Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: I want to get right to our first guest. Connor
Speaker 2: Teskey is chief executive officer of Brookfield Asset Management. They've
Speaker 2: got over tillion dollars in assets under management, touching into
Speaker 2: many different parts of the investment universe, and he joins
Speaker 2: us here at Bloomberg invest Nice.
Speaker 3: To have you here with us. Thanks for having me.
Speaker 2: It's been a while and you now officially are CEO
Speaker 2: of Brookfield Asset Management.
Speaker 3: What's changed in your life? Very little.
Speaker 4: At Brookfield we run a lot of businesses around the world.
Speaker 4: We like to run those business as well. We like
Speaker 4: to run our own business quite well. And full credit
Speaker 4: to Bruce in the other senior leadership team, this was
Speaker 4: a very thoughtful, methodical, incremental transition, so telegraph. Nice to
Speaker 4: get the announcement out of the way and just back
Speaker 4: to business as usual.
Speaker 2: All right, So that went as expected. But the world
Speaker 2: is kind of crazy, to say the least, and I
Speaker 2: think about the volatility we see as a result. We
Speaker 2: see if playing out to some extent in the markets today,
Speaker 2: But we do have an environment macro where things can
Speaker 2: change pretty dramatically, as we saw this past weekend. With
Speaker 2: US and isroel the attacks are on. So I'm just
Speaker 2: curious for you, is it too soon to rethink kind
Speaker 2: of strategies at this point, Like what will it take
Speaker 2: to maybe say we've got to start with thinking differently
Speaker 2: about the macro.
Speaker 4: We're very long term investors. We focus on long duration
Speaker 4: assets that are essential and critical in the communities and
Speaker 4: businesses that they operate in around the world. And these
Speaker 4: are assets that produce cash across a cycle. They're downside protected,
Speaker 4: their inflation linked. So we will take a very very
Speaker 4: long term view. And despite the headlines over the last weekend,
Speaker 4: our focus is on our people who are safe and
Speaker 4: our assets that are operating. So we continue to look
Speaker 4: forward and the fundamentals for the key themes we're investing
Speaker 4: in continue to be positive.
Speaker 1: Does the geography change at all? And I bring that
Speaker 1: up because Data Center's energy infrastructure big investment play for
Speaker 1: you guys. You teamed up with Cutter Investment Authority on
Speaker 1: a twenty billion dollar venture to invest in AI infrastructure.
Speaker 1: How does the war with Iran, the instability in the region,
Speaker 1: does it change that specific investment at all?
Speaker 3: It does not.
Speaker 4: And again, when something like the past weekend happens. The
Speaker 4: focus is on our people who are safe, both at
Speaker 4: Brookfield and our portfolio companies, and then our focuses are
Speaker 4: on the assets and those are all performing. When you
Speaker 4: think longer term about our focus on the region, it's
Speaker 4: an incredible region. It's got very significant growth, it's got
Speaker 4: an increasing presence on the world scene. Those are the
Speaker 4: like those are the types of asset classes and geographies
Speaker 4: that we want to be investing in long term.
Speaker 1: Could this make the region even more attractive? Is there
Speaker 1: an idea? I mean, look, we don't The President spoke
Speaker 1: from the Oval office today. It's obvious that there's not
Speaker 1: a clear person who is going to take over for
Speaker 1: the Supreme leader or with regard to Iran's leadership at all.
Speaker 1: Nobody knows what's going to happen. But is there chance
Speaker 1: that Iran becomes a more stable force in the in
Speaker 1: the world and that opens up opportunities for you in
Speaker 1: the region.
Speaker 4: I would say when we think at Brookfield, in the
Speaker 4: types of things we invest in, they tend to have
Speaker 4: durations far beyond single administrations, political parties, individual leaders, and
Speaker 4: therefore we focus on the fundamentals and when you think
Speaker 4: about things like data centers like energy, the two you
Speaker 4: just mentioned. The fundamentals today are better than ever before,
Speaker 4: and that's what's going to drive our investment decisions.
Speaker 2: Connor, one of the things that we love talking with
Speaker 2: you guys specifically is I mean, I think about Brookfield
Speaker 2: asset Management. You've got two hundred and seventy three billion
Speaker 2: in assets under management. When it comes to real estate, infrastructure,
Speaker 2: two hundred and forty seven billion, renewable power transition. This
Speaker 2: is something that you have been overseeing for a while
Speaker 2: at the company. One hundred and forty three billion in
Speaker 2: assets under management, Credit three hundred and sixty three billion.
Speaker 3: Where are you.
Speaker 2: Seeing though, any signs of stress? Are you going to
Speaker 2: tell me the whole portfolio is fine?
Speaker 4: So I think the topical one today is credit, and
Speaker 4: the first thing we would say is everyone needs to
Speaker 4: take a step back. Credit, private credit, and direct lending
Speaker 4: are almost used synonymously in today's market, and they represent
Speaker 4: very different things. Our view is credit markets are actually
Speaker 4: in very good shape. Corporate balance sheets are strong, banks
Speaker 4: are great, capital markets are incredibly liquid today. Then you
Speaker 4: can move to private credit. Our private credit focus is
Speaker 4: on three things. Asset back lending, real asset lending and
Speaker 4: opportunistic credit. All of those are seeing very strong fundamentals.
Speaker 4: And then there are some concerns in direct lending today,
Speaker 4: and there are concerns about tightening credit spreads, corporate credit
Speaker 4: quality deterioration, maybe some concerns about liquidity. It's important to
Speaker 4: recognize that direct lending's a very small component of the
Speaker 4: broader credit markets.
Speaker 2: So, but are there any situations that your guys are
Speaker 2: concerned about our note, I understand it's a small in proportion, but.
Speaker 4: We've positioned the business really well over the last few years,
Speaker 4: and we've been very cautious and incremental about our exposure
Speaker 4: to the headlines. The themes that are dominating headlines today, whether
Speaker 4: it be software or retail.
Speaker 3: Funds, Well, we have some, it's deminimous.
Speaker 4: What's more important is we've positioned our entire business to
Speaker 4: be a net beneficiary from AI penetration. And then the
Speaker 4: other exciting thing for us is we've recently announced our
Speaker 4: full partnership with oak Tree, a very contrarian credit investor
Speaker 4: that's extremely well placed to go to work in this environment.
Speaker 1: We'll get to oak Tree in just a second. One
Speaker 1: more on credit, though, outside of your portfolio, and when
Speaker 1: you look across the credit landscape, what gives you pause.
Speaker 1: Not Brookfield's assets, but out there in the environment.
Speaker 4: In the environment today, I think the thing that we
Speaker 4: look at is sometimes there is issues with underlying credit
Speaker 4: quality and sometimes there is issues about liquid in which
Speaker 4: these credit investments are held. And those two things are
Speaker 4: very different, and in today's environment they're sometimes being conflated.
Speaker 4: There's a lot of talk about perpetual credit vehicles.
Speaker 3: We think these vehicles long term are great.
Speaker 4: They offer a unique private market exposure to a wider
Speaker 4: spectrum of investors that can offer diversification, that can offer growth.
Speaker 4: But those vehicles are perpetual in nature. They need to
Speaker 4: be managed, they need to be invested appropriately, and they
Speaker 4: need to be executed in a way that is thoughtful
Speaker 4: given the liquidity requirements they will have over time.
Speaker 2: You're understanding and Brookfield's understanding of like the financial markets,
Speaker 2: this push to kind of spread those things like private
Speaker 2: credit to a wider investment pool, if you will, Do
Speaker 2: you think that still makes sense?
Speaker 3: Absolutely? Yeah, absolutely.
Speaker 4: Private markets offer an incredible opportunity for investors of all type.
Speaker 4: It gives them diversification versus what they can get in
Speaker 4: the public markets give them exposure to some of the
Speaker 4: most exciting growth themes that are sometimes difficult to get
Speaker 4: in public stocks and bonds, and historically private markets have.
Speaker 3: Offered a premium return.
Speaker 4: It comes down to a very simple fact that when
Speaker 4: they are offered to the individual investor, it needs to
Speaker 4: be through a structure that is well understood on both
Speaker 4: sides and is managed appropriately from both an investment and
Speaker 4: a liquidity standpoint.
Speaker 2: And so understand it's not liquid, so understand what you're
Speaker 2: investing in.
Speaker 4: Understand, and there is an onus on the manager to
Speaker 4: appropriately manage those vehicles.
Speaker 3: I'll tell you from the Brookfield.
Speaker 4: Standpoint, we've been very incremental and thoughtful of our growth
Speaker 4: in this space, at times restricting capital to avoid any
Speaker 4: situations that there could be a liquidity crunch.
Speaker 2: Can we squeeze in one real quick one about forty
Speaker 2: five seconds or sixty seconds on AI. In terms of
Speaker 2: the data center build, what do you continue to see
Speaker 2: and has anything changed versus what we've seen in the
Speaker 2: last six to twelve months. You're starting to smile, so
Speaker 2: I'm assuming now.
Speaker 4: It's exciting and the reality here is the demand is
Speaker 4: being driven by the largest, highest quality credit counter parties,
Speaker 4: the best corporates in the world and the best sovereigns
Speaker 4: in the world. And this is creating what is going
Speaker 4: to be a productivity enhancement for economies and businesses going forward.
Speaker 4: It needs large scale capital, it needs operating expertise across energy,
Speaker 4: real estate and digital infrastructure. We're excited because we think
Speaker 4: there's a big role for us to play.
Speaker 3: So nothing slowing down. Nothing slowing down.
Speaker 2: That's pretty amazing. Connor, thank you so much. I really
Speaker 2: appreciate you taking some time for us.
Speaker 1: You'll have to come back well enough time to touch
Speaker 1: too much on Howard Mark's and oak Tree, but we
Speaker 1: can do that another time.
Speaker 3: So Connor, thanks a lot. Always good to see you.
Speaker 3: Thank you for having us all right.
Speaker 2: Connor Testca, of course chief executive officer of Brookfield as
Speaker 2: a management here at Bloomberg inst