In the past five years, there has been a wave of publicly traded partnership (PTP) conversions to C-corps. The two core reasons being it broadens the investor universe as indices often can’t purchase PTPs and PTPs are administrative / tax nightmares.
Brookfield Business Partners (BBU) just spun off an identical C-corp (BBUC) that trades parallel to BBU. Within no time, the C-corp is at a major premium to the PTP:
This isn’t the first time Brookfield has done this as both Brookfield Infrastructure and Brookfield Renewable both executed this spin-off as well, and have seen similar results as far as the C-corp trading at a premium.
It doesn’t change the course of daily business, but does offer a more richly priced currency to utilize in raising capital or making acquisitions. Brookfield’s has not been shy to raise capital by selling down Brookfield Renewables’ C-corp shares and utilized Brookfield Infrastructure’s C-corp shares as the currency for a material portion of its InterPipeline acquisition.
While the premium comes and goes (see below for Brookfield Infrastructure), one can hope that in due time it expands the degrees of freedom that the entity has:
Disclosure: We own shares of BBU / BBUC. This is not investment advice, do your own work.