Executive Summary / Key Takeaways

• Brookfield Asset Management ($BAMKF) is strategically positioned to capitalize on the "Supercycle" of digitalization, decarbonization, and de-globalization, leveraging its global scale and operational expertise in real assets.
• The company has demonstrated robust financial performance, with fee-related earnings (FRE) and distributable earnings (DE) consistently growing, supported by expanding fee-bearing capital (FBC) and improving margins.
• BAMKF is aggressively expanding its private credit platform, targeting to more than double its size over the next five years, and is making significant inroads into the individual investor market through its Brookfield Wealth platform.
• Its integrated approach to AI infrastructure, combining renewable power, data center development, and nuclear technology, represents a significant technological differentiator and a major growth driver.
• With strong fundraising momentum, a disciplined deployment strategy, and a robust balance sheet, Brookfield is well-equipped to achieve its ambitious goal of doubling its business and reaching $1 trillion in fee-bearing capital.

The Foundation of Global Megatrends

Brookfield Asset Management stands as a global powerhouse in alternative asset management, focusing on long-term, mission-critical investments that form the backbone of the global economy. The company's overarching strategy is deeply rooted in identifying and capitalizing on three powerful, interconnected themes: digitalization, decarbonization, and de-globalization, collectively referred to as the "3 Ds." These megatrends are reshaping global economic landscapes, driving unprecedented demand for capital in sectors where Brookfield possesses deep expertise and significant scale.

The company's history reflects a strategic foresight in anticipating these shifts. Its spin-out as a standalone entity around mid-2022 aimed to simplify its business structure and enhance investor understanding, allowing for a clearer focus on its asset management capabilities. A pivotal early move, approximately five years prior to the Q4 2024 earnings call, was the acquisition of Westinghouse, a leading global supplier of nuclear products, technology, and services. This strategic investment positioned Brookfield to address the increasing appetite for nuclear energy as a crucial component of clean energy grids, a need that is becoming ever more apparent in the pursuit of reliable, 24/7 power.

In the competitive landscape of alternative asset management, Brookfield distinguishes itself from peers like Blackstone (BX), BlackRock (BLK), KKR & Co. (KKR), and Apollo Global Management (APO) through its deep operational expertise and integrated approach to real assets. While firms like Blackstone excel in opportunistic investments and BlackRock dominates passive strategies, Brookfield's focus on premier, sizeable assets, particularly in infrastructure and renewable power, provides a unique value proposition for clients prioritizing sustainability and long-term value creation. Brookfield's ability to co-invest its own capital alongside client funds also fosters a perception of aligned interests, potentially leading to stronger customer loyalty and enhanced pricing power in real assets.

Technological Edge: Powering the AI Revolution

Brookfield's technological differentiation is most evident in its integrated approach to AI infrastructure, a sector management believes will be "one of the largest capital formation cycles of this generation." The company is uniquely positioned to deliver next-generation AI infrastructure by combining its extensive capabilities in renewable power, data center development, and nuclear technology. Brookfield has already built 2,000 megawatts of data center capacity and stands as one of the world's largest renewable energy providers.

The tangible benefits of this integrated approach are substantial. For instance, Brookfield has a renewable energy framework agreement with Google (GOOGL) to deliver up to 3,000 megawatts of hydroelectric capacity across the United States, with initial contracts valued at over $3 billion. These facilities provide stable, clean baseload power, a critical input for AI and data operations. Similarly, a landmark transaction with Microsoft (MSFT) aims to supply over 10 gigawatts of renewable power over five years to facilitate their data center build-out. Furthermore, Brookfield is building a $30 billion semiconductor fabrication plant with Intel (INTC) in Arizona, demonstrating its involvement across the entire AI supply chain.

The acquisition of Westinghouse around 2019-2020 has proven prescient. With increasing global demand for electricity, particularly from AI, nuclear energy is gaining traction. Brookfield is the "only Western economy business that has access to nuclear technology", positioning it to offer unmatched clean energy solutions. The company is actively working on "the next phase of our AI plans to match our land entitlement property skills, our power franchise, our data center capabilities, and our nuclear SMR technology, which will soon power the most advanced data centers in the world." This strategic convergence of capabilities creates a significant competitive moat, contributing to higher asset values, lower operating costs for its portfolio companies, and a stronger market position in critical, high-growth sectors. Even with potential efficiency gains in AI, the vast supply-demand imbalance for infrastructure is expected to continue favoring developers and suppliers like Brookfield.

Financial Strength and Operational Momentum

Brookfield Asset Management has consistently delivered strong financial results, reflecting its strategic execution and the resilience of its business model. In the second quarter of 2025, fee-related earnings (FRE) increased by 16% to $676 million, while distributable earnings (DE) rose by 12% to $613 million. This performance was underpinned by a 10% year-over-year increase in fee-bearing capital (FBC), reaching $563 billion. The company's earnings model is characterized by its stability, with FRE comprising nearly all of its distributable earnings.

The company's operating leverage is evident in its expanding margins, which reached 56% in Q2 2025, up 1% from the prior year quarter. This trend of margin improvement is expected to continue, with management anticipating margins in 2025 to be higher than in 2024, driven by revenue growth outpacing expense increases as prior investments in platforms, particularly credit and insurance, begin to yield returns.

Fundraising has been robust, with $22 billion raised in Q2 2025 and $97 billion over the past 12 months. This includes significant contributions from its super core infrastructure strategy and its private wealth infrastructure vehicle, both achieving record quarters. The fifth vintage of its flagship real estate strategy is on track to be its largest ever, having already raised $16 billion by Q1 2025. Brookfield's diversified fundraising across flagships and complementary strategies provides stability and ongoing growth.

Deployment and monetization activities are at multi-year highs, demonstrating the company's ability to both invest opportunistically and realize value. Year-to-date in Q2 2025, Brookfield invested $85 billion and monetized over $55 billion of assets. Notable deployments include major infrastructure transactions totaling over $30 billion in enterprise value, such as Colonial Pipeline, Wells Fargo Rail, Hotwire Communications, and Duke Energy Florida. Monetizations have also been significant, with $15 billion in real estate sales and nearly $13 billion in infrastructure sales year-to-date in Q2 2025, achieving strong returns. This "buyer's and seller's market" environment is expected to persist through 2025, favoring large-scale, experienced managers.

Strategic Expansion and Future Growth Drivers

Brookfield is actively expanding its capabilities and reach, particularly in private credit and the individual investor market. Its Credit Group, with over $250 billion of fee-bearing capital in Q2 2025, is a major growth engine, with a goal to more than double its size over the next five years. The strategy focuses on less commoditized areas like asset-backed finance and real assets, where it sees strong demand and competitive advantages in origination and underwriting. Recent acquisitions, including a 50% stake in Angel Oak and increased ownership in Oaktree and Primary Wave, bolster its credit capabilities.

The Brookfield Wealth platform is a "new major growth engine", targeting individual investors through retirement and wealth channels. It is on track to raise over $30 billion of capital in 2025 from private wealth and insurance annuity channels, with $10 billion expected from retail or Brookfield Oaktree Wealth Solutions. The recent agreement for Brookfield Wealth Solutions to acquire Just Group in the U.K., a provider of retirement services, positions Brookfield Asset Management to manage a significant portion of Just Group's $36 billion portfolio, adding stable, incremental fee-related revenue. This expansion into the individual investor market, including the 401(k) opportunity, is viewed as a multi-decade growth opportunity, with success dependent on the "quality and durability of the products" offered.

To enhance its market recognition and access deeper pools of public capital, Brookfield has undertaken significant corporate structure simplification. This includes changing its head office to New York and a transaction, filed on September 9, 2025, to swap Brookfield Corporation's (BN) 73% private ownership in Brookfield Asset Management for equivalent public shares of BAM. This move aims for broader U.S. index inclusion, such as the Russell 1000, and potentially the S&P 500, by reflecting the full value of the asset management business in BAM's market capitalization.

Robust Balance Sheet and Risk Mitigation

Brookfield maintains a strong, asset-light balance sheet with ample liquidity to support its growth initiatives. At the end of Q2 2025, the company had $1.5 billion in liquidity. Its inaugural bond offering in Q1 2025, raising $750 million with a 5.795% coupon, was more than seven times oversubscribed, reflecting strong investor confidence. Investment-grade ratings of A from Fitch and A- from S&P underscore the durability of its earnings and provide over $4 billion of additional debt capacity. This capacity will be strategically deployed to seed new products and support programmatic buyouts of partner managers, catalyzing organic FRE growth.

While the market environment is currently constructive, Brookfield acknowledges potential risks. Competition in private credit, particularly in commoditized areas like sponsor direct lending, could lead to spread compression. However, Brookfield mitigates this by focusing on specialized areas like asset-backed finance and real assets. The company's diversified, domestically oriented real asset portfolio provides resilience against macro shifts like deglobalization and potential tariffs, as many assets benefit from inflation-linked revenues or regulated pricing structures. Furthermore, the long-term nature of its uncalled commitments, with almost 90% not expiring until after 2028, significantly reduces fee expiration risk.

Conclusion

Brookfield Asset Management is a compelling investment proposition, firmly anchored in its ability to harness the transformative power of digitalization, decarbonization, and de-globalization. The company's integrated platform, spanning critical infrastructure, renewable power, real estate, private equity, and a rapidly expanding private credit business, positions it at the forefront of these global megatrends. Its technological leadership in AI infrastructure, particularly through its extensive data center capacity, renewable energy solutions, and unique access to nuclear technology via Westinghouse, provides a significant competitive advantage.

With a track record of strong financial performance, robust fundraising, and disciplined capital deployment, Brookfield is well on its way to achieving its ambitious goal of doubling its business and reaching $1 trillion in fee-bearing capital. The strategic expansion into the individual investor market and the simplification of its corporate structure are expected to unlock further growth and enhance shareholder value. While market dynamics and competitive pressures persist, Brookfield's scale, operational expertise, and strategic foresight in high-growth sectors, coupled with a strong balance sheet, underscore its potential for sustained long-term value creation for discerning investors.