Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: One of the giants of deal making is Brookfield.
Speaker 3: And it's CEO, Bruce Flatt, is an industry titan in
Speaker 3: his very own right. This morning, the company announced that
Speaker 3: Flat will be stepping down from his post leading the
Speaker 3: company's one trillion dollar asset management business. He of course,
Speaker 3: we'll stay on as the chair and as well as
Speaker 3: CEO of the parent company. I'm pleased to say that
Speaker 3: Bruce Flatt joins us now for the big picture, an
Speaker 3: elevated look at the strategies and trends shaping corporate action. Bruce,
Speaker 3: thank you so much for joining. We're so thrilled to
Speaker 3: have you as our inaugural guest.
Speaker 1: Bett, thank you for having me as your first customer.
Speaker 3: I was going to say, there's no one else we'd
Speaker 3: want to kick things off with, and what a way
Speaker 3: to kick things off with this announcement that you're handing out,
Speaker 3: least for the asset management business. The reins over to
Speaker 3: Connor Tasky. I have to say, in a lot of
Speaker 3: your industry, not only are there issues with succession plannings,
Speaker 3: rarely do they lay out such a clear path.
Speaker 2: Why do this and why now?
Speaker 4: So Our business is about running great businesses. What we
Speaker 4: do is we buy into companies, we help management teams,
Speaker 4: we build them. And therefore we were very determined ourselves
Speaker 4: about making sure we have the best succession, the best
Speaker 4: run business on the planet.
Speaker 1: So we've been.
Speaker 4: At this for fifteen twenty years. We've been at with
Speaker 4: Connor for the last four very methodically and all the
Speaker 4: other team across the board, and it's just the natural time.
Speaker 4: And it's really great to have young, new energy in
Speaker 4: the business and I can be the chair and help
Speaker 4: them out as the chairman of the parent.
Speaker 3: CEO of the parent com You got to say, how
Speaker 3: do you see your role evolving with this kind of the.
Speaker 1: Same thing I do today.
Speaker 4: I help with strategy, I help the team when they
Speaker 4: need me to do something. I help with clients, and
Speaker 4: that's what I've done for the last five ten years
Speaker 4: and that's what I'll be doing in the future.
Speaker 3: So does this mean the timeline speeds up for Connor
Speaker 3: to take some other of your roles for Brookfield Corpse?
Speaker 4: You know so far right now enough Brookfield has the
Speaker 4: management's enough and we've got a big insurance business. We're
Speaker 4: building a big investment business out in Brookfield Corps.
Speaker 1: So we've got lots.
Speaker 4: Going on up top, and frankly, giving up one job
Speaker 4: is helpful to make sure that we can focus on
Speaker 4: other things.
Speaker 3: I'd love to get your philosophy on talent more broadly,
Speaker 3: because clearly it's something that's near and dear to you
Speaker 3: as a leader of this industry.
Speaker 2: Leader.
Speaker 3: There is this moment right now. We've heard from other
Speaker 3: financial services companies like Gooman that growth is going to
Speaker 3: be slowing and talent hiring because of things like AI.
Speaker 2: Do you see the same thing ahead?
Speaker 4: You know?
Speaker 1: I don't know.
Speaker 4: Maybe we're different because we're backbone real asset investors and
Speaker 4: we've never had a better time. We keep raising more money,
Speaker 4: we keep deploying it. We're any good returns. Things are great,
Speaker 4: and the business is accelerating. So and even our credit
Speaker 4: it's asset back finance credit. It's not what you see
Speaker 4: in the news today. And therefore our business keeps growing.
Speaker 4: We keep adding people, we keep adding countries, we keep
Speaker 4: adding clients.
Speaker 1: It's pretty good. But we're always focused.
Speaker 4: Talent people, especially in a business like ours, but especially
Speaker 4: in every business. People's everything, and it's really really important
Speaker 4: to focus on it. It's the easiest thing to forget about,
Speaker 4: and one should never forget about your people.
Speaker 3: So at the same time you mentioned it, just the
Speaker 3: real asset business that you have in this really big
Speaker 3: bet on AI infrastructure that's been involving at Brookfield, everything
Speaker 3: from mega deals with the hyperscalers to creating your own
Speaker 3: cloud company. There's a lot of really interesting work you're doing.
Speaker 3: If I could borrow a phrase and kind of bastardize
Speaker 3: it from alphabet sound or PATRII what.
Speaker 2: Is the risk right now? Is it under or overinvesting?
Speaker 4: So if you're in the real asset space, in the
Speaker 4: private markets, it's very difficult to entitle land, it's very
Speaker 4: difficult to get power, it's very difficult to build because
Speaker 4: you can't get you can't get people to build, and
Speaker 4: therefore the investment is tough to do. And that's why
Speaker 4: there's the returns in it are excellent because people need
Speaker 4: skills to be able.
Speaker 2: To do it.
Speaker 1: Now, what most.
Speaker 4: People focus on as the public markets, there's a few
Speaker 4: securities which everyone wants to own and therefore multiples go higher.
Speaker 4: But in the private markets it's very different and there
Speaker 4: is an underinvestment in what's going on in private markets
Speaker 4: because everyone's looking for additional AI cloud capacity and it's
Speaker 4: very tough to build.
Speaker 1: Easy sites have been built or committed. The hard sites.
Speaker 4: Now the hard work starts, and in particular, we need power,
Speaker 4: and as you know, we have a huge power business,
Speaker 4: and that's the bottleneck in artificial intelligence for the next
Speaker 4: ten years.
Speaker 3: I definitely want to talk with that because you've been
Speaker 3: doing some really interesting stuff there. But I do wonder
Speaker 3: just on the public market side of things, Again, the
Speaker 3: fear is less about the infrastructure. It's more these hyperscalers
Speaker 3: are spending so much and maybe they don't have the
Speaker 3: revenue to back it up, and maybe that.
Speaker 2: Trickles down into infrastructure.
Speaker 3: Do you see any red flags or do you think
Speaker 3: public markets are misplaced when you see some of those.
Speaker 4: Nerves firm first are when we build out infrastructure, we're
Speaker 4: generally leasing them for twenty five, ten, twenty thirty years
Speaker 4: to governments or large scale technology companies, and we just
Speaker 4: have long term contracts.
Speaker 1: This is just a leasing business. But we're building things
Speaker 1: for them.
Speaker 4: That are super critical and only we and a few
Speaker 4: others can build them. So we're providing that backbone infrastructure
Speaker 4: and they need more of this, and they need it
Speaker 4: at scale, and they need it in the United States today,
Speaker 4: but it's now going global in all countries in the
Speaker 4: world for various reasons. We don't have time to get
Speaker 4: into all of them here, but for various reasons, it's
Speaker 4: accelerating all over the world.
Speaker 3: So I say, just to answer that question, it sounds
Speaker 3: like the risk is indeed underinvesting that maybe we're not
Speaker 3: doing enough.
Speaker 4: We are not doing enough in the private markets because
Speaker 4: it's tough to do, and that's where we are, and
Speaker 4: that's where we focus on because it's like, really, it's
Speaker 4: not we could do way more with the amount of
Speaker 4: money we have.
Speaker 1: It's the technical capabilities to.
Speaker 4: Bring on power, data centers, artificial intelligence, infrastructure, and everything
Speaker 4: that's around it.
Speaker 1: That's where the bottlenecks are.
Speaker 3: Well, first of all, on the power side of things.
Speaker 3: I know in twenty twenty three you did a deal
Speaker 3: with Westinghouse, a nuclear energy company, which, by the way,
Speaker 3: incredible foresight to see just the immense need that we
Speaker 3: would need what it need for that. And then late
Speaker 3: last year we also learned that the US government is
Speaker 3: doing a partnership too. How has that partnership evolved how
Speaker 3: much has the US government, for example, been involved so
Speaker 3: far since that was announced.
Speaker 4: So we had a discussion with the US government to
Speaker 4: ensure that we could bring power on America. And we
Speaker 4: couldn't do it ourselves. We can't build all nuclear plants
Speaker 4: in the country. We're not big enough for that. We
Speaker 4: needed their help, and the Department of Commerce and the
Speaker 4: Presidents saw fit that they would help us, support us
Speaker 4: to build out the industry. And we need to build
Speaker 4: a whole supply chainnel because you can't just build one plant.
Speaker 4: We're going to build now eight ten plants for them,
Speaker 4: and we're going to build eight ten more plans for others.
Speaker 4: And it's going to build a whole supply chain out
Speaker 4: in America for nuclear And this is very very important
Speaker 4: because it's bringing on power, it's bringing baseload power, it's
Speaker 4: bringing on power that's much needed in America. And we're
Speaker 4: going to double the grid in the next twenty years.
Speaker 4: And this is super critical because it's baseload capacity and
Speaker 4: it's very very important to the United States.
Speaker 3: A lot of your infrastructure is really important to the
Speaker 3: United States. Have you had talks with the US government
Speaker 3: and other aspects about striking more partnerships.
Speaker 4: Jo. Look, I would say they're very commercial in they're
Speaker 4: what they do where it makes sense and where business
Speaker 4: entrepreneurs can put money to work. They're very supportive and
Speaker 4: they were very good with us, and we're going to
Speaker 4: build out. We're going to recreate an industry and create
Speaker 4: enormous number of jobs in America because of what they did.
Speaker 3: Have you felt any more friction because of your Canadian
Speaker 3: rooms or your cross border.
Speaker 2: Type of business.
Speaker 3: There had been this fear and we saw it very
Speaker 3: President Davos that it's a more insular United States and
Speaker 3: maybe foreign powers and Mark Carney speech R I know,
Speaker 3: you know very well talked about the need of the
Speaker 3: middling nations to come together.
Speaker 2: Do you feel that flow through.
Speaker 1: Yes.
Speaker 4: So sixty percent of ourssets are in the United States.
Speaker 4: We're headquartered in the US. We have a huge business here.
Speaker 4: This is super super United States, super super critical to US.
Speaker 1: As is every country.
Speaker 4: Remember what we do is we build local infrastructure in
Speaker 4: countries and we sell goods and services to individuals or companies.
Speaker 1: That's it.
Speaker 4: We don't move over the borders. We just build out
Speaker 4: and sell in the country. So we pick countries very wisely.
Speaker 4: We go to them and we build out in those countries.
Speaker 4: So we're friends with every country in the world, and
Speaker 4: we try to be great citizens. We try to do
Speaker 4: well for the country. We always try to be on
Speaker 4: the side of doing the right thing for the country,
Speaker 4: never get cross thread with any and build out infrastructure
Speaker 4: in the country. And what we're doing is, as you noted,
Speaker 4: super important for the backbone of the global economy.
Speaker 1: That's all we do.
Speaker 4: We either lend to or we put equity into the
Speaker 4: backbone of the global economy, and that's what these countries need,
Speaker 4: including the United States.
Speaker 3: I heard from someone that this administration, someone said this
Speaker 3: recently to me, is just like much more willing to
Speaker 3: pick up the phone.
Speaker 2: It's much more willing to listen.
Speaker 3: Is it just much easier to get things done in
Speaker 3: this country right now?
Speaker 1: Yes? Yes.
Speaker 4: Department of Commerce, like our transaction was done with Department
Speaker 4: of Energy and specifically Department of Commerce Howard Lutnik, and
Speaker 4: they were very they were very transactional and did they
Speaker 4: focused on the right things and we got a transaction done.
Speaker 3: Late last year, you announced that you were going to
Speaker 3: be buying the rest of oak Trea, a company that
Speaker 3: you had also long had a partnership with beginning in
Speaker 3: twenty nineteen. How is that combination going to evolve as
Speaker 3: you work through it. Does the oak Tree brand get
Speaker 3: blended into Brookfield, does it remain its own entity?
Speaker 2: How are you thinking about this?
Speaker 4: So we have two I'm going to say this as
Speaker 4: we have two amazing brands. But Feels an incredible brand,
Speaker 4: but oak Tree is an amazing brand as well, and
Speaker 4: we plan on keeping both behind the scenes. Some of
Speaker 4: the things that we do will be we'll join them together,
Speaker 4: and we'll do things to get cost synergies and benefits
Speaker 4: and all those kind of things. But the two brands
Speaker 4: are unbelievably valuable in our opinion, and they're going to stay.
Speaker 4: And you know, for opportunistic credit investing, which today is
Speaker 4: super important or more important.
Speaker 1: This week than it was last week.
Speaker 4: The oak Tree brand is an incredible franchise and we're
Speaker 4: going to keep that and it's really important to us.
Speaker 3: Just on that note, because you mentioned this at the
Speaker 3: start of the conversation that there does seem to be
Speaker 3: a little bit of nervness around credit markets.
Speaker 2: I know in your twenty twenty six outlook and the.
Speaker 3: Team had written credit markets are rewarding those with underwriting
Speaker 3: standards focused on asset quality. Say that kind of implies
Speaker 3: that maybe there are others who aren't focused on quality.
Speaker 2: Is there a real divergence.
Speaker 1: Yeah.
Speaker 4: I don't comment on any other person, any other group's business,
Speaker 4: But what I would say is our business focused on
Speaker 4: asset back finance, opportunistic credit, and lending to things we understand,
Speaker 4: lending to the real economy, and therefore we have very
Speaker 4: little exposure to the types of things that are going
Speaker 4: on today. And that may be fortuitous, I'd say, in
Speaker 4: our opportunistic business, it creates a big opportunity because then
Speaker 4: when things sell off, often they go way too far,
Speaker 4: and therefore opportunity comes about.
Speaker 2: So are you calling up your team saying, hey, look
Speaker 2: at what happened this week. There might be something.
Speaker 1: Yes, Yes, we're very focused.
Speaker 3: I was gonna say, because you're not that exposed to software,
Speaker 3: would this be an opportunity maybe to get in there
Speaker 3: a little bit more.
Speaker 4: It's we're very under exposed to software. We're a real
Speaker 4: asset business. But in our in our our private equity,
Speaker 4: our opportunistic strategies for credit. Look at industries when they
Speaker 4: sell off and when there is value to be had,
Speaker 4: and I suspect somewhere in this cycle of software there's
Speaker 4: going to be some amazing value to be made.
Speaker 3: There feels to be like a lot of reckonings happening
Speaker 3: in this market. You've outlined a lot of changes, be
Speaker 3: it deglobalization otherwise some of what you're doing in infrastructure.
Speaker 2: Is this a moment of a market reset? Look?
Speaker 4: I think the world twenty The thing I start off
Speaker 4: by saying is everyone gets excited about day to day
Speaker 4: changes in the markets. They listen to your show and
Speaker 4: then go or go and buy or sell. But twenty
Speaker 4: years from now, we will look back and the valuations
Speaker 4: will be ridiculously low for great companies and businesses. And
Speaker 4: that's what people should really be focused on, focused on
Speaker 4: the long term, focus on buying great companies and businesses,
Speaker 4: stick with them, don't sell, and just stay the course.
Speaker 4: And that's like that. That's been our story for a long,
Speaker 4: long period of time, and that's what it's going to
Speaker 4: going to continue to be