Brookfield’s credit arm emerges as it largest source of growth

financialpost.com:

Brookfield Asset Management Inc. raised US$29 billion in the fourth quarter, most of it through its credit business, which has become its largest driver of growth.

Distributable earnings climbed 11 per cent from a year earlier to US$649 million, the firm said in a statement Wednesday. That amounted to 40 cents U.S. per share, slightly above the 39-cent U.S. average estimate of analysts surveyed by Bloomberg.

The credit arm collected US$20 billion of new capital, almost half of which came through Oaktree funds and strategies, with another US$6.6 billion coming from insurance clients. Brookfield’s global transition fund took in US$3.5 billion of capital, and its real estate flagship fund raised around US$500 million.

“Credit has grown substantially within our business over recent years and now represents the single largest source of our assets under management,” chief executive Bruce Flatt and president Connor Teskey said in a letter to investors.

Last year, the New York-based firm created an arm that aggregates its credit business across Brookfield’s infrastructure and real estate lending funds under one umbrella, and also includes partnerships with Oaktree Capital Management, European credit manager LCM Partners, Primary Wave, Castlelake LP and 17Capital.

Alternative asset managers have been expanding beyond private equity in recent years to become major players in credit markets. Blackstone Inc. and Apollo Global Management Inc. also count credit as their largest businesses.

Brookfield’s total fee-bearing capital increased to US$539 billion, up 18 per cent from a year earlier but unchanged from the third quarter.

Brookfield, which manages more than US$1 trillion of assets, sees “conditions that are favourable for both