WEBVTT - Brookfield Asset Management CEO Connor Teskey

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>I want to get right to our first guest. Connor

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<v Speaker 2>Teskey is chief executive officer of Brookfield Asset Management. They've

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<v Speaker 2>got over tillion dollars in assets under management, touching into

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<v Speaker 2>many different parts of the investment universe, and he joins

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<v Speaker 2>us here at Bloomberg invest Nice.

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<v Speaker 3>To have you here with us. Thanks for having me.

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<v Speaker 2>It's been a while and you now officially are CEO

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<v Speaker 2>of Brookfield Asset Management.

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<v Speaker 3>What's changed in your life? Very little.

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<v Speaker 4>At Brookfield we run a lot of businesses around the world.

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<v Speaker 4>We like to run those business as well. We like

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<v Speaker 4>to run our own business quite well. And full credit

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<v Speaker 4>to Bruce in the other senior leadership team, this was

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<v Speaker 4>a very thoughtful, methodical, incremental transition, so telegraph. Nice to

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<v Speaker 4>get the announcement out of the way and just back

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<v Speaker 4>to business as usual.

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<v Speaker 2>All right, So that went as expected. But the world

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<v Speaker 2>is kind of crazy, to say the least, and I

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<v Speaker 2>think about the volatility we see as a result. We

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<v Speaker 2>see if playing out to some extent in the markets today,

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<v Speaker 2>But we do have an environment macro where things can

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<v Speaker 2>change pretty dramatically, as we saw this past weekend. With

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<v Speaker 2>US and isroel the attacks are on. So I'm just

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<v Speaker 2>curious for you, is it too soon to rethink kind

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<v Speaker 2>of strategies at this point, Like what will it take

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<v Speaker 2>to maybe say we've got to start with thinking differently

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<v Speaker 2>about the macro.

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<v Speaker 4>We're very long term investors. We focus on long duration

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<v Speaker 4>assets that are essential and critical in the communities and

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<v Speaker 4>businesses that they operate in around the world. And these

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<v Speaker 4>are assets that produce cash across a cycle. They're downside protected,

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<v Speaker 4>their inflation linked. So we will take a very very

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<v Speaker 4>long term view. And despite the headlines over the last weekend,

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<v Speaker 4>our focus is on our people who are safe and

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<v Speaker 4>our assets that are operating. So we continue to look

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<v Speaker 4>forward and the fundamentals for the key themes we're investing

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<v Speaker 4>in continue to be positive.

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<v Speaker 1>Does the geography change at all? And I bring that

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<v Speaker 1>up because Data Center's energy infrastructure big investment play for

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<v Speaker 1>you guys. You teamed up with Cutter Investment Authority on

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<v Speaker 1>a twenty billion dollar venture to invest in AI infrastructure.

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<v Speaker 1>How does the war with Iran, the instability in the region,

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<v Speaker 1>does it change that specific investment at all?

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<v Speaker 3>It does not.

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<v Speaker 4>And again, when something like the past weekend happens. The

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<v Speaker 4>focus is on our people who are safe, both at

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<v Speaker 4>Brookfield and our portfolio companies, and then our focuses are

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<v Speaker 4>on the assets and those are all performing. When you

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<v Speaker 4>think longer term about our focus on the region, it's

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<v Speaker 4>an incredible region. It's got very significant growth, it's got

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<v Speaker 4>an increasing presence on the world scene. Those are the

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<v Speaker 4>like those are the types of asset classes and geographies

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<v Speaker 4>that we want to be investing in long term.

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<v Speaker 1>Could this make the region even more attractive? Is there

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<v Speaker 1>an idea? I mean, look, we don't The President spoke

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<v Speaker 1>from the Oval office today. It's obvious that there's not

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<v Speaker 1>a clear person who is going to take over for

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<v Speaker 1>the Supreme leader or with regard to Iran's leadership at all.

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<v Speaker 1>Nobody knows what's going to happen. But is there chance

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<v Speaker 1>that Iran becomes a more stable force in the in

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<v Speaker 1>the world and that opens up opportunities for you in

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<v Speaker 1>the region.

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<v Speaker 4>I would say when we think at Brookfield, in the

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<v Speaker 4>types of things we invest in, they tend to have

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<v Speaker 4>durations far beyond single administrations, political parties, individual leaders, and

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<v Speaker 4>therefore we focus on the fundamentals and when you think

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<v Speaker 4>about things like data centers like energy, the two you

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<v Speaker 4>just mentioned. The fundamentals today are better than ever before,

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<v Speaker 4>and that's what's going to drive our investment decisions.

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<v Speaker 2>Connor, one of the things that we love talking with

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<v Speaker 2>you guys specifically is I mean, I think about Brookfield

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<v Speaker 2>asset Management. You've got two hundred and seventy three billion

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<v Speaker 2>in assets under management. When it comes to real estate, infrastructure,

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<v Speaker 2>two hundred and forty seven billion, renewable power transition. This

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<v Speaker 2>is something that you have been overseeing for a while

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<v Speaker 2>at the company. One hundred and forty three billion in

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<v Speaker 2>assets under management, Credit three hundred and sixty three billion.

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<v Speaker 3>Where are you.

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<v Speaker 2>Seeing though, any signs of stress? Are you going to

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<v Speaker 2>tell me the whole portfolio is fine?

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<v Speaker 4>So I think the topical one today is credit, and

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<v Speaker 4>the first thing we would say is everyone needs to

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<v Speaker 4>take a step back. Credit, private credit, and direct lending

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<v Speaker 4>are almost used synonymously in today's market, and they represent

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<v Speaker 4>very different things. Our view is credit markets are actually

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<v Speaker 4>in very good shape. Corporate balance sheets are strong, banks

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<v Speaker 4>are great, capital markets are incredibly liquid today. Then you

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<v Speaker 4>can move to private credit. Our private credit focus is

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<v Speaker 4>on three things. Asset back lending, real asset lending and

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<v Speaker 4>opportunistic credit. All of those are seeing very strong fundamentals.

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<v Speaker 4>And then there are some concerns in direct lending today,

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<v Speaker 4>and there are concerns about tightening credit spreads, corporate credit

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<v Speaker 4>quality deterioration, maybe some concerns about liquidity. It's important to

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<v Speaker 4>recognize that direct lending's a very small component of the

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<v Speaker 4>broader credit markets.

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<v Speaker 2>So, but are there any situations that your guys are

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<v Speaker 2>concerned about our note, I understand it's a small in proportion, but.

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<v Speaker 4>We've positioned the business really well over the last few years,

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<v Speaker 4>and we've been very cautious and incremental about our exposure

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<v Speaker 4>to the headlines. The themes that are dominating headlines today, whether

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<v Speaker 4>it be software or retail.

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<v Speaker 3>Funds, Well, we have some, it's deminimous.

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<v Speaker 4>What's more important is we've positioned our entire business to

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<v Speaker 4>be a net beneficiary from AI penetration. And then the

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<v Speaker 4>other exciting thing for us is we've recently announced our

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<v Speaker 4>full partnership with oak Tree, a very contrarian credit investor

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<v Speaker 4>that's extremely well placed to go to work in this environment.

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<v Speaker 1>We'll get to oak Tree in just a second. One

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<v Speaker 1>more on credit, though, outside of your portfolio, and when

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<v Speaker 1>you look across the credit landscape, what gives you pause.

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<v Speaker 1>Not Brookfield's assets, but out there in the environment.

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<v Speaker 4>In the environment today, I think the thing that we

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<v Speaker 4>look at is sometimes there is issues with underlying credit

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<v Speaker 4>quality and sometimes there is issues about liquid in which

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<v Speaker 4>these credit investments are held. And those two things are

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<v Speaker 4>very different, and in today's environment they're sometimes being conflated.

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<v Speaker 4>There's a lot of talk about perpetual credit vehicles.

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<v Speaker 3>We think these vehicles long term are great.

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<v Speaker 4>They offer a unique private market exposure to a wider

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<v Speaker 4>spectrum of investors that can offer diversification, that can offer growth.

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<v Speaker 4>But those vehicles are perpetual in nature. They need to

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<v Speaker 4>be managed, they need to be invested appropriately, and they

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<v Speaker 4>need to be executed in a way that is thoughtful

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<v Speaker 4>given the liquidity requirements they will have over time.

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<v Speaker 2>You're understanding and Brookfield's understanding of like the financial markets,

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<v Speaker 2>this push to kind of spread those things like private

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<v Speaker 2>credit to a wider investment pool, if you will, Do

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<v Speaker 2>you think that still makes sense?

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<v Speaker 3>Absolutely? Yeah, absolutely.

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<v Speaker 4>Private markets offer an incredible opportunity for investors of all type.

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<v Speaker 4>It gives them diversification versus what they can get in

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<v Speaker 4>the public markets give them exposure to some of the

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<v Speaker 4>most exciting growth themes that are sometimes difficult to get

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<v Speaker 4>in public stocks and bonds, and historically private markets have.

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<v Speaker 3>Offered a premium return.

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<v Speaker 4>It comes down to a very simple fact that when

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<v Speaker 4>they are offered to the individual investor, it needs to

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<v Speaker 4>be through a structure that is well understood on both

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<v Speaker 4>sides and is managed appropriately from both an investment and

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<v Speaker 4>a liquidity standpoint.

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<v Speaker 2>And so understand it's not liquid, so understand what you're

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<v Speaker 2>investing in.

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<v Speaker 4>Understand, and there is an onus on the manager to

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<v Speaker 4>appropriately manage those vehicles.

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<v Speaker 3>I'll tell you from the Brookfield.

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<v Speaker 4>Standpoint, we've been very incremental and thoughtful of our growth

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<v Speaker 4>in this space, at times restricting capital to avoid any

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<v Speaker 4>situations that there could be a liquidity crunch.

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<v Speaker 2>Can we squeeze in one real quick one about forty

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<v Speaker 2>five seconds or sixty seconds on AI. In terms of

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<v Speaker 2>the data center build, what do you continue to see

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<v Speaker 2>and has anything changed versus what we've seen in the

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<v Speaker 2>last six to twelve months. You're starting to smile, so

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<v Speaker 2>I'm assuming now.

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<v Speaker 4>It's exciting and the reality here is the demand is

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<v Speaker 4>being driven by the largest, highest quality credit counter parties,

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<v Speaker 4>the best corporates in the world and the best sovereigns

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<v Speaker 4>in the world. And this is creating what is going

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<v Speaker 4>to be a productivity enhancement for economies and businesses going forward.

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<v Speaker 4>It needs large scale capital, it needs operating expertise across energy,

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<v Speaker 4>real estate and digital infrastructure. We're excited because we think

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<v Speaker 4>there's a big role for us to play.

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<v Speaker 3>So nothing slowing down. Nothing slowing down.

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<v Speaker 2>That's pretty amazing. Connor, thank you so much. I really

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<v Speaker 2>appreciate you taking some time for us.

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<v Speaker 1>You'll have to come back well enough time to touch

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<v Speaker 1>too much on Howard Mark's and oak Tree, but we

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<v Speaker 1>can do that another time.

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<v Speaker 3>So Connor, thanks a lot. Always good to see you.

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<v Speaker 3>Thank you for having us all right.

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<v Speaker 2>Connor Testca, of course chief executive officer of Brookfield as

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<v Speaker 2>a management here at Bloomberg inst