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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: Bruce Flatt, thank you so much for speaking to Bloomberg.

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Speaker 1: Now.

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Speaker 2: A lot has happened in the last twelve months. When

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Speaker 2: you look at your investment thesis, has anything changed and

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Speaker 2: where you see value and where you see our economy's going.

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Speaker 3: The short story is not much has changed now. As

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Speaker 3: you know, every day the news changes. But what we

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Speaker 3: try to focus are on our long term trends and

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Speaker 3: focus on the long ball, and within that there are

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Speaker 3: going to be fluctuations all the time. I'd say everything

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Speaker 3: that has happened over the last year is all positive

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Speaker 3: to the long term thesis.

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Speaker 1: As we have.

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Speaker 3: We're still going to digitalize the world and we're going

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Speaker 3: to do it faster, and we're going to have more.

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Speaker 3: We're still going to deglobalize and we're going to do

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Speaker 3: it faster and we're going to have more. And we

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Speaker 3: still are going to transition to renewables, maybe not because

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Speaker 3: of renewables, but because we just need more power. So

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Speaker 3: I think all those three three trends are maybe more

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Speaker 3: important today than they were before.

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Speaker 1: So we don't get too.

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Speaker 3: Wrapped up in the day to day effects of what's

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Speaker 3: going on. On rates or economy or different.

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Speaker 1: Things like that.

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Speaker 2: Has your US business been impacted at all with some

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Speaker 2: of the Trump policies.

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Speaker 3: What we do is in go to great countries, invest

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Speaker 3: in great businesses or assets on the backbone of the

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Speaker 3: global economy with great people, and we don't trade over borders.

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Speaker 3: So in the United States we have five hundred billion

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Speaker 3: dollars worth of assets.

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Speaker 1: They're all local assets.

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Speaker 3: We sell the goods to local companies and people, and

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Speaker 3: we're a local company, as we are in every other

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Speaker 3: country of the world. So there's no doubt there's always

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Speaker 3: some raiplicationations on everyone good or bad, But for us,

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Speaker 3: it's pretty small because we just invest in places and

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Speaker 3: we don't trade over borders.

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Speaker 2: When you look at regions around the world, where do

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Speaker 2: you see the big next opportunity, we're.

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Speaker 1: In thirty countries.

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Speaker 3: And therefore, and the success of our investment strategy for

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Speaker 3: many decades has been to have global business and to

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Speaker 3: be able to pick the spots where value and price

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Speaker 3: don't intersect. Where markets are up a lot, we probably

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Speaker 3: were selling things, and where markets are down a lot,

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Speaker 3: we're probably buying things. And so I would say it

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Speaker 3: always differs in Europe for example, it's a value market.

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Speaker 3: Multiples are lower in the United States. The trends behind

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Speaker 3: what's going on in the United States are very large,

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Speaker 3: so they're just different opportunities. But I would say if

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Speaker 3: I had to pick spot where more capital will go

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Speaker 3: over the next eighteen months, it's probably in the United States.

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Speaker 2: What about the Middle East?

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Speaker 3: You know, we've had a business there investing in the

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Speaker 3: Middle of the East, unlike many others.

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Speaker 1: We've been there for twenty five years.

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Speaker 3: We have many big businesses from payments to schools to

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Speaker 3: real estate, pipelines, and it's been a great place to invest.

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Speaker 3: So yes, we're still doing more there. We're the largest

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Speaker 3: foreign investor in the UAE, for example. I think we

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Speaker 3: have twelve billion dollars of assets. So it's just it's fantastic.

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Speaker 3: It's just not we can put twelve billion at a

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Speaker 3: crack into investments in the United States.

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Speaker 1: Just the size of the economies are just different.

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Speaker 3: The United States is the largest, deepest and most robust

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Speaker 3: economy in the world, and that's not changing anytime soon.

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Speaker 2: The prospects for you are also infrastructure and therefore some

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Speaker 2: of the data centers. How much of an increase what

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Speaker 2: we see from the Brookfield.

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Speaker 1: The thing that.

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Speaker 3: I guess that hasn't really been factored in yet is

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Speaker 3: that data center build out really only started ten years ago,

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Speaker 3: and it was just getting started for Cloud and then

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Speaker 3: the chat GPT moment happened, and the amount of increase

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Speaker 3: in requirement to train models and for learning is very,

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Speaker 3: very significant. And we're talking trillions and trillions. So the

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Speaker 3: opportunity for us, as we've always tried to move our

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Speaker 3: backbone of the global economy along with what's changing in

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Speaker 3: the world, and increasingly today the world is digitalizing and

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Speaker 3: the final step of all that is providing computer uh

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Speaker 3: and so we continue to work on opportunities like that.

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Speaker 1: But these are large, large sums of money.

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Speaker 3: Some of these sites, like one thousand megawatt one gigwat

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Speaker 3: data center site is with compute capacity. Power to compute

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Speaker 3: capacity all the way through is fifty billion dollars. These

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Speaker 3: are almost unprecedented investments ever seen.

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Speaker 1: In the last in hundreds of years.

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Speaker 2: Are we overestimating or underestimating the pace of change that

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Speaker 2: this needs to get done?

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Speaker 1: You know, I would say, you never know at the

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Speaker 1: moment in time, But if I had to, if I

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Speaker 1: had to guess we will.

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Speaker 3: Everyone gets excited sometimes, but in the in the next

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Speaker 3: ten years, it will be we will look back and

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Speaker 3: be extremely surprised at the progresses have been made.

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Speaker 1: And probably the most important.

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Speaker 3: Thing is is that really what's happening is that it's

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Speaker 3: the application hat of artificial intelligence into service businesses and

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Speaker 3: industrial businesses and the compression of the component of labor.

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Speaker 3: And because of that, the productivity advances are going to

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Speaker 3: be very significant.

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Speaker 1: But that's going to be good for America because it.

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Speaker 3: Means you can reshore capacity that you couldn't have made

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Speaker 3: in the United States before, and that's going to continue

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Speaker 3: to happen over the next ten years.

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Speaker 2: Has Deep Sea changed anything for you?

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Speaker 3: I think all it does is show that when advances

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Speaker 3: get made, they continue to get made and progress. Smart

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Speaker 3: entrepreneurs figure out another way, and it just I'd say

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Speaker 3: it makes the point we are going to have better

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Speaker 3: technology every day.

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Speaker 1: We're all learning.

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Speaker 3: And I'd say for us, what's really important is we

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Speaker 3: provide the backbone.

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Speaker 1: Of all of that.

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Speaker 3: So we're providing the green power, buying the data center,

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Speaker 3: we're providing the compute capacity, We're funding all of that,

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Speaker 3: and that's the that's different than I don't. We don't

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Speaker 3: own a competitor to deep Seek. If you did, you

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Speaker 3: might worry about whether you had that. What it does

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Speaker 3: mean probably is that there's more capacity required, which means

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Speaker 3: they they need more of our backbone. And as you

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Speaker 3: bring costs down with anything, more use cases come about.

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Speaker 3: And and that's what's going to happen in the next ten.

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Speaker 1: Years as we as we evolve this business.

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Speaker 2: If you're sitting in Europe, there's a you know, there's

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Speaker 2: concern that actually you're being left out because China is

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Speaker 2: going one way. The US is America first. You know,

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Speaker 2: you worry about inflationary pressures and trade wars. What does

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Speaker 2: that mean for brook Field or are there opportunities to

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Speaker 2: be had again?

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Speaker 3: We're we're a local investor in countries. We're building out

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Speaker 3: data centers all through Europe. We have the largest builder

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Speaker 3: of data centers in Europe. We just now it's a

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Speaker 3: big deal in France for twenty billion dollars. In all

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Speaker 3: of our businesses, we continue to invest across the backbone.

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Speaker 1: We're local players in local countries. We sell local things and.

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Speaker 3: Sometimes less money being available and less positivity means greater

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Speaker 3: opportunity because there's less money available and therefore the opportunities

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Speaker 3: are better, and so we're always selective with what we do,

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Speaker 3: but I think there are still significant opportunities in Europe

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Speaker 3: on private credit.

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Speaker 2: You're a big player on private credit.

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Speaker 1: Where do you go from here?

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Speaker 3: This business is going to get bigger, Our business, and

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Speaker 3: the industry in total is going to get bigger and

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Speaker 3: bigger because this is just capital being pushed off of

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Speaker 3: banks balance sheets. It's less regulatory friendly on their balance sheets.

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Speaker 3: They don't really want it on their balance sheets. It's

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Speaker 3: being pushed to sponsor groups who are usually lending in

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Speaker 3: the area where they have a lot of expertise. And

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Speaker 3: our two biggest businesses today or I guess three biggest

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Speaker 3: business our real estate, infrastructure and direct lending in corporates

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Speaker 3: because we have a lot of expertise in those things.

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Speaker 3: We just bought an asset backed lender called Castle Lake

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Speaker 3: and we're going to continue to build out the business

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Speaker 3: merely because I think the scale opportunity is there and

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Speaker 3: our clients can earn extra return in private credit than

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Speaker 3: they can just buying bonds in the market, and that's really.

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Speaker 1: The we're here for our clients.

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Speaker 3: We're here just to service them, and if they can

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Speaker 3: earn extra hundred basis points over what they'd get somewhere else,

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Speaker 3: this is a very exciting place for them to put money.

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Speaker 2: How much bigger do you think this market can? Again?

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Speaker 2: If you're good, it seems like you're doing really well,

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Speaker 2: But if you're in that mid level, Yeah.

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Speaker 1: We're three hundred billion today. I think it can be

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Speaker 1: much much larger.

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Speaker 2: And what kind of time for you?

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Speaker 1: Look it? It will grow with us. It's with us.

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Speaker 3: We always try to grow methodically. Once in a while

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Speaker 3: we buy something, but we grow methodically. It can grow,

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Speaker 3: it can double, it can driple, it can quadruple over

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Speaker 3: the longer term, and we'll.

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Speaker 1: Just keep building it out. But I'd say, the.

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Speaker 3: Thing we want to make sure with every business we have,

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Speaker 3: we're super responsible. The foremost thing we have to do

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Speaker 3: is make clients. Make our clients the returns we promise them.

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Speaker 3: And if we can do that, this business will be very,

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Speaker 3: very large twenty five years.

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Speaker 2: From now, do you expect consolidation in that space? In

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Speaker 2: your space?

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Speaker 1: Look, the.

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Speaker 3: Asset management industry started from nothing thirty years ago. Circuit

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Speaker 3: thirty years ago, there are five or seven big players today.

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Speaker 3: Some of us have done acquisitions to add in are

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Speaker 3: sources of skills into the businesses. We've done, some others

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Speaker 3: have done some. I think there's going to be a

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Speaker 3: it's never one size never fits all, but there's gonna

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Speaker 3: be some very large players. We're one of those, and

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Speaker 3: then there's going to be some niche players that fit

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Speaker 3: a certain area. What's happening in the middle is it

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Speaker 3: so far in the last eighteen twenty four ouns it

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Speaker 3: hasn't been easy for them to raise money. We raised

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Speaker 3: one hundred and thirty five billion dollars last year in

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Speaker 3: our asset management business.

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Speaker 1: Not many others can raise that type of capital.

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Speaker 2: Are you looking to buy anything?

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Speaker 3: We're always on the lookout for complimentary things that can

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Speaker 3: add to the business and that we can deliver to

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Speaker 3: our clients in a seamless way that don't conflict or

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Speaker 3: compromise the investing skills that we have as an overall business.

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Speaker 3: We need to be We need to be able to

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Speaker 3: say to our clients, we're pleased to offer you an

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Speaker 3: oak Tree fund because the team at oak Tree, Bruce Howard,

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Speaker 3: arm and are the best in the world, and that

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Speaker 3: they do great in opportunities and investing, and when we

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Speaker 3: can do that, we're proud to have them as part.

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Speaker 1: Of the team.

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Speaker 2: Can you talk to me about oak Tree? So you

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Speaker 2: have seventy percent of oak Tree? Well you have you know,

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Speaker 2: become one?

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Speaker 1: Do you know?

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Speaker 3: We're sort of one, But I've had we've had a

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Speaker 3: different attitude towards the acquisitions we've made. We like to

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Speaker 3: partner with management teams. Today the management has been transitioned

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Speaker 3: to Arman Panosian and Bob and O'Leary, and the two

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Speaker 3: of them are running the business and it's run as

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Speaker 3: a separate unit and they own a part of the business.

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Speaker 1: And I think it's good.

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Speaker 3: Each asset management organization has a special culture and ours

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Speaker 3: is right for us, but it may not be right

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Speaker 3: for that group or whatever other group we work with.

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Speaker 1: So I think it's a fine line.

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Speaker 3: Entrepreneurialism in alternative managers managers is really important, and therefore

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Speaker 3: we've had this partner manager model and it's worked so far,

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Speaker 3: and so we're pretty happy with it.

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Speaker 2: If we talk about your three d's, so decarbonization, digitization

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Speaker 2: and deglobalization, how do you think that's changed the last

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Speaker 2: twelve months? Is there one that will be accelerated compared

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Speaker 2: to where you thought it would do twelve months ago.

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Speaker 3: Everyone out in the world thought the decarbonization was going

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Speaker 3: to be the big thing, and we're going to everything's

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Speaker 3: going to net zero. That wasn't That wasn't exactly the

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Speaker 3: case when it was. Today it's the news story is

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Speaker 3: less that, but I think it's the same. We need

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Speaker 3: power preferably. Most companies want green power, and the good

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Speaker 3: news is green power is largely the lowest cost energy

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Speaker 3: anywhere in the world, most countries of the world. Therefore,

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Speaker 3: that one just continues. I'd say the two that have

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Speaker 3: ramped up very substantially on the amounts of money they're

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Speaker 3: going in is the digitalization of the world, largely because

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Speaker 3: of artificial intelligence and what's required to build out the

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Speaker 3: backbone for it, which had been coming, but it's now.

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Speaker 1: On at way different levels.

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Speaker 3: And because of that, there will be reshoring of industrial

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Speaker 3: capacity back to other countries, assisted in some places by tariffs,

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Speaker 3: I might add, but even the terroriffs might not have

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Speaker 3: worked if you didn't have what's going on with artificial intelligence.

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Speaker 2: When you look at real assets and this is what

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Speaker 2: you like, and this is what Brookfield buys, what can

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Speaker 2: we expect from you in the next twelve months.

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Speaker 3: For my whole career, I've just said the same thing

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Speaker 3: we did before, But we always change, and fifty percent

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Speaker 3: of the assets we own today we didn't exist as

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Speaker 3: an asset class to invest into fifteen years ago, ten

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Speaker 3: fifteen years ago. I find it amazing how the world changes,

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Speaker 3: and it.

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Speaker 1: Doesn't change overnight.

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Speaker 3: But in investing, if you don't evolve your investing skills,

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Speaker 3: maybe you do the same things. We're value investors through

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Speaker 3: and through. We like to buy cash flows, we discount

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Speaker 3: them back. We like proven technologies. But if you don't

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Speaker 3: evolve your thinking as to what's going on in the

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Speaker 3: world and try to see forward to where we're going,

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Speaker 3: you get left in the dust. And so we're just

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Speaker 3: always trying to see out in the future where we're going,

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Speaker 3: and that's increasingly what a few of us at Brookfield

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Speaker 3: are spending our time on, just understanding where the world's

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Speaker 3: going and how we can we can add value to

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Speaker 3: our clients by just being ahead of the game.

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Speaker 2: Can you tell me one thing that you've seen that

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Speaker 2: you think is new.

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Speaker 1: I think the.

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Speaker 3: I think the application or early days, the application of

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Speaker 3: artificial intelligence in our service and industrial businesses.

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Speaker 1: Is seeing productivity.

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Speaker 3: Advances and investment returns of numbers almost never seen before.

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Speaker 3: We're talking fifty to one hundred percent cash on cash

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Speaker 3: investment returns and that's very significant to productivity, which which

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Speaker 3: may mean if it all works out, that we're in

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Speaker 3: an investment led era for the next twenty years which

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Speaker 3: is highly productive and can be deployed into highly productive

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Speaker 3: and drop big and significant amounts cash flow to the

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Speaker 3: bottom line. And if that occurs, we're going to have

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Speaker 3: a very strong economy. Of course, cycles have not been repealed,

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Speaker 3: but we should have a pretty good period of time

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Speaker 3: for the next twenty years as that deploys within business,

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Speaker 3: but it takes a lot of capital and you have

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Speaker 3: to be smart to deploy it with the right people.

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Speaker 1: Bruce, thank you so much for joining us. Thank you

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Speaker 1: for having me. Francy