we did five years ago, and that just advanced us quickly, and we were able to assist in ways that could help them grow their business, and that's really what the consolidation is today. Sure. It's our vast fundraising machine we have, the relationships we deal with, the multiple offices we have around the world, and all those sort of things just add extra benefit to those joining us if we chose to do that. Sure. No, that makes perfect sense. Let's spend a couple minutes on the business itself, and as I mentioned in my introduction, it's been about a year since you completed the spin-off of BAM from the corporation. It comes with a bunch of, you know, benefits to the shareholder base. One of them obviously being it's a cleaner story. You get, you know, a pretty clear, 100% of our earnings stream. But are there any other benefits that shareholders get, do you think, from this structure that might kind of go unnoticed? After a long time, we have the cleanest structure of any alternative manager out there. We have no debt. We have $3 billion of cash. We generate $2.25 billion of earnings a year. It grows at 15%-20%. It should grow in the next while at that. We pay out 85% of the earnings. It's a very simple, clean story, and I'd say the real maybe difference. It's not better or worse, it's just different. The real difference is we got lucky being industrial business owners from a long time ago. Our infrastructure franchise is. There's nothing like it in the world, and that allowed us to build out a transition franchise, which now is. There's nothing like it in the world, and I think it's only gonna get bigger and bigger in the next 10 years. And those two areas give us something that very few people have. Yep. So we have a private equity business just like everybody else, and we have a real estate business, yes, like a few. We have a credit business like some, but those two franchises we have are something very special, and there's three things going on in the world that I would say hit all of our businesses but hit those two specifically, and it's the decarbonization of everything- Mm-hmm ... the digitalization of your phone- Yep ... and what's behind it, and all the data centers, and fiber, and towers that are getting built, and what's going on with just the de-globalization of everything. Manufacturing plants, industrial capacity, chips, coming back from Asia, the transaction we did with Intel. All of the things that are going on, there's just this enormous push of need for capital in those businesses, and we just happen to be in the right spot, for now, but it looks like those three themes are here to take maybe even greater amounts of capital than they have for the next 5, 10, 15 years. Yeah. Like, we've got 5, 10, 15 years of this, and the amounts of capital being put into the digitalization sector, both towers, fiber, but now with AI and the build-out of data centers- Mm-hmm ... it is massive. I, I've not seen anything like it. What is needed as we ramp up decarbonization around the world is very, it's, it's tens and tens of trillions. Yeah. Yeah. It's very, very significant, and manufacturing capacity gets built somewhere, it's just they need diversity of sources. Yeah. You know, India's been a big beneficiary of that, for example, as an example. Right. Lots of durability in those trends, for sure. Let's talk about a couple of them. So I want to start with the transition business. Brookfield is obviously one of the largest renewable power and transition business in the space. Lots of momentum. Very timely, just last week, there was an announcement that UAE has made a $2 billion commitment to your current transition fund, and I think a $1 billion commitment to seed the launch of the new fund called Catalytic Transition Fund. Can you talk a little bit about both of those, how they came together and sort of the plans for further branching out around this transition theme? Yeah. So look, I'd just say that we got lucky in that we were in the renewables business as an industrial owner for 30 years. Fifteen years ago, we started doing that for some clients in our infrastructure fund. Three years ago, we decided the opportunity was very, very big, and therefore, we had to split it out of our infrastructure fund. So we launched, we launched a transition fund three years ago. We raised $15 billion for our first-time fund, which was really not a first-time fund because we had always done it in infrastructure. But it's been very successfully invested, and I think because we had the history, we had a head start, and the business was going to be something that is going to be enormous. Institutions want to get in on it now. Mm-hmm. And so we're out raising our second fund as we speak. The one thing I can say about the fundraising is we did just get a commitment from one of the Abu Dhabi funds for $2 billion. In addition to that, we're sponsoring a new fund with them, where they're putting up $1 billion. It'll be for emerging markets. Mm-hmm. Our main fund is investing in developed markets. Their $1 billion is going into a new fund that we're gonna raise, which will be for emerging markets. I think the spin-off funds or the next iteration of all of these in transition will be very significant. Mm. So this business didn't exist. Right ... four years ago, and I think between the different spin-offs we'll have of this fund, it will be our largest business, probably within Brookfield within five or seven years. And that's with we have an infrastructure fund of $28 billion and a $15 billion real estate fund- Yeah. Yeah. $12 billion private equity, and $15 billion opportunistic credit Right ... et cetera, et cetera. I think this will be the biggest business we have, because the opportunities are very, very significant, and we happen to be in a good spot. Is the velocity of capital, they're similar, faster, slower, meaning the amount of time it takes to put capital out, given all these needs for climate-related transition, which seems like they continue to build? Look, the real trick here is most people can't do what we do because they don't have the renewables power expertise, they don't- Mm ... have the power trading expertise, and they don't know how to build all of these things. Mm. That's what we have. So, you can raise money, but you don't know how to arbitrage power markets and build power plants. And if you do, you can compete with us, but not many people do, and we just have a head start. And it's not that... Others will come. They're coming. They always come. Right. Where there's money, people come. Yeah. That's not to say there won't be competition, but we just have a big head start, but we also have a bunch of innate operating talents within our businesses. We have 3,000 operating people that run our business, that work for Brookfield in power, trading, and development, and that gives us an edge that very few other people have. We really compete with single industry participants. Mm ... that trade on the markets, and what they don't. They have, they have what we have in industrial operations, but what they don't have is the access to money that we do. Capital. Really, our success over 25 years has been ensuring we had operating talent combined with the most money in the world. Mm-hmm. If you can get those two things aligned, you can earn more than the only the financial players, and you have access to more money than just the industrial players. Yeah. And that's the trick of... That's, I guess, the secret sauce- Yeah ... of what we've tried- It kind of comes together. What we've tried to do with Brookfield over the decades. I gotcha. Great. Let's talk about the second theme you talked about, which is obviously digital infrastructure and what that means for your infrastructure business. So as you mentioned, your latest flagship Infra Fund also closed last week, $28 billion, I think, and there was a little more on top of that. It was a big week for closing. It seems like it. Why does, why does everything have to come at the end of the year? I don't know, but it's good at least it comes. I'm happy it happened before the conference, so we can talk about it, so we'll take that. As of the last update, I think you guys were about 40% deployed in that fund already, which is pretty fast. How are you thinking about deployment pipeline from here? What differentiates you in the infra business? Because, again, to your point earlier, it is getting more crowded. There are other larger players coming in into the space as well. Yeah. So we're 40% invested. It's 4 deals. Yeah. It's not a lot of things to have been done. Mm-hmm. They all fit one of those themes. We bought two great data center businesses. We did the Intel transaction in the fund, and we bought a logistics container business, global logistics container business. And those four businesses, we probably normally wouldn't have found four great things like that within a short period of time, but as you know, 2023, from January to June- Mm-hmm ... was pretty rough in the markets. Yeah. Globally, everyone knows this, interest rates were cranking up like this, and everyone was petrified about doing transactions. Just given the fact that we have large sums of money to put to work, we, across our, all of our businesses, we put, I think, $60 billion to work in that period of time. Four of those were the deals that went into the infrastructure fund. I'm super excited about every one of those deals we did, because when there is lack of investment capital and nobody else bidding, usually, it doesn't mean you get the most extreme deals, but usually odds favor- Mm-hmm. returns being better than you would otherwise have. Right. I think everything we bought in the last 12 months will be, other than if we make some mistake, it will, they will be excellent vintage investments to have made. So that we decided to put our foot on investing when nobody was investing, mostly because we could, and that's why that fund is 40% invested because we just found some great opportunities to put in the fund. The pipeline, as you kind of look forward? Yeah, pipeline, I look, there's still... You talked about it. Mm-hmm. Many sponsors don't have money. It's tougher to get money in the banks. It's easier today than it was 12 months ago- Yep ... but it's still not robust, and that just means there's less capital, and therefore, the opportunities are significant. Yep. We see across private equity, across real estate, across credit, across infrastructure, renewables, every single one of them, for different reasons, there are significant opportunity, and I'd say it still exists. It's not as good as it was in March of last year. March of last year, there was literally no bid on lots of things. Like, some of the transactions we did, zero bid. No. That does not happen in many times. Right ... in the market. Right. You mentioned real estate. Let's talk a little bit about that as well. The market continues to be pretty uncertain, and, you know, you suggested that the next several years will be excellent time to deploy capital. You guys are fortunate to have, obviously, dry powder in that part of the business as well. Can you help us frame opportunities for new investments, so sectors, geographies, versus some of the risks in the back book that you may have in your existing portfolio? Yeah, so Look, I just frame real estate. It's the largest business in the world. We've been around it, in it for a long time. It's been a great business, and our returns over 30, 40 years have been in the 20s. There are times like this, I can go back 5 iterations, and it's been a lot worse than it is today. So actually, I do not think that anything has changed, and there's anything that is different today. The most important thing from our perspective is that all of our long-term assets, mostly in office and retail, they're owned in the perpetual balance sheet, the parent company, and they, they've owned most of those assets for 25 years- Mm-hmm ... plus, and it's perpetual money, and it just will be there for time, and the real thing with real estate is you have to be able to survive through periods of time. In our fund business, we have virtually no office exposure and very little retail exposure in the United States. Mm-hmm. It's mostly multifamily, logistics, life sciences, and alternative student housing, things like that, and the business has been very, very good, and the returns look to be excellent. So I'm not-- we're not worried at all about office, and off- Mm-hmm. What we mostly own, even on the balance sheet for office, it's very high-quality office, and there's a big dispersion. A high-quality office around the world, even in the United States, is very strong. Yep. It's low-quality office which is struggling, and it's going to continue to struggle, and that happens all the time. It's just worse this time because of the COVID effect, I'll call it. Right. On the opportunity side, I think there's gonna be some excellent opportunities, and they split into two buckets. Bucket one, which I'm not—we're not too interested in, is bad assets that you have to do a lot of work to turn around or to redevelop. Right ... we have too much money. We have too much money for that in scale. Mm-hmm. Where the opportunities are coming are great assets which have not bad capital structures. They're capital structures which are not appropriate for the environment that we're sitting in today, because interest rates went up, and you have floating rate financing or whatever that is, and the easiest way to make money in real assets, especially in real estate- Mm-hmm ... is to buy great assets with bad capital structures. Bad capital structures, right. Fortunately, there will be a number of those situations, and they're not coming one day, or there's not gonna be just an event, but they're just gonna be coming over the next 24-36 months. Mm-hmm. And hopefully, we can capture some of those opportunities to put into our portfolio. Great. Let's talk about your private credit business, and it's a sizable one. It's $60 billion in illiquid private credit strategies, and you know, Oaktree Opportunistic business is part of that, but then there are others as well. So as you think about the opportunity set for private credit, which is substantial, as we obviously talked about in the past, as we talked about over the last couple of days here, what, what are your plans to sort of further expand Brookfield's private credit capabilities? Is this likely to be organic build, or M&A? You know, I don't think we need—we don't need anything else to keep growing the credit business. We have it all within the Oaktree franchise and within Brookfield- Yep ... the different products we have. It's possible there are niches or there are businesses that come to us that could be highly additive, that we could just roll into the fold.... and we continuously look at those types of opportunities. But, there is really what this is, is that, regulatory capital requirements are going up in the banks globally. Yep. They need partners to have capital off balance sheet, and we're either partnering with them or investing beside them in loans. Yep. It's really simple. It's just having more capital for the business to lend to private enterprise. We're very excited about continuing to grow the business. I'd say our Oaktree franchise made its name in opportunistic investing in credit. Yep. That will stay, and we'll continue with that business, and that's a separate business. We now have a private credit business set up, and we're gonna continue to grow that, and I think it'll be, it'll be big. But partly backed by a lot of our insurance clients, including the Brookfield business that we manage capital for. Yep. Well, let's talk about Oaktree for a couple of minutes. Just given how important private credit is, this partnership is obviously quite critical in your efforts there, yet the business operates largely separately. They kind of still have their own infrastructure. Is there an opportunity to bring these businesses closer together to drive incremental revenue and expense synergies? And I guess, what's holding you back from purchasing the rest of the stake? I think you guys own 68% of the company right now. Yeah, just seventy- Seventy ... I think. We bought a few percentage points last year. The deal was when we bought the firm that we would... There was an opportunity for them, the partners, to stay in and be owners with us. They also can put to us over time if they wanna phase out of the business. Mm-hmm. We've never had to own everything. I'd rather have them be responsible for the business, care about the business, and be our partners in the business. They're very responsible. They're very good at what they do, and so we have no need nor desire to own 100% of the business. I suspect there's small amounts of expense synergies you would get if you combine businesses. Mm-hmm. But our thesis in business has always been accountability, and compartmentalization of businesses is always better than the small amounts of cost synergies- Mm-hmm ... you get by merging things together. When you merge things together, you get cost synergies, but what you lose often is the accountability and the culture you get from having a separate business. And I think even if we bought much more of the business, we would run it separately because it is a different mentality, it's a different business, and it's a different culture. And, people businesses, like ours is- Yeah ... are very particular, and being respectful of that is something that's really important. And so we're in no need nor desire to actually go higher. Over time, we'll naturally go higher 'cause some of the- Yeah ... owners will sell to us. Right. But, there's no great need to do it today. Okay, makes sense. All right, let's touch base on retail expansion. That's obviously another important theme for the space. You have, you know, made an effort with a couple of products out there, likely to do more. So give us an update on kind of traction you're seeing with existing products in the retail wealth management channel, and what else is on your priority list in terms of both product expansion and distribution platforms expansion into 2024 and 2025. Yeah, so our... We think of retail with a couple of lenses. First one is, there's no doubt that what we saw 25+ years ago in institutional management is coming to retail over the next while. So the next 25 years, I think, you may not see the exact same increase in amounts, but you're gonna see a similar increase in amounts in retail because alternatives are what people should have in their portfolios, and therefore, that will happen. All it takes is education. Mm-hmm ... and products properly designed for the market, and that's slowly coming. So we're continuing to build our resources. We have a very large group of people dedicated to marketing these products. We have a number of products in the market, both under the Oaktree brand and under the Brookfield brand. Yep. We raise probably $250 million a month today in specific retail products, call them semi-liquid products. Yep. The largest two of those are our Brookfield Income Infrastructure Fund. Mm-hmm. BII, it's called, and it was launched in Asia. We're now launching it in the US- Mm ... in retail, and then, one of the credit products we have under the Oaktree brand. But we'll have more, and it's gonna continue to grow. There's not too many... Again, back to consolidation and, what you asked me on the first question- Mm ... there's not too many people that can have 150 salespeople, the back office, the relationship with banks, and all those things, and have a brand to sell in the systems, and, and therefore, it'll continue to grow and, and go to the large sponsors with a good track record. In addition to that, with our relationship with Brookfield Corporation, they're selling annuities into broad America, and that capital comes to us under management arrangements to manage the capital, and they're selling $500 million a month that comes to us. It probably goes to $1 billion a month, and maybe $1.5 billion a month- Mm-hmm Very shortly thereafter, in the next while. Mm-hmm. So that money is from annuities across America, which comes to us, and it's sort of hitting two separate groups of the market. And that's the way we think of significant scale. And the second pool is very well designed because it has long terms on it. Right. It's perfect for these types of assets to back. Got it. That makes sense. So you mentioned insurance. I did have a quick question on that. So AEL is on track to close in short order here. It's an important, again, source of growing your private credit business and as a lot of the capital will be allocated ultimately to your insurance partnerships, like, like that one. How do you view the kind of opportunity for additional M&A in the insurance space? You guys have obviously grown in that business largely and organically. I'm here as the Brookfield Asset Management CEO- Yeah and our goal is to encourage the insurance affiliate, which we have no investment in- Yeah We just manage capital for them. Yeah to grow as fast as they possibly can, and give us as much money as they possibly can, and the good news is they've gone from zero to $100 billion. Organically, it will grow to $250 billion in a very short period of time. And the goal is of that business to grow big, to grow large. Mm. In addition to that, what it's allowed us to do with a team within Brookfield Asset Management is to spend time designing products and understanding exactly what insurance companies need with all of our products, and we're getting better and better and better in then not only servicing them but servicing all of our other insurance clients. Mm. They used to tell us, "We need XYZ because our regulatory ratios..." We'd just say, "Take this. Right. Now we're much more respectful of their issues, and we're designing products for them, and I think it's, it's gonna be game-changing for that segment of our distribution- Mm-hmm because we're getting better and better with how we turn our products regulatory-wise by for them. Great. What about acquisitions at the Brookfield Asset Management level? So you guys mentioned a couple of times, including obviously today, the balance sheet is in great shape, $3 billion of net cash, no debt. You talked about M&A potentially being on the table, but can we narrow that down a little bit? Are these largely tuck-in deals, kind of like you talked about credit, like maybe adding a few capabilities here and there, or is there room for something larger and more substantial at the BAM level? You know, I don't know. I'd say in the absence of anything else that really made sense, it will be tuck-in transactions or none. Yeah. It may be nothing. We may just keep doing what we're doing- Mm Keep compounding away, if giving the cash back to shareholders with share repurchases and dividends, and do nothing more because we have an amazing business. Yeah. There may be other businesses. You know, we bought three or four others, other than Oaktree, we bought three or four other franchises over time- Mm-hmm ... and tucked them in. There may be, I suspect there will be tuck-ins of smaller businesses, and there may be something that's larger and probably not as large as us. Mm-hmm. With a $60 billion market cap, there aren't too many of them. Right. There may be some other, moderately sized businesses that we could tuck in, that they would make sense because they either gave us greater geographic exposure or greater product exposure, which we don't have today. There aren't many things we're not exposed to. Product-wise, you guys kind of check all the boxes- I, you know— -mostly ... I used to say that years ago- Yeah And we always find something. Maybe not secondaries, but- What is amazing- Yeah ... Alex, is I actually went through this the other day, and I went back to 25 years ago as to what we were talking to people about- Mm putting into our funds, and it's vastly different today. It's amazing. We still, we just invest in the backbone of the global economy. That's all we do. But the backbone of the global economy has shifted dramatically over 25 years. It's amazing, and we didn't invest in data centers before. Yeah. We didn't buy telecom towers before. We didn't make semiconductor chip plants before. We didn't build life sciences buildings before. You know, you can go through the whole- Right ... we didn't, we didn't build solar plants, we didn't build wind plants. All of the things that we do today, like, it's probably 20% of what we do now- Mm-hmm ... we did 25 years ago. So it's still the backbone of the global economy, but what's amazing is the backbone shifts with the evolution of technology, people, places, and investments. What we're trying to do is always think about what's the next backbone thing that can drive this business further. Yeah. Transition is an example. The business didn't exist five years ago in our company, and it's possible it'll be the largest business we have five years from now. Yeah. That, that's amazing. It's pretty fascinating. Great. Well, look, we're at time, so thank you so much, Bruce. Always good to see you here. Appreciate it.