Where Will Brookfield Asset Management Be in 5 Years?

Brookfield Asset Management (NYSE: BAM) recently held its annual Investor Day. The leading global alternative asset manager laid out its five-year plan at that event. Here's a look at where it expects to be in 2030.

Where Brookfield is today

Brookfield Asset Management is one of the largest alternative investment firms in the world. It has over $1 trillion in assets under management (AUM), including $560 billion of fee-bearing capital. That fee-bearing capital currently generates $2.6 billion of annual fee-related earnings. The company has more than doubled its business in the past five years (it had $277 billion in fee-bearing capital and $1.3 billion in annual fee-related earnings in 2020) despite returning over $130 billion in capital to clients.

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The company invests client capital across five key verticals: Infrastructure, renewable power and transition, private equity, real estate, and credit. Brookfield is an industry leader in each category. That has allowed it to launch new strategies, providing clients with more opportunities to earn strong risk-adjusted returns.

The company's ability to leverage its expertise and expand into new strategies has paid off for investors. For example, it has built its credit investment platform from essentially nothing a decade ago into a $1.5 billion annual fee-generating business. Meanwhile, the energy transition has gone from zero fees to one of its largest revenue streams (over $400 million in annual fee revenue) in under five years.

Brookfield's five-year plan

Brookfield believes it can double its business again over the next five years. It expects its total fee-bearing capital to exceed $1.2 trillion by 2030, even as it returns another $170 billion of capital to clients. That would increase its annual fee-related earnings to nearly $5.9 billion.

The company expects all five of its business groups to contribute to its growth. However, it sees credit investments delivering the biggest increase. Brookfield believes it can grow its fee-bearing credit capital from its current level of $254 billion to $640 billion by 2030. One factor driving that view is the investments it has made to expand this platform by investing in several other credit investment managers. Over the past year, it acquired a 51% interest in asset-backed aviation financing firm Castlelake, bought a majority stake in mortgage financing company Angel Oak, and grew its stake in music royalty investor Primary Wave to 44%. Brookfield also recently acquired the remaining 26% stake in leading credit manager Oaktree that it didn't already own. These deals have significantly expanded the capabilities of its credit investment platform.

Brookfield also sees a massive opportunity to invest in AI infrastructure across its platforms, which it believes will significantly drive future growth. The company estimates that the world needs to invest $7 trillion over the next decade to build AI factories and related infrastructure to support the AI era. This massive capital need should provide Brookfield with opportunities to invest in AI data centers, new renewable power to support them, and credit solutions for technology and other companies supporting their AI expansion. By investing client capital in these AI-related projects through both its existing flagship funds and its newly launched vehicles, such as the Brookfield AI Infrastructure Fund, Brookfield expects its AI investment strategy to attract additional client capital and boost fee-related earnings growth.

The company believes its robust fee-related earnings growth and other upside catalysts position it to deliver more than 20% annualized earnings growth over the next five years. That will allow the company to grow its dividend, which yields more than 3%, at a more than 15% annual rate.

Brookfield will be much bigger by 2030

Brookfield Asset Management anticipates doubling its fee-bearing capital by 2030, enabling it to more than double its earnings and dividend payment. This strong growth outlook positions Brookfield to deliver robust total returns, making it a compelling investment opportunity over the coming five years.

Matt DiLallo has positions in Brookfield Asset Management. The Motley Fool has positions in and recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.