Ladies and gentlemen, thank you for standing by and welcome to the Brookfield Asset Management Fourth Quarter 2021 Results Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Ms. Suzanne Fleming, Managing Partner. Please go ahead.

Thank you, operator and good morning everyone. Welcome to Brookfield’s fourth quarter and 2021 full year conference call. On the call today are Bruce Flatt, our Chief Executive Officer, Nick Goodman, our Chief Financial Officer, and Natalie Adomait, Managing Director in our Renewable Power & Transition Group. Bruce will start off by giving a business update followed by Nick, who will discuss our financial and operating results, and finally, Natalie will give an update on our transition strategy. After our formal remarks, we will turn the call over to the operator and take analyst questions. In order to accommodate all those who want to ask questions, we ask that you refrain from asking more than two questions at a time. If you have additional questions, please rejoin the queue and we will be happy to take any additional questions at the end as time permits. I would like to remind you that in today’s comments, including in responding to questions and in discussing new initiatives and our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. Securities laws. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks and future events and results may differ materially from such statements. For further information on these risks and their potential impacts on our company, please see our filings with the securities regulators in Canada and the U.S. and the information available on our website. And with that, I will turn the call over to Bruce.

Thank you, Suzanne and welcome everyone on the call. We reported strong results for the year, with record total net income of $12.4 billion and distributable earnings for common shareholders of $6.3 billion. Results were driven by $71 billion of inflows of capital and associated fee-related earnings, strong performance from our principal investments and gains and carry received from $42 billion of assets sales, where we booked $16 billion of gains, $12 billion for clients and $4 billion which came to BAM. As we enter 2022, the normalization of central bank monetary policy has caused volatility in the markets, mostly in sectors trading at high multiples. Those did not affect us in any major way. Our general view is that this has been a healthy re-rating and will likely create opportunity. For our business with interest rates still very low on a relative basis and expected to stay so for some time, combined with the positive inflation of revenues, we are seeing a positive backdrop for most of our businesses. Our asset management business is continuing to attract large amounts of capital, with our product offerings aligned around several positive global investment themes. Our underlying operations continue to strengthen coming out of the recession. And with many of our businesses generating inflation linked cash flows were positioned to benefit from economic growth. We are well positioned. Turning now to our strategic initiatives, 2021 was a busy year in that regard. First off, we spun out and paired our reinsurance business establishing BAMR. Subsequent to that, we completed a number of reinsurance agreements and committed to acquire American National, which we expect to close in the coming months. American National will give us a U.S. insurance platform and provide us with direct origination capabilities. In total, we are heading towards $50…

Thank you, Bruce and good morning everyone. So, we had strong financial results for the year, with record net income of $12.4 billion and this compares to $707 million of net income in the prior year. Distributable earnings, or DE for the year were $6.3 billion or $3.96 a share compared to $4.2 billion or $2.74 a share in 2020. The uplift in both net income and DE was due to excellent operating and financial performance across our businesses. Our asset manager continued its strong growth trajectory supported by record levels of fundraising, with total inflows of $71 billion. We ended the year with $364 billion of fee-bearing capital, an increase of 17% from the prior year. Inflows were supported by the continued scaling of our flagship funds as well as the success of many of our complimentary product offerings. During the year, we held a final close for our latest opportunistic credit fund for $16 billion the largest ever raise for the strategy and we have been successful in deploying this capital at attractive returns. With this fund already approximately 75% invested or committed today. We will shortly close on $15 billion for our transition fund. And combined with our fourth flagship real estate fund, we have raised $24 billion in aggregate for those two funds to-date. Our six flagship private equity funds launched fundraising in the fourth quarter and we also recently started fundraising for our fifth flagship infrastructure fund. And to meet our clients’ needs, we are also introducing new products. To give a couple of examples, our growth equity fund, which focuses on technology investments that are adjacent to our businesses, recently had a final cost of over $500 million and we have seen an accelerated pace of deployment for this fund. And as a result,…

Thanks, Nick and good morning everyone. I am pleased to be here today to talk to you about Brookfield’s new transition fund and the exciting opportunities we see for this strategy. Climate change is one of the most pressing and significant issues facing the economy today. While climate change has been a focus topic for governments for years, the pace at which corporates are making commitments to lower emissions to net-zero are now accelerating at a rapid pace. In the last 2 years, we have seen emissions covered by net-zero commitments triple, an increase in the number of commitments of 7x for countries, 5x for companies. And finally, commitments from the financial sector recognized by the Glasgow Financial Alliance for Net Zero increased 26x from $5 trillion to over $130 trillion. Achieving net-zero emissions and more specifically, the goals of the Paris Agreement will require a massive amount of capital. It is estimated that over $150 trillion will need to be invested through 2050 to drive the decarbonization of energy systems and our economy, that’s approximately $5 trillion every year. At Brookfield, we are rising to meet this capital need and exciting investment opportunity. We are currently in the final stages of raising approximately $15 billion for our first flagship transition fund, the Brookfield Global Transition Fund, of which Brookfield itself will be the largest investor. And our fundraising has exceeded our expectations. Once we reach final close, we will have raised more capital and faster than we had planned. And we have already started to put that capital to work. The success of our fundraising demonstrates that we have many likeminded investors, who also recognize the urgency and the magnitude of capital required to transition the global economy to net-zero. More importantly, they also understand that this investment opportunity…

Thank you. Our first question will come from Cherilyn Radbourne with TD Securities. Please go ahead.

Thanks very much and good morning. In terms of the discussion regarding the separation of an asset-light manager, can you expand a little more on how you weigh that internally, just considering the flexibility that the balance sheet has provided historically versus the opportunities that you referred to that would open up if you hadn’t more appropriately valued asset manager?

Hi, Cherilyn. It’s Nick. I think as Bruce laid out and we talked in the letter, we have always been focused on delivering strong returns to shareholders, and over the last 20 years, we have realized 20%. And we have achieved that by deploying capital for value and evolving with financial markets. We know we have done it in the past and we are always wanting to make sure that we are evolving with markets and two things have happened. Over the last few years: one, our asset management business has achieved significant scale and it has benefits of being close to the capital and that has benefited us as we have grown the business from its infancy, but no of a position where it’s one of the largest asset managers in its own right, with a strong growth profile. And secondly, the markets have evolved and currently have a clear preference for asset-light. And to Bruce’s point, we listen to the market and we often look to respond accordingly and we believe that spinning out a part of the manager would allow investors the one access to just that asset-light part of the business that access without maybe losing the overall synergies that we have in the business.

Okay, I will let others pick that up. I am sure you are going to get lots of questions. I did want to ask one about the wealth channel, which the asset management industry has really just only started to tap. Can you talk about how much of your fee-bearing capital and current fundraising is coming from that channel? But also, how do you factor in the significant retail ownership of the perpetual affiliates when you think about your scale in the retailer wealth?

Yes, that’s a good question, Cherilyn. I think on the on the private fund, fundraising, it was in that 7% to 10% range that’s coming from that private wealth channel of our fee-bearing capital. But you are right to observe that with our listed affiliates, we also have a really strong retail following and a retail product through that channel. So, that does play into it. For the business, as you know, we have been building out our retail marketing efforts with the creation of Brookfield Oaktree Wealth Solutions and with the creation of the distribution capabilities and we have been selling existing products, but also creating new products that are specifically designed and resonate with that channel with their private REIT being the first, but I think there is more to follow. And I think it’s just an extension of what we already do and some of our products and where we have that expertise. And we can leverage the platforms that we have. And so there should be more products to follow and we think that it will be a good source of capital going forward.

That’s my two. Thank you.

Thank you.

Thank you. Our next question will come from Mario Saric with Scotiabank. Please go ahead.

Alright, thank you and good morning. Just coming back to the potential asset manager spin-out, I think you have referenced a couple of times the potential to spinout or separate a part of the manager. So, if we sit back and just think about intrinsic value of the company today in the invested capital as you pointed out value of the asset manager, is the part in reference to differentiating between kind of public and private fee streams? I am just hoping you can expand on how you define part in terms of the options that you are considering?

Yes, the part Mario more just refers to the actual percentage of the manager that we spend into public hands. I mean, maybe the public would own x percent of the business and Brookfield parent would still own a meaningful part of the business, meaning, if people have the preference to invest in asset-light, they can invest directly into the manager or for those that have – that want to invest in the manager and the capital, that option would still exist.

Got it. Okay. And then, I guess there is a couple of different ways you can go about doing it in terms of separating asset managers from the invested capital, what are kind of some of the ways that you are thinking about today or is it too early to say?

It’s too early to say I think those parts we are working through and it’s too early to talk through that in detail.

Got it. Okay. And then just my second question is pertaining to real estate asset dispositions. It seems like there is daily headlines of BAM selling assets, as you pointed out to get valuations. You have an expected range of real estate dispositions of BAM share for 2022? And if so, where do you think most of the focus will come from in terms of geography and asset type?

Yes. Mario, I don’t think we have an expected range. But we obviously have assets that we have executed the business plan on. And we think if the markets are right, then they are candidates to sell in line with what we laid out at the Investor Day. We executed a lot in Q4 and we have others coming. And I’d say it’s broadly spread geographically and by asset class. As Bruce said, others are catching up. Retail is probably the one that the ground on the data is excellent. And the leasing activity, the spreads are back and the performance is great. Maybe sales for retail might not be the immediate focus, but other asset classes where capital is flowing significantly, we are being very active.

Okay, thank you. Those are my two.

Thank you. Our next question will come from Sohrab Movahedi with BMO Capital Markets. Please go ahead.

Yes, thank you. I just wanted to also maybe start off by thinking about the scheme you are talking about to make sure that the underappreciated value of the asset manager is realized. I mean, Nick, in the past, we have talked about maybe buybacks as a way of extracting some of their value. And I wonder if you could even talk a little bit about where we are on that. But also, what about distributing some of their invested capital to the BAM shareholders? I guess, the essence of the question being, why would the holdco if you will then not trade at a discount, if you had this spinout? So I am just trying to kind of think through a bunch of these things if you can, please?

It’s Bruce and maybe I’ll take a shot to trying to answer your question. And if look, our thinking is that our job is to run a great business, which we are still trying to do and to unlock shareholder value when it makes sense and optimize our structure. If we can have our cake and eat it too, i.e., we can have our capital up top investors that want to invest into the parent company will stay there, keep their shares in that company, and they will have us invest their capital plus they will own a part of the manager. But if we list part of manager separately, it would enable those investors who choose to or want to own an asset-light asset manager, the ability to do that. If either of those securities in the future don’t trade properly we can always buy shares back into the treasury and continue to increase value by if they are trading less than fair value. So, the bottom line is all of those options are open. All we are trying to do is maximize the value of the business in the longer term. And so, all the things you say are possible.

Okay. That’s it from me. Thank you.

Thank you. Our next question will come from Robert Lee with Keefe, Bruyette and Woods. Please go ahead.

Great. Good morning. Thanks for taking my questions. Maybe just sticking with the theme of the day on the potential spin, so I mean it kind of sounds like this is something on a high level, what’s the amount, but maybe you’ve decided. So really is at this point just kind of going through the mechanics of how that would look, any tax impacts? So, again, kind of like, we think this will be a good thing, but we now just got to work through the mechanics of it is kind of pretty much where you are at right now?

Look, I would – the bottom line is we think it’s a very executable plan. It’s now in the public, all of our owners can express their views to us and we are going to come up with the right plan based off of all that plus the information we have. So, we are heading down a path, and we are quite serious about it, or we wouldn’t have put it in the letter the way we did it.

Great. And then maybe shifting gears a little bit to fundraising, I mean clearly, for you guys going gangbusters? You have seen it, actually across many of your peers. So, I am just curious, number one, are you seeing any signs of – in fact a better way of putting it fatigue among LPs? I mean clearly, we know there is secular demand here, given the rate environment and whatnot. But are you starting to see at least on an interim basis, kind of getting this impression that LPs are flooded with fund offerings? And that maybe there has been like, slow this down, push back? Are you seeing any signs of that that may change how your – impact how you are thinking about the timing of fund closes at all?

I will give you a short answer. No. Look, the longer answer is, we are in a very low-interest rate environment. As noted in the letter, eight interest rate hikes, gets your short rate to 2%. So, we are in a very low environment, especially when the products that we invest for clients earn 6 on the low end and 25 on the high end. These are very attractive products. And there doesn’t seem to be any reason to have that slowdown.

Great. Thanks for taking my questions.

Thank you. Our next question will come from Geoff Kwan with RBC Capital Markets. Please go ahead.

Hi, good morning. Just going back to the asset manager potential spin, I am just wondering is obviously you have talked about it’s still a little bit preliminary, but would any sort of spin-off have at least theoretically the potential to change the relationship with BEP, BPG, BBU in terms of management services agreement, whether or not it’s financial terms or other as opposed to keeping the status quo, or is that probably one of the considerations as you think about what ways to go about doing it, if you decide to go with a spin?

Geoff, the short answer is we would expect no change.

Okay. And then my second question was just on the global transition fund, I mean it sounds like obviously, the opportunity is large and numerous. I am just trying to, I guess understand a little bit how you are going about figuring out where to focus on, where the best opportunities are, whether or not it’s the renewable assets themselves, or if it’s making investments with operating companies that need help with the transition. Are there certain geographies that are more attractive, that sort of thing?

Sure, Geoff. I will take that, it’s Natalie here. First of all, the immediate first place we are starting is renewable energy. When you look at the range of decarbonization solutions that are available for corporates today, thinking about cleaning up their CO2 emissions, cleaning up how they purchase their electricity or reducing their electricity consumption by the way of investing in things like distributed generation, that is the best way for corporates today to make an immediate impact on their carbon footprint, and to help buy them time as the cost of other decarbonization technologies comes down. That’s the absolute first place we will start. But I would say what’s exciting, and particularly why we mentioned that we are going to be spending time with the hard to abate sectors like steel, cement and chemicals, is because the timeline for those companies to implement their solutions will take 5 years to 10 years to invest in the infrastructure to actually enable them to decarbonize by 2030. And so those capital projects are starting now. And those conversations are starting now. And we are having active dialogue with all of them. And we will focus on those that have the most – the highest energy intensity and the largest capital need is where we are seeing the most opportunities to add value.

Okay. Great. Thank you.

Thank you. Our next question will come from Alexander Blostein with Goldman Sachs. Please go ahead.

Thanks, everybody. Good morning for taking – good morning and thanks for taking the question. So, back to the structure, so from what it sounds like you are really considering the spin-off to be not really separation, but more as a tracker stock, they will just give investors an opportunity to play that kind of pure asset management side of the business. So, a) just want to understand if that’s correct? And b), I guess, what is your timing in ultimately, in terms of structure, how should ultimately investors think about the cash flows that will be coming into that vehicle meaning that, are you guys going to distribute it? Are you going to retain it? And currently, you guys have a pretty material tax shield, given that everything is combined under the BAM umbrella? Are you going to be able to retain the tax shield or the kind of earnings from the new co, the asset manager will be taxed at a typical rate?

It’s Bruce. I think you asked four questions. I will try to be quick, although I am not going to try – I am not going to get into too much detail on this call until we have more fulsome answers for you. I will try to answer three. First, you said is the security going to be a security or a tracking stock, it will be a full security and a listed company. The band parent may own a part of it and we are going to separate and distribute to our shareholders a part of the business, a quarter, a third, whatever that number is to start off with. But it will be a separate, separately listed security. As to payout, we will have to consider that based on all the other securities are out there and what’s best for the shareholders. But there will not be a lot of need for cash in the company. So, it could have a full payout of its cash flows, if we so choose. And as to the shields we have within the business, we will allocate them to the right spot at the time when we lift the – when we lift the security and everyone will know about that at that time.

Great, thanks so much. And then I guess my second question, or maybe second topic, what I circle back on the wealth business, it sounds like you guys are on four platforms now, up from one earlier, or late last year. I am curious to get your sort of take on what the reception has been from financial advisors and kind of key gatekeepers to the product. Any updates you have for us and for the monthly flows would be helpful? And ultimately, what would you consider sort of success from this channel over the course of the year?

Look, early days, we put together Brookfield Oaktree Wealth, six months, nine months ago. And it’s had a very meaningful impact with our relationships with the wealth channels. I think it could be – it will be very meaningful going forward. But we are just starting into it. So, I don’t really have a prediction for you as to the numbers that will be coming in on a monthly basis. But the early indications are that our products like they are to institutional clients will be highly attractive to wealth. And we need to pick the right ones to put into those channels. And we are going to do that.

Great. Thanks so much.

You’re welcome.

Thank you. Our next question will come from Andrew Kuske with Credit Suisse. Please go ahead.

Thanks. Good morning. I guess one of the key principles for Brookfield on a longer term basis has been compounding historically. And as you highlighted this in the letter this morning was the miracle of finance. Could you maybe just step back a little bit and address your businesses? Are you seeing multiplier effects across some of the businesses as they interact together? And maybe one example would be just what you can do on the residential front? The residential infrastructure being HVAC multifamily distributed generation? Do you see multiplier effects across those businesses as they are now sort of merging together to a certain degree from an opportunity standpoint?

Yes. Look, I think that part of the success of our business is that we have tried to keep – ensure that we coordinate all of the affairs within the business, and therefore many of our groups work together. And when we find new ideas, we try to flow them across different areas. So, I think it just it helps when you have a big broad platform to be able to do that. And maybe even as important is when we learn something in one country, it may not have been applied the same way in 29 other countries that we are in. And therefore we can take our businesses and globalize them. So, many of the things we are doing today and are taking ideas that we have in one country that we found, that are really successful and applying them in other areas is doing the same thing, but doing it in another country where it hasn’t been done before. And both from an operating and a financial perspective, that has been extremely positive for the business.

That’s helpful. And then maybe related to that slightly different as you look at the market conditions now globally, where there is a bit more volatility, some inflation concerns in parts of the world, uneven economic recovery, you are positioned in multiple markets. Do see the transactional environment is potential now and the outlook in the next 12 months is being more favorable from a deployment standpoint than what you saw in the last 18 months?

Look, there is never a perfect environment, because when there is no money available, there is usually lots of opportunity. And when there is lots of money available, there is less opportunity. But I would just say that, given our broad platform in many countries, and we are in multiple sectors, there is never – every one of them doesn’t offer opportunities, but there is always something to do. And I would say today, we see lots of opportunity out there. And I would say it’s no less than it was before. And a lot of them are things that you would not even think there should be opportunities available, but people require our capital, require our operating skills, require partnership with somebody like us, and therefore we find opportunity. So, I – there is an excellent market today for opportunities for all of our – most of our – most or all of our businesses.

Okay. That’s great. Thank you very much.

Thank you. Our next question will come from Bill Katz with Citigroup. Please go ahead.

Okay. Thank you very much for taking the questions. So, just coming back to spin yet again, certainly apologize. So, I guess maybe the conceptual question for me, why not spin the whole asset management business, or spin the capital platform. And how you think about milestones here just to keep the market abreast of your thinking? Thank you.

So look, here is what I would say. If we create the most value by entirely separating the business, we would do it. Our view today is that having the capital company have an interest in the manager to be able to align itself and put its capital and have its capital managed in a fashion that it’s happy about is the right way to go. But over time, if that made sense, we could do it in four steps, or we could do it in one all upfront. But our view today is that is creating the asset light manager listing part of it is the way to go. But if owners of ours have views, we would be pleased to talk about it.

Okay. And just a follow-up, you had mentioned that your current form is holding you back in certain growth opportunities. I was wondering if you could expand a little bit about what the hold backs are, and what growth opportunities you see. And then which comes for you using to value the asset management business?

I am going to let Nick deal with the second one. But what I would say is just to be crystal clear, we have compounded at 20% for 20 years, so there aren’t any hold backs here. What our job is to do, our job is to look at the business, run a great business, unlock shareholder value as we can. That’s what we are in business to do. And our view therefore is just we should keep at that effort. And if we have securities that trade properly in the marketplace at their fair value, it opens up the options to use those securities for something you want to do in the future if the opportunity presents itself.

And Bill, it’s Nick on the second question that’s consistent with what we used at our Investor Day. So, 25 to 40 on FRE and 10 on our target carry.

Thank you very much.

Thank you. We do have a follow-up question from Robert Lee with Keefe, Bruyette & Woods. Please go ahead.

Great. Thanks for taking my follow-ups. Maybe sticking with fundraising, and not the spend. So, really maybe a two-parter, so, I mean if I look at the number of strategies outside of the flagship strategies that you have in market, I think you pointed out something like 35. I mean it’s really kind of expanded tremendously last bunch of years. So, I am just curious, I mean could you maybe give us a sense of how you actually have maybe changed your organization, or how you go-to-market to actually try to maximize that, because it had so many things in so many places, how do you make sure you are kind of not missing opportunities or maximizing your potential there? And then, maybe the second part of the fundraising is, there is – as you pointed out, there is so much demand. Historically, you have taken very large chunks of your own funds. How is your own appetite for whether your participation will be 5% or 15%, changing to create more capacity for third-party clients?

Hi Rob. Yes. So, on the first part, I think the number of complementary strategies has really evolved as the scale and size of each of our businesses has evolved. So, how we have evolved this, we have four businesses, plus we have over three supply businesses. And each of those businesses have client relationships. And as clients have allocated more and more capital to alternatives and have looked for solutions, I would say up and down the capital stack with different risk profiles, we have the investing and the operating expertise and the experience to offering those products across the channel. So, it’s really a leveraging the platforms that we have and catering to our clients needs, and providing them with these products. And we start as Natalie said, like we are doing in transition, we started with the flagship funds. But that knowledge and expertise translates well to scaling up the core offering in the same sectors with different risk or profile, and adding a couple of investment professionals to lead the strategy, but really leveraging the underlying platform to inform our decision making, our diligence and then operating when we own the asset. So, I would say that’s we have evolved, and we stay on top of it by having close relationships with our clients and responding to their needs. And that has led to the sorts of products. And as we said at out Investor Day, real estate is probably the most evolved. And our other businesses are evolving quickly with new products and all the time and catering to new channels as we go. On our own appetite, I would say that, as the size of the funds is growing, it’s a decision we make each time, but the absolute dollars are still significant. So, percentages may change, but the dollars are meaningful, which shows our conviction in the funds and still creates that strong alignment of interest. And so it evolves over time, but the capital is still meaningful.

Thanks for taking my questions.

Thank you. And we do have a follow-up from Sohrab Movahedi with BMO Capital Markets. Please go ahead.

Thank you. Just a more detailed or maybe a final one, I think you mentioned about $10 billion of real estate dispositions, any indications as to what the plan is for that cash?

Yes. So Sohrab, the $10 billion would have been the gross number of sales, I think we mentioned about a couple of billion dollars of games. So, that games is obviously accruing to the real estate business, some being reinvested and some being repatriated to Brookfield. So, it’s in line with the plan that we would have laid out. We will look for opportunities over the at most optimal places to deploy that capital within the organization.

So, just to be crystal clear, it may involve making new investments in the real estate?

It could do. It could do or it could yes or it could be repatriated.

Thank you.

Ladies and gentlemen, thank you for participating in today’s question-and-answer session. I would now like to turn the call back over to Ms. Suzanne Fleming for any closing remarks.

Thank you, operator. And with that, we will end today’s call. Thank you for joining us.

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.