Brookfield announced this morning that it is considering separating its asset manager from its balance sheet assets. It obviously is looking longingly at Blackstone’s rich multiple based on its asset-light approach to the business (specifically, BX holds little / no balance sheet assets beyond minimal GP commits and distributes all of its earnings).
Other asset managers have taken different approaches. KKR is similar to Brookfield in that it is actively building its balance sheet as a corporate strategy. Apollo took its insurer on balance sheet. Same with Carlyle and Ares.
In Brookfield’s case, its asset manager is growing so quickly and generating so much associated cash flow, my expectation is that it spins off its assets to shareholders in a semi-organized fashion after pruning non-core or mature assets. While having the balance sheet is helpful or has been helpful in the past, Brookfield should be able to fund its growth and / or strategic transactions off of its asset manager cash flows. Furthermore with a higher multiple, it can use shares as necessary to fund strategic actions.
I’m assuming the Brookfield transformation will happen, else they wouldn’t talk about it publicly. But that said, I believe it will happen over the medium term as there’s a lot of work to do to separate the two pieces of the business.