Brookfield Asset Management Stock

Welcome from Brookfield Asset Management, Jason Fooks, Managing Director and Head of Public Investor Relations.

Good afternoon, and welcome to Brookfield Asset Management's 2026 Investor Day. We hope you enjoyed that video. It's part of own what's next, our first ever brand campaign. The message is consistent with things you've heard us talk about for a long time. Brookfield owns and operates the real assets and essential service businesses to make up the backbone of the global economy. And as the backbone continues to evolve, we've evolved with it. Our industry is changing, too. Private markets are opening up and individual investors now have the opportunity and shows to participate. This campaign is how we introduce our approach to investing to more investors.

We'll share a few more videos between today's presentations that highlight how the backbone is being reshaped, how an ownership mentality is core to our DNA and how we're always looking ahead for what's next. So on behalf of our entire management team, we appreciate your interest, and we appreciate you being here with us today. We have a terrific agenda lined up for you today.

So let's dive in. First, Connor Teskey, our CEO, will discuss the advantages we've built across Brookfield and how they are driving durable, resilient results across the franchise. Hadley Peer Marshall, our CFO, will continue by highlighting how our resilient earnings model also has significant durable growth drivers that will propel the business for the next 5 years and beyond. Then Bob O'Leary, our Co-CEO of Credit, will take you through our integration of Oaktree and how it's allowed us to build one fully scaled, full spectrum credit platform. And finally, Bruce Flatt, our Chairman will moderate a conversation with the CEOs of our other business group for a rare dialogue on how each of those businesses are growing and the opportunities they see today.

Now before I begin, I just want to walk touch on a few housekeeping notes. We'll save questions for the end of the presentation, but we'll be happy to take questions from both our live audience and those attending virtually. [Operator Instructions] And as always, I'd like to remind you that during the Q&A and throughout today's discussions, we may make forward-looking statements. These statements are predictions about future events and trends and are subject to known and unknown risks. Actual results may differ materially from those we discuss today.

For further details, please see our filings with the Securities Commission in the U.S. and in Canada, and the cautionary statements contained in our presentation, which is also available on our website. So with that, please silence your phones, sit back and enjoy the presentation. Let's get started by welcoming Connor Teskey to the stage.

Good afternoon. Thank you for being here, both those in the room and those online, and thank you for your interest and support of Brookfield Asset Management. We don't think there's ever been a more exciting time in the history of Brookfield. And as a result, we're all very excited to provide an update on our business. In previous years, we've talked about our objective of doubling the size of BAM every 5 years or less. And today, we're on track or ahead of schedule in that regard. And in a moment, Hadley will discuss our ongoing growth profile. But equally important is how we are continuously enhancing the resiliency and stability of our underlying earnings.

When we spun out Brookfield Asset Management in 2022, we want to create the highest performing alternative asset manager, one that would raise significant amounts of capital and deploy it into the largest and most attractive investment themes, but equally one that was incredibly diversified, able to drive fundraising, investment performance and earnings quarter after quarter, year after year, cycle after cycle. And that is exactly what we have been doing. We have been building a business model that can produce across market cycles and in all economic environments. Today, Brookfield continues on its 100-plus year history as the leading owner operator and investor in the critical assets and intel services that make up the backbone of the global economy.

We operate across 5 verticals and use our competitive advantages of size, global reach and operating capabilities to identify the largest investment trends and drive underlying operating performance. In the diversity of that business, the leadership in the largest and fastest-growing segments of the alternatives market, and our disciplined approach to execution is showing up in our results. We are both investing and monetizing more capital than at any point in our history, while at the same time delivering growth rates at or above our long-term targets. What this demonstrates is easing as our platform grows, we can continue to maintain the growth rates of the past. And even as we deliver these record results for shareholders, at the same time, we are delivering some of the best investment performance in our history to our LP partners.

And there is nothing that highlights the momentum in our business more than our current level of fundraising. This is a result of that leadership position in the largest and fastest-growing segments of the alternatives market. It's the result of an underappreciated structure that allows us to raise capital from a diversified spectrum of the largest pools of money around the world, and it's the result of the initial dividends of some recent initiatives that will continue to scale going forward. Not only will we deliver record fundraising this year, but we are raising the bar of how much capital we expect to raise year in and year out. But perhaps what's most important is it's not coming from a single strategy or a single platform. Every business at Brookfield is printing records right now.

Our infrastructure, energy and AI infrastructure platform continues to be dominant in what is one of the biggest capital needs and greatest build environments in history. Our private equity and real estate platforms continue to grow and scale, particularly at a time where others are seeing headwinds and perhaps retreating. And lastly, now with the full integration of Oaktree, we have built one of the largest global credit platforms built for performance and market leadership in the most important subsegments of credit. And we are able to continue to enhance the resiliency of our earnings while delivering growth due to ongoing processes within our business. We increasingly diversify those leading market positions in the most important segments of the alternatives market.

We continue to deliver on Brookfield's brand of exceptionally attractive risk-adjusted returns but at a scale and a consistency that few, if any, can match. And lastly, we continue to stay focused on the future, building new businesses the right way such that they can scale into market leaders over time and continuously positioning our platform at the forefront of investment trends, both today and in the future.

Let's go through each of those individually. Brookfield's diversity is a quiet, underappreciated and hugely value attribute of our business. Our diversity across geographies, investment capabilities, products and investors ensures that we can deliver results across all economic conditions. Said another way, we can continue to grow regardless of which products are in the market in a given year. And while this is an undisputed strength of our business today, we have an ongoing process to ensure we go from strength to more strength in this regard. And that's because increasing our diversity and growth is part of a very virtuous cycle. Brookfield uses its competitive advantages of size, global reach operating capabilities to deliver exceptional, strong and consistent results.

That track record, it allows us to not only raise larger funds in our existing strategies, but also launch new funds. And that growth and increased diversity of our business gives us visibility to more capital flows, a greater spectrum of transactions and gives us more information which to make the next investment decision. We put that back into our business, enhancing our capabilities and continuing the virtuous cycle. Where does this show up in our results? Let's just take a sub segment shot at some of our infrastructure products. In our most mature strategies, we are seeing almost 80% of fundraising from re-ups, existing investors in that strategy who are attracted to the strong and consistent returns it delivers. But once an investor joins Brookfield, they increasingly look to invest across other strategies as well, the way that 60% of the investors in our market-leading infrastructure debt strategy are also investors in the flagship.

But different investors have different needs, different objectives, yield, risk tolerance, duration, liquidity and by offering a greater spectrum of different products and solutions we can service the entire spectrum of investors, but in different proportions for each type of product. Over the last 10 years, we have increased our institutional investor base by 8x, 800%. Obviously, that significantly increases our diversity, minimizing any reliance on a single geography, investor or investor type. But perhaps what's more important is investors who partner with Brookfield are increasingly investing across a greater number of strategies. This allows us to build deeper, larger, more enduring relationships, and it also allows us to continue to grow our business without the burden of customer acquisition costs every time.

Looking at the stats today, the average investor has a little bit more than 2.5 different product investments with Brookfield. That's less -- that's more than less than 2x a decade ago. That might not seem that exciting but it is remarkable. Please understand the denominator effect in that calculation. We have brought in more than 2,000 new investors who, by definition, started with just a single product at Brookfield. We've been saying for a number of years now that the largest investors around the world are increasingly concentrating their capital with a smaller number of managers who can deliver performance but also deliver a greater suite of products and services.

This is why we launch new products, this is why we integrated with Oaktree. This is why we continue to expand our partner manager program, increasing the number of new entry points for new investors to Brookfield as well as increasing the number of products and solutions we can offer to existing partners. And that investor base is highly diversified by geography, minimizing our exposure to any regional market, economic or geopolitical trend. These things do change over time. They've changed in the past, they will continue to change in the future, but we have built a business model that can evolve and adapt to those changes using 2020 as a base year, fast faring to 2023, we increased our annual fundraising over 20% in that time frame, but we also increased our exposure to Asia and the Middle East.

Jumping forward another 3 years, we increased our annual fundraising an additional 40-plus percent. This time seeing greater fundraising in North America and increased exposure to Europe where we made a concentrated effort. But it goes beyond diversity of geography or investors or products, it's also diversity of investment capabilities. Today, we have 5 platforms where we have market-leading positions and not a single one of those platforms is responsible for more than 1/3 of our revenues. But within each of those platforms, we have industry expertise on subsegments that ensures that we are well positioned to invest in whatever the best opportunity is wherever or whenever it arises.

What all of this does is it creates an incredibly balanced and diversified portfolio that can grow across the cycle. The bulk of Brookfield's business our long-duration real assets across real estate, infrastructure and energy, they perform across market cycles. But now -- our more procyclical strategies are offset and balanced out by more countercyclical strategies, meaning regardless of market conditions, some component of Brookfield is growing rapidly, ensuring we can deliver consolidated growth year in and year out.

Let's turn to investment performance. Brookfield uses a repeatable and consistent formula of leveraging our competitive advantages of size, global reach and operating capabilities. We use our market-leading platforms to identify the largest investment trends, and then we use our scale and operating capabilities to buy for value and drive underlying investment performance. But this goes beyond just being an owner operator. Increasingly, we are using those leading platforms to manufacture or originate new bilateral investments that others cannot creating very attractive economic exposures that others cannot get access to. And this isn't driven solely by our investment teams. It is very difficult to replicate because it leverages our $1.3 trillion global asset base.

Our presence in 50 countries around the world are 250,000 operating professionals who are dealing with the largest corporate and government counterparties around the world identifying the biggest capital needs and the unique solutions we can provide. And every business we own, every investment we make, every deal we review that we don't execute on gives us more information to make more informed investment decisions going forward. We've talked in the past about the benefits of the Brookfield ecosystem, how we can use the knowledge and perspective in each of our 5 verticals to enhance our competitive advantages and unlock new opportunities.

Today, around the world, leading corporates rely on an increasingly integrated system of real assets to support their growth. our knowledge and ability to navigate that system, identify the capital needs and identify and mitigate the risks, not only drives new investment opportunities, it drives superior returns. And we are seeing this day to day in our business. Increasingly, our private equity and credit teams are leveraging our real estate and infrastructure teams to help with underwriting. As digitalization accelerates, the leading corporates around the world are seeing physical and digital worlds collide, converge. And as a result, they are restrained by their physical capacities.

This increases the value of the platforms we own, the knowledge we have and the capabilities we possess. Take for example, energy, which is now debottlenecked for growth for not only the largest corporates but the largest economies around the world. Our energy team has perfect visibility to identify growth opportunities across all of our platforms and help them underwrite their investments. If you want to get excited about one of the reasons of bringing Brookfield and Oaktree together is we now have 2 sourcing teams, not just to drive greater deal flow in their specific verticals but across all of Brookfield's verticals. And this is exactly what we're seeing.

More so than ever, we are seeing deals originated in one platform eventually executed in another platform where they are more appropriate, a clear benefit of the Brookfield ecosystem. But the biggest benefit of all of this is the most important metric to us the bedrock of our business, our long-term, high-performing investment track record. And over the last 12 months, we have actually enhanced this track record in what we can all agree has been a relatively uncertain market environment. With that, ability to originate and the credibility of that track record allows us to launch new products successfully, but equally important, it allows us to build businesses the right way such that they can scale and become market leaders in the future.

Building new products and new platforms is something that is not new to Brookfield. We've been doing it for over a decade, but it has accelerated in the last 5 years and it is happening across every single one of our verticals. In fact, across all 5 of our platforms, non-flagship revenue is now the majority of our business. And whenever we build a new product or a new strategy at Brookfield, we use the same repeatable and consistent approach to drive success. There are 3 rules. It needs to be a large and attractive opportunity set. It needs to be somewhere Brookfield is positioned to be the market leader, and it can't conflict with anything we're already doing.

As a result, we focus on adjacencies to our existing business where we can leverage our in-place leading platforms. And we also very consciously at the onset of new products focused on execution and performance sometimes growing slower initially but providing a platform for accelerated growth and market leadership in the future. We'll give an example. 8 years ago, we launched BIP, our super core infrastructure fund. At the time, we only had our flagship value add and our leading infrastructure debt fund. Initially, we consciously grew methodically, thoughtfully and in a modest way, balancing deployment with investor inflows. Fast forward to today, that is a $26 billion platform that is raising almost $4 billion a year on a run rate basis. But at the same time, 4 years ago, we launched Brookfield Infrastructure Income Fund into the private wealth channel, again, consciously being very methodical about how many platforms we initially listed on and growing slowly matching deployment with fundraising.

Today, we're raising over $1 billion a quarter. And in the last 8 years across these 2 products, we have never had a single quarter of net redemptions. I don't think there's many managers can say that, let alone people that added 2 products that can deliver almost $10 billion of annual net inflows to what was already the largest infrastructure platform in the world. This was done against the backdrop where our other infrastructure platforms our flagship infrastructure fund, our infrastructure debt fund, our energy business also saw significant scale growth at the same time. But it's not just about what we're executing today. It's about what we will do in the future. And we look to enhance and maintain the stability and growth of our returns by one, partnering with the most strategic counterparties that will deliver growth over the next decade; by two, continuously enhancing our capabilities; and three, constantly assessing what the largest opportunities are for the future and positioning our business to capture them.

We've discussed in the past how Brookfield is the partner of choice for the largest corporates and governments around the world. Our ability to pair large-scale flexible capital solutions with unparalleled industry operating expertise positions us to help these counterparties with their most strategic growth initiatives. And what's most important to us is not that we're doing more partnerships but it's that each of these partnerships continues to broaden. Our counterparties are no longer just an LP or an offtake or a JV partner, but in some cases, all of the above. There's no better example of this than NVIDIA, the largest corporate in the world. They are the $2 billion anchor LP investor to our AI infrastructure fund. They are the critical supplier to one of our portfolio companies. We are JV partners with them and neighbor on a Gigafactory in South Korea, and Brookfield is one of the financing partners of their new $500 billion compute program.

There are very few around the world that have the capability to have such multifaceted and deep relationships with the most important institutions that will drive growth over the next decade. But we're also enhancing our internal capabilities. Undoubtedly, the best example of this is our Investor Solutions group. This has started less than 2 years ago and what ISG does is it works with an investor counterparty to understand their specific needs. What's their risk tolerance, what's their return target, what's the duration, how much cash yield, how much liquidity do they need. And then after understanding that, they go create a multi-product, multi-asset solution by leveraging the over 65 different products at Brookfield.

Very few have either the capability or the product suite to offer this service. And in less than 2 years since we launched this, we've secured over $10 billion of unique mandates including some very unique structures, including one where we secured a $1 billion mandate with a 25-year lockup. Do the math on that. Fast forward 2 decades, that's more than $20 billion of fee-bearing capital to Brookfield from a single mandate today. We also are positioning ourselves for the biggest growth markets in the future. We've talked about our interest in growing in the individual market. We have a very rapidly growing private wealth business.

We continue to scale our ability to service life insurance and annuity policyholders, but we are also positioning ourselves at the forefront of the 401(k) and retirement market here in the United States. In particular, positioning Brookfield to be the real asset investment provider to the recommended or default programs of the largest plan administrators in the United States. We announced our first collaboration with AllianceBernstein this year, and we expect to announce many more given that our expertise in long-duration real assets are the perfect complement to the objectives of retirement investors. And perhaps you thought 2026 was the year that we would get off the 3 Ds, but in the year that we've had, that would have been impossible.

Since highlighting 3 global investment themes of the digitalization of everything, the world needing more energy than ever before, the rewiring of global supply chains to focus on resiliency and production of critical goods and services closer to home. These major global investment themes continue to accelerate year after year. The capital needs are forecasted to be bigger going forward than they have been at the past and our leadership position across all 3 of these themes ensures that we will be at the forefront of not only the largest but the most attractive investment opportunities going forward.

So with that, before I hand over to Hadley, while we are very excited about the growth of our business, we're equally focused on continuously increasing the resiliency and stability of our underlying earnings. We do this by increasingly diversifying our business by continuing to deliver on our value proposition very attractive risk-adjusted returns, but at a scale and a consistency that few, if any, can match. And lastly, we continuously position ourselves for the future. Building new businesses that can become market leaders and ensuring that we stay on the forefront of not only investment trends today, but investment trends tomorrow as well. Thank you.

[Presentation]

The MAP global trade is shifting faster than the map of global consumption. People are largely living in the same areas and buying the same goods where those goods are coming from and how they're getting to the consumer is changing very rapidly. What we are seeing is not the end of globalization, but a shift in globalization to strong regional hubs that provide adaptability optionality for companies to adjust in the face of volatility. The old adage with warehouse is location, location, location.

What we see now is connectivity. And the way I like to think about it is a highway system. And so you have large interstates and you have regional highways. You have local roads. And finally, the street that makes it to your house. It is the same with a distribution center and a distribution system redundancy used to be considered inefficient. Now we call it resilience. If a company depends on port or one facility to move goods and there is a disruption due to weather or labor strike or a geopolitical event and they cannot continue their business that is no longer efficient.

Rents and square footage don't dictate the value of a building. It's the ability to move goods efficiently through that building.

Please welcome from Brookfield Asset Management, Hadley Peer Marshall, Chief Financial Officer.

Thank you, and welcome. Connor talks about our business and our earnings are resilient, diversified and consistent. And that's not by accident. We built it that way in order to maximize value. And when you spin out Brookfield Asset Management from Brookfield Corporation 4 years ago, we did so in order to give transparency to our public investors as well as an opportunity to invest directly in a pure-play alternative asset manager. And it's been a great success. We've grown significantly. Our earnings are up 40%, and we are very happy with what has happened. If you talk to our shareholders, they'll say that they are excited about the growth, the disciplined investment approach we have the leadership that we've built and the consistency and stability in our performance.

Now we've also grown our fee-bearing capital in a material way. And part of this is because our model allows us to reach the deep pools of capital in the world. Public markets, insurance, institutional and individual. And when you look at that $700 million and the $670 billion of fee-bearing capital, about $250 billion comes in a permanent format, which compounds via our public markets and the listed affiliates as well as our insurance channel. The remaining $425 million is long term, diversified into our private funds from our institutional and individual clients.

Now across the board, this big advantage for us. And there's 2 focuses we have. One is client servicing and 2 is performance. And if we do those things well, we will continue scaling and building on our fee-bearing capital across all of these channels. Now because of our model, and the growth of our business, we have been able to create a product for every type of investor. As you heard from Connor, we have over 60 and growing. So let's take an example for a second.

Let's assume that you want to invest in a close in global Core+ fund with leading infrastructure manager. You'd invest in Beth. But let's say, instead, you actually want daily liquidity but still have access to the best-in-class infrastructure funds we have it. And then let's just say that you want to invest in maybe the world-leading infrastructure credit strategy bid. The broader point is that we have the solutions for [indiscernible] risk return spectrum up and down the capital structure. And we do this for all of our businesses. We have some investors that want to have exposure to sector or geographic themes outside of our flagships, which are global and well diversified. So here's another example.

Let's assume that you're interested in investing in real estate, but specifically housing. You can invest in BREVA-H, our recently launched strategy. But then let's say you actually want access to the best-in-class deals we do in private equity, but only in the Middle East, [indiscernible]. And finally, if you want to invest alongside the leading AI infrastructure manager base. Overall, we have 6 strategies. And as mentioned, they're growing. Now what they all have in common is that we are focused on delivering that performance, which is critical to us continuing to scale.

Now I talked about earlier how our model was built on purpose in order to maximize value and helps allowed us to achieve providing a product for every single investor. And that gives us a deep relationship with our clients and a breadth, which makes our fundraising and ultimately are earnings consistent. And you can see that in our fundraising. We have significantly grown our fundraising year-over-year consistently throughout all the various economic cycles, tariffs, inflation, denominator effect, geopolitical complex, volatility in energy markets. The point here is that we have been able to successfully raise capital regardless of the market backdrop, and it only strengthens us.

Now we have not provided guidance for our 2026 fundraising number. But I think some of our analysts have a rule of trying to back into what that number is. But what I will say is that is going to be a record year. 2026 will be a record year for us, even when you look at it from an organic perspective. And as evidence of that, we've raised [indiscernible] billion over the last 12 months. That fundraising will lead directly into our SEC and our FRE. So if you go back to 2020 and you look at the growth that we've experienced, 16% for both of them on a compounded annual growth rate. Now what's interesting about that is not only is that above our 15% long-term target. But that's been done steady every year, not with 1 year or one product making a determining factor.

It's also evident in our deployment. Deployment has doubled to $160 billion over the past 12 months. These investments sit in the sectors that fit into the global economy, including utility-scale energy storage, industrial gas infrastructure and transportation. What they all have in common is the quality investments with a disciplined investing approach in the sectors we know well. Monetizations are very important for our business. They do 3 main things for us. Obviously, they cement the proven track record. They return capital back to our investors. And that, hopefully, is recycled back to us, and they realize carry. They generate the carry for us. And you can see we've tripled our monetizations over the past -- over the past 5 years. That leads to $90 billion for the last 12 months. And 2026 will be a record year for us.

So now when you take the stability of our cash flows, the predictability and that consistency and you [indiscernible] with the growth engine, that gives us line of sight to doubling our business. And the 3 main pillars have been critical in our growth historically will still be the major part of our growth when we look forward, flagship funds, complementary strategies and insurance capital. Flagships are a large part of our success and our growth. We raised $129 billion over the past 5 years, and that's going to $175 billion, 35% growth over the next 5 years. And our flagships do more than just scale and grow.

They are the initial engine creating new strategies. When they build their investor base, their capabilities into new markets, that allows us to expand into complementary strategies, and we've done that successfully. We've raised $195 billion over the past 5 years, and that will almost double when we look out to 2031. Now we have 2 categories for our complementary strategies, new strategies, which are 1 to 2 vintages, but the remaining 65% is made up of strategies, mature strategies that had 3 or 4 vintages. They built a track record. They've got the [indiscernible] a similar to our flagships, all they need to do is keep delivering, and then they will scale. So low execution risk.

The final one is Brookfield Wealth Solutions, powerful partnership for us. We manage $150 billion under the investment management agreement, where we earned 25 basis points. And that's going to grow to $360 billion by 2021. You will notice that about 6% is allocated to private funds, and that's growing to 18%, so call it $60 million, where we earn additional fees. So what else is driving our growth? We have other merging themes. They're actually growing faster than our broad business. And these include the increase in fundraising for private wealth, the scan of our capital markets, the contribution from partners and the value generation for our balance sheet investments.

I'll start with private wealth. It is gaining even more momentum. We have about 200 people dedicated to engaging, educating and building relationships with financial advisers. We have 6 evergreen strategies, and they are building a track record. And as they build that track record, they scale. So this gives us a 5x increase in our FPC. Now Capital Market is interesting because we issue about $150 billion or so of debt on an annual base for our portfolio companies as we do large deals, that our investors want to participate in. So this gives us the ability to scale the business even further, reaching probably $50 million to $100 million of revenue next year and growing to about $250 million by 2031.

Here is an interesting one because in the past, we've talked about as the second leg of growth, but it's actually happening now. And I'll come back to that in just a second. So as a reminder, when we spun a Brookfield Corporation, they kept all of the legacy carrier. So we're really starting from scratch. We can see the build, the fast build, and we should show on a cumulative basis, $9 billion of [indiscernible] over the next 5 years. 1/3 of that will go to Brookfield Corporation as a royalty. 1/3 to employees is compensation. And then third, will go to Brookfield shareholders. And if you look out the following 5 years, even bigger, $35 billion and then beyond.

Now coming back to [indiscernible] today, what's interesting and what we're seeing in our numbers is that, that is accelerating for us. And we should see [indiscernible] this year in building over the next few years. And I'll talk about this when we get to the numbers.

Finally, on the balance sheet. I put this one in here because we are an [indiscernible] manager. We're judicious about our balance sheet, seeding using it to see new strategies or invest in [indiscernible] managers, our existing partner managers. But on a stand-alone basis, these are very attractive. They have a J curve, but we generally target 20-plus percent returns for these investments. So not only do they support the overall business from a growth perspective, but they also are accretive to Brookfield Asset Management.

So now let put it all together and show you what the future looks like with all of these drivers of growth. We are going to double $1.3 trillion of [indiscernible] capital by 2031. It will be broad-based across all of the segments. And between flagships mature complementary strategies and insurance where all we need to do is deliver, we will be able to scale. So low execution risk. That's about 75% of the capital.

Now going back to monetizations and the importance there, we will return $220 billion back our clients. Now this fee-bearing capital is very stable for us. and it gives us that consistency and stability. If you go back to when we spun out, about 83% of our capital was long term or permanent in nature. Today, that's 88%. But then look at 2031. That's after we've doubled the business. So it will continue to be a value add to our cash flows. And then the diversification will be met across all of our businesses. Infrastructure and Energy will continue to capture the tailwinds from the 3 Ds. We'll see private equity benefit from their focus around industrial and essential services, real estate is seeing a big flow of opportunity after the lows of 2023. And Credit, which Bob will talk about shortly, is seeing a large opportunity in asset-backed finance, real assets and opportunistic credit.

And that FEC will drive our FRE growth. We'll hit almost $11 billion of revenues, but our costs are growing slower, which means that we'll have expansion of our margins, showcasing the operating leverage that's built into the system and generate 16% returns for us on an annual basis. That translates to $4.08 and per share relative to $1.97 today.

Now coming back to Carry. Remember, not much at 2022, but it's building. And by 2031, we should see a 32% compounded annual growth rate. So that carry will be more meaningful. And you can see it here because our DE is growing even faster. FRE will still be the foundation, but we have about $1.4 billion coming in from realized Carry that will support that 18% growth rate and translates to $3.99 per share relative today of $1.75. And now is the fun part. This will support our 15% plan for our annual long-term dividend growth rate. That was the base case plan. But now we have additional levers that we know will be impactful for our growth over the next 5 years. That includes the defined contribution market. Connor talked about that.

The new complementary strategies, which inevitably will be built, our existing partner managers and M&A. These will give us multiple paths to 20-plus percent annualized earnings growth. And I pulled up partner managers because this one we do have numbers that we can put against. We have 5 partner managers, best-in-class. We know them well, and we have embedded options to continue to increase our stakes and that could generate up to $350 million of FRE by 2031. So not only these partners growing, but our stakes in them are growing as well.

So pulling it all together, hopefully, you now have a better understanding of how our design, our model is a competitive advantage for us, allowing us to grow consistently and doubling the size of the business. Now what is interesting and worth noting is that these levels that we presented are some of the highest levels we've ever presented, making Brookfield Asset Management a value investment, especially today. Thank you.

Please welcome from Brookfield Asset Management, Bob O'Leary, Co-Chief Executive Officer, Credit.

Good afternoon. I'm Bob O'Leary, Co-CEO of Brookfield Credit and also the portfolio manager of the Global Opportunities Funds at Oaktree. I'd like to share some perspectives on Brookfield's credit platform, of which Oaktree is now the largest constituent part. On July 31, Brookfield completed the acquisition of the of Oaktree that it did not already own. That closing marked the beginning of a journey as a fully merged credit platform. Today, I'll cover 3 things. Number one, how we built the platform and how our capabilities differentiate us. Number two, how is that integration going and making us stronger. Number three, and most excitingly, where the biggest opportunities are today.

Story of this relationship and the resulting credit platform goes back fully 125 years to the founding of Brookfield. Brookfield's Origins as an owner operator of essential assets affords our credit platform, critical insights, insights that few credit managers can match. Oaktree's founding in 1995, was premised on the steadfast focus of the primacy of risk control. The philosophy of downside protection has served us well over multiple credit cycles and dislocations in debt markets. In 2019, Brookfield and Oaktree came together in the first stage of their partnership. Shortly thereafter, we executed a foundational IMA with Brookfield Wealth strategies. Over the 6 years of our relationship together, we have selectively added partner managers who we feel contribute distinctive investment capabilities to our platform.

Today, as we stand as a fully integrated platform with a scale and scope that no other manager can match. Let's put some numbers around the scale. As a consolidated platform, today, we manage fully $416 billion in assets. Those assets are across 4 key verticals. Number one, opportunistic; number two, real assets; number three, asset-based finance and number four, performing corporate credit. This is one of the largest global credit platforms of any alternatives manager, operating in areas of tremendous relevance to our limited partners. We also offer industry-leading scope with products that run the full extent of the risk-reward spectrum.

Through Brookfield, we have core capabilities in hard to replicate areas like real assets lending. This lending is informed by our 125-year history as an owner of essential assets. Through Oaktree, we add critical credit expertise, especially in opportunistic credit. And finally, we have added, again, selective capabilities with our credit partner managers to offer additional investments to our clients. Our products span the entirety of several different dimensions of the credit universe, from investment grade to opportunistic and special situations, from senior to subordinate lending from liquid to illiquid credit and finally, from corporate credit to real asset lending.

Now that we've established some of the core capabilities of the platform, let's talk a little bit about the status of the integration of our respective credit capabilities. It should be noted that even prior to the initiation of our partnership, there was a high degree of commonality in our approach. Our investment philosophy, our approach to putting clients first, our affinity for complexity, and our long-term orientation. We've also had the benefit of working together for over 7 years, leading up to the final closing of the transaction in July.

Even with the collaboration to date, the closing of the transaction will allow us to unlock even more value over time. There are 3 specific areas that we think hold the most promise. The first area client relationships. You heard Connor talk a lot about this earlier. The second area, enhancing the collaboration across our platform that breaks into 2 areas: sourcing and knowledge and finally, the delivery of new products. In terms of our client relationships, it's no secret at this point that LPs are looking to consolidate their relationships into a few scaled skilled general partners. This represents an extraordinary opportunity for us to build on our existing strong market position with our most trusted clients.

As of today, the overlap between Brookfield and Oaktree is about 21% of the top clients we have. As Connor referenced in his remarks, we have clear opportunity to introduce the unrepresented partner to our most trusted relationships. Even in situations where we do overlap, there are opportunities to deepen our relationships as LPs winnow down the number of GPs that they use. Sourcing is an area of clear collaboration. It's an area that's got our investment professionals very excited. I started in Oaktree's Opportunities funds 25 years ago.

At that time, the critical capability was analytical. If you could analyze the instrument better than your competitor, you want. Today, that is a necessary but not sufficient condition to outperforming. It's the new skill, the skill that has become critical is sourcing. The combination of our 2 platforms will establish an industry-leading sourcing capability that is both geographically diverse and has deep industry expertise. Our sourcing capability will be a game changer for our credit strategies.

Brookfield Wealth Solutions is also a key source of differentiation for our credit platform. BWS is a large, growing and long-duration source of capital for our strategies that we can put to work in ways to generate attractive outcomes for both borrowers and policyholders. All of this, our client base our sourcing capability and our insurance capital will enable us to continuously innovate for our clients. Already since the initiation of our partnership in 2019. The number of products that we offer as a combined entity has nearly tripled. While our product portfolio feels complete, we are always on the lookout for naturally adjacent products and remain responsive to client needs.

So let's take stock of what we have discussed. Our combined platform has been built over decades and across multiple credit cycles to produce strong risk-adjusted returns in any environment. The combination of strength in our platform, we are particularly proud of our record in times of market dislocation and periods of volatility. And this is precisely the site type of environment we think we're headed into right now.

In December of 2022, Howard Marks wrote a memo entitled Sea Change. In that memo, he made several observations. First, starting in 1980, the world saw the onset of 3 massively deflationary forces. Number one, favorable demographics, primarily an accelerating birth rate number two, unprecedented global economic integration; and number three, benign geopolitical conditions. Those conditions gave rise to one of the greatest bull markets in modern financial history. The subsequent decline in interest rates drove unprecedented increases in valuations of financial assets.

Today, all of the forces that drove that bull market are in sharp retreat. Demographics are a headwind. Global economic integration has broken down in spectacular fashion and the peace dividend has vanished. With the reversal of these forces, the memo argued that it was likely that interest rates would be higher and more volatile for an extended period of time. That, in fact, has come to pass. Partly as a result of the higher and more volatile interest rate environment, private credit has experienced its share of turbulence. Negative headlines in select parts of the private credit market have been written as a result of this turbulence. These headlines are narrowly focused on sponsor-driven direct lending and ignore the vast diversity of private credit.

More importantly, it's environments such as this that demonstrate where specialized analytical capability and superior credit analysis, drive differentiated outcomes. Our private credit platform is showing precisely those differentiated outcomes right now. Interest rate volatility is driving opportunities across all of our credit businesses.

Let's talk about some of the deployment areas in our key verticals. Taking real assets. First, the business operates in 2 verticals: infrastructure and real estate. Our infrastructure debt fund is the largest in the world. Our real estate debt fund has been a leader across multiple forms of real estate lending for several decades. Together, they manage over $50 billion in assets and have completed nearly 600 transactions. The strong deployment outlook in infrastructure is driven by a massive funding gap. Funding gaps are a function of either the supply of capital retrenching or the demand for capital outpacing the available supply. In infrastructure is the latter phenomenon propelled by the 3Ds that you heard about from Connor earlier, digitalization, decarbonization and deglobalization. Those trends show no sign of abating and have driven a truly massive funding gap.

In real estate, the industry is still recovering from one of the sharpest and swiftest rate moves in financial history. While funding is starting to flow back into the sector, valuations have yet to fully reflect the strong fundamental performance of certain sub-asset classes. This represents an attractive opportunity to lend at very economic levels. Asset-based finance has been an area of singular focus for both Brookfield and Oaktree for the past several years. Together, we have assembled a best-in-class capability that manages close to $60 billion in assets and has invested in over 1,800 transactions. The asset-based finance market is huge and growing as borrowers seek to lower their debt cost of capital.

Banks and other traditional lenders are retreating from the sector to focus on other lines of business. This has opened up the field to private capital providers, which currently represent a relatively small portion of the business. And finally, a topic and a subject near and dear to my heart, opportunistic credit. We have the longest running strategy and opportunistic credit having deployed over $60 billion in 38 years of the operation of the strategy. We've been involved in more debt restructurings than any firm in the world and have executed close to 1,400 investments. The addressable market for opportunistic credit has expanded dramatically in the last several years.

The amount of subinvestment grade and BBB debt has more than quadrupled since 2007. That's a growth rate of 8%, which is roughly double to the growth rate of the underlying economy. We're levering up as a world economy. With rates and credit issues starting to rise, we are seeing opportunistic credit increase meaningfully across all of the regions that we operate in. Relatively simple definition of opportunistic credit is debt under the price of $0.90 on the dollar and over 15% yield to maturity. Using that definition, the opportunity set has accelerated over the last several years. As you might expect, the largest increase in that debt is software-related debt, but nearly every industry sector has some representation.

We are very encouraged by what we're seeing in our pipeline right now Credit markets are still relatively orderly. We aren't seeing the signs of the macro dislocation that we saw during the GFC. And yet the horses of digitization, deglobalization and decarbonization are creating structural imbalances in lending market. We have the platform to create strong risk-adjusted returns by lending to these imbalances. As markets turn as they inedibly will, we have a purpose-built, best-in-class opportunistic capability to capitalize on the dislocation. In short, we believe we can generate strong returns no matter where we are in the credit cycle.

Hadley walked us through the tremendous growth of the overall Brookfield portfolio. And here, we are seeing the strength of the credit platform and how that translates into credit contribution to that overall growth. This growth will be balanced across our drawdown style funds, our perpetual capital vehicles and liquid credit. The majority of the growth will obviously come from our perpetual capital vehicles. Over the next 5 years, we see our fee-bearing capital doubling at Brookfield Credit, which is a reflection of both the increasingly attractive rate environment and our distinctive capabilities.

Thank you for taking the time to listen today. I look forward to updating you in the future on our progress against these goals.

Please welcome our CEO panel moderated by Bruce Flatt, along with our panelists Anuj Ranjan, Sam Pollock, Lowell Baron, and Connor Teskey.

Okay. Hi, everyone. Before we get into this, I was just looking at that slide, Connor, and this is totally off the grid. What's actually an incredible statement. And this show -- I'm going to use this to say what's changed in the world. Battery costs, you may have not caught it. Battery costs have decreased by 90% over the last 5 years. So why are batteries [indiscernible] today? And why do they matter and why didn't they matter before? The price of [indiscernible] down by 90%.

The fastest-growing part of our business today, [indiscernible].

I like that's shocking. Anyway, sorry for distracting the crowd. I guess, the real story that was tooled, I think, by those 3 presentations, [indiscernible] was just the growth in what's going on -- and -- but every year, we do this, and we say we're going to do that. And generally, we meet it. But it's a lot of growth. And usually on the PE front, how do we get there and how do we achieve it?

Yes. So look, it's been -- we're quite fortunate today to be in an environment where we have really 3 things going for us. I'd say on the private equity side. First is I'd love to take all the credit personally, but it's actually the broader Brookfield platform. Managers want to do more -- sorry, clients, our partners, our LPs want to do more with less management and we're a beneficiary of that in the private equity group because they're doing more with all of us across Brookfield.

The second trend we're seeing is they want groups that have deep operating capability in whatever they do best. Our focus being industrials, heavy asset services happens to be something today. I think that many of our partners think is quite attractive in this world. People used to pay up for things that could scale fast and now they want to pay up for things that can't be tipped over. And so our private equity business is no exception to that. We're really benefiting. And the third is just consistency of performance. I think having an exceptional track record, one that's only gotten better as we've gotten bigger, being disciplined about that has paid us dividends as we've gone out to fundraise. So things are going quite well. And I think we're going to have our -- well, we are going to have our best year ever of fundraising.

And it seems like the businesses you're buying are almost lost or forgotten in the markets. people are chasing the toy the AI toy and they're forgetting about industrial businesses. Is that -- and again, the multiples therefore are reasonable. Therefore, you can buy in the public markets. That's why a lot of the deals seem have been in the public market.

We've been doing more of the public to private for sure, but corporate carve-outs are still a big part. I'd just say boring businesses.

Although corporate carve-outs is almost the same feel, right? Our stock is low, we need cash. Therefore, we have -- we don't sell the whole company, but we sell something.

Absolutely. There are a lot of these dislocated companies especially in our world of industrials, manufacturing, restructure services that you can buy very, very cheap. And the thing is they're actually businesses that are very resilient and actually can be aided by AI. So even though they're not as shiny as some of the other toys that are out there, they're fantastic companies and better held in privately.

Connor, in energy. How -- like it is -- how do you grow as fast as you've grown in the past 5 years? I think, is what I said.

With the demand environment for energy, I don't think tough to see the market opportunity for exceptional growth. And you can almost pick your tagline. To meet the supply-demand imbalance for energy around the world, you're going to need any and all or all of the above type solutions. And that's what Jay just said in the previous video. We will participate in all that, but the thing that gets us most excited is we see the fastest growth in 4 technologies that all have a right to win. And it's fuel cells because they're the fastest to deploy. It's wind and solar because they're the cheapest cost electricity.

It's batteries because they increasingly balance an intermittent and volatile grid, and it's too clear because it provides a base load energy security. And the incredible thing we have is we have leadership in all 4, and that's driving investment growth and performance across a not just our energy private funds, our infrastructure private funds or funds, all of our listed affiliates. So they're all going to grow, but we feel very fortunate we're at the forefront of the biggest, fastest-growing trends in that rising tide.

And can you keep the wheels on? Like that's a lot of building, lot of construction, a lot of people, a lot of businesses.

In almost counterintuitive way, the more you do the easier it gets. And what we're seeing around the world is the largest corporate users and procurers of power are increasingly partnering with a smaller number of providers. And we are one of the largest in the world. We're the most diversified by geography. We're the most diversified by asset class. We can do more for these counterparties. And in a way, we're growing our business and working with the biggest off-takers but actually having to work with less offtakers and it's making our life more simple.

And Lowell, turning to real estate. What about the real estate? Is it your big funds? Or is it different funds? Or how do you lay that out?

Yes, it's interesting. It's -- I'd say we saw 2 things happening. One, as we were working on the flagship fund, and we're looking for opportunistic 20% returns, we came across lots of great opportunities that maybe weren't quite at that level but could achieve low teens, mid-teens, very attractive opportunities, and we didn't have the capital set up for that. At the same time, we talked a lot about consolidation of managers. A lot of our investors are coming to us and saying, we want not just the big fund to investment, we won't be able to customize with you. We need more exposure to housing or to logistics or to Europe. And so it gave us this ability to then create these complementary strategies that do both of those things for us that lets us put the capital to work in the deals we were seeing anyway and provide a solution for our investors who wanted to be able to customize and do more things with us. So that's where the growth is coming from.

Sam, infrastructure?

Look, on the infrastructure side, we're fortunate we're in an asset class that continues to be one of the most sought after because of the great risk-adjusted returns we've seen over probably the last 2 decades. In the case of our business, in the last 5 years, we grew fee-bearing capital by about $60 billion. And I think the targets laid out are about $90 billion, plus or minus. And we can see the growth pretty easily. We have larger funds replacing smaller funds that are running off. And in most cases, they're 2x the size, $30 billion versus [indiscernible]. We have larger evergreen and permanent capital vehicles.

So if I stop there, just to make sure that everybody understands that even if you raised the funds are increasing. But even if you raise the same size of fund, that fund is replacing a fund, which is half the size or less than half the size from before in the P&L -- Connor's P&L.

Even if our fund size is plateaued and they're not plateauing, they're growing, we would have 10 years of growth with plateaued fund sizes.

That's an important fact. Okay. Got it.

So larger funds, NAV accretion on our permanent capital evergreen funds, and they've grown over the last 5 years, so the NAV accretion is a lot higher going forward. We've got new strategies. So we've got both the AI fund and our mid-market special situations fund that are just in their early stages and scaling up. And so we will get tremendous growth from those. And our hope is that the AI fund becomes another flagship fund, same scale as energy transition or even BIF. Then lastly, we have private wealth, which we talked about earlier, but we've set up some vehicles that are attracting private wealth into infrastructure, and we are seeing that grow dramatically year-on-year.

What's amazing I just say is everything Sam just described the infra group did and was on that slide earlier. In a sense, all we've done in private equity is try to emulate what we've learned there, not too long ago, we just had one fund in private equity. Now we got 3 funds plus the public vehicle, plus one for the Evergreen. And that's also compounding how much money that we can raise. And I think all of our groups are doing that.

And Sam, on the deals, when we raise $30 billion for the big fund and you need to have co-investment with 20 of our large partners that want scale Conrad co-investment. How does that change what we're doing on deals? Like what -- does it make it harder or easier, better, more complicated?

Yes. No. Look, I think the -- one of the misnomers is that people think that because we're raising larger funds that all we're doing are larger deals. In fact, our thesis has always been that we will do the best deals regardless of size. And if you go back in history, Bruce and you'll remember this, some of our best deals were roll-ups of the District Energy business, for example, where we took a number of small assets, built them up into a $1 billion business [indiscernible] $7 billion or $8 billion. We do that still. We haven't stopped doing that. But having the larger fund allows us to go after these marquee businesses where we can leverage having that big check, particularly at moments in time when others are either they can't move quickly or just don't have the boldness to strike.

And we can -- my great businesses like Colonial. You think of Colonia just a year ago, we bought that. This is a $9 billion investment into the largest refined products pipeline in the U.S., 5,000 -- over 5,000 miles of pipelines and because we were able to move -- we had that huge fund, we were able to strike when others didn't have the capital. And that's been an amazing investment for us in the benefit of our scale.

If I recall, we had an investment committee, it was the day -- liberation day happened, we had investment call. Are we buying a $9 billion pipeline and you can take -- you all know this, but just to state it, you can take risks -- calculated risk, you can take them if you can afford to take them. And if you have a small fund and you've got a bunch of co-investors it's tough to take that risk, but we stomach it and paid $9 billion that day. And it's probably the only reason nobody else showed up to the -- to purchase the...

Other people had to pull together consortiums and what happens in situations like that, you always have lowest common denominator effect where the person who is the least confident can dictate what happens. In our case, we could speak for the whole check write it, and we'd syndicate a little bit afterwards. Having that scale differentiates us.

So all, when you sit with a client, do they think about those things? Or what do they think when they are taking money from you? Do they -- like what is it that they come to us for -- why us?

Yes. Look, I think about it [indiscernible] sort of the table stakes. The table stakes are what does your platform look like, your people, your experience, your track record, track record incredibly important. And those things, we're very fortunate to be at the top level that helps us get there. But then there's the second category, which makes us unique and different than everybody else. Those 2 things would be Brookfield having Brookfield Capital in those strategies in a large way being generally the largest investor in those strategies. People really appreciate the alignment. I think that's incredibly important. And probably the most important is the operating expertise. And this is where I can say in real estate, there's no one else like us besides having the investment team is an asset management portfolio management teams, there's the operating platforms that have expertise in every property type and sit in every market that we're investing in.

And we're managing our own assets with our 25,000 people. No one else has the ability to put that together. And that's -- investors recognize all the information we get from doing it. the ability to originate that way to underwrite better and of course, to manage better and create growth.

I think when we -- your question, what are investors looking for? There's been a very large change in the market over the last let's say, 5 years, which is providing access to alternatives used to be a competitive advantage. But now there's several ways for investors to get access to alternatives. So now they're being more discerning in terms of which manager they invest with far more discerning than they have been in the past. And what are they looking for? They're looking for track record and capabilities. They're looking to be serviced across a wider spectrum of products and solutions. And then the third one is kind of the other bucket that maybe doesn't show up. Can we give them co-invest? Can we do knowledge sharing? Can we help them in parts of their portfolio where they're struggling in that asset class? And it is undoubtable that the investor universe is getting more discerning, that makes our jobs harder but it is also very good for Brookfield because we are incredibly well placed to differentiate ourselves as investors become more disciplined.

Sorry, Bruce. I think you forgot one. What we're also hearing from investors is that they're impressed by the way we have been able to scale our businesses, so grow from a $2 billion fund to a $30 billion fund, for example and our returns haven't deteriorated. So they're all trying to scale up their businesses. We've been able to prove that we can scale up our business and still deliver the same or better returns. That's huge without mandate. Without mandate [indiscernible]

And in fact, the returns have gotten better almost in every business. And it's really because of what you said, it's we buy -- when you have larger sums of money, you buy better things with better people and better counterparties deal with you and in life easier when those 3 things exist. It just is better. But when you...

We've got smarter over time.

We still make a lot of mistakes, little ones, but a lot. When you thinks like all these, I'd call it, super sophisticated additional clients are the mandates. Are we changing the mandates we're doing for them? Are they just investing in funds? Or is there a whole way of different dealing with them today as we evolve?

Far different. And the world is notably moving less from a provision model to providing more multi-product, multi-asset solutions and the ability to combine was unique, call it, ingredients, if you will, in a way that is tailor-made for that specific investor. And that's for small investors, the same it is for large investors. And we're fortunate that we have both the ingredients and the capabilities to mix them to capture that opportunity. But who are the largest investor around the world? They're the large plans, the large sovereigns.

The other way that we are very differentiated is we do more than just the stewards of these partners' capital. We help them in their own businesses. We can invest in their countries. We can partner with those nations on key initiatives, bringing our knowledge and capabilities from elsewhere in the world, who those countries. That is something that very few if any others can do. Our power nuclear partnership with the Department of Energy here in the United States, our sovereign AI partnerships with Sweden and France, our energy partnerships in the GCC.

That -- those are examples of putting it all together that I don't know anyone else. Even I think back to just as an infrastructure, with [indiscernible] they had a complicated partnership in one company they owned a part of, and they came to us and said, "Look, we need help. And we ended up privatizing the business, and we own it 100% today, "I think, right with partners or -- with partners, we own the business, and it solved their issue.

But these are [indiscernible] is the government of Singapore, but it's an enormous industrial business, and we have an amazing relationship. And you can imagine that leads to other things when you work with people like that. And we probably wouldn't have been aware of that opportunity if we weren't having such great dialogue with them across a variety of different things they want to sell.

This may be specific to real estate because everyone thinks they're a real estate expert and they can do it on their own. But we also see when times are a little bit to the sector, in the case of real estate, I'd say 5 years ago, we go talk to investors and they say, yes, maybe we'll invest with you, but we can do a lot of things directly ourselves. Now when we talk to them and say, those things we did directly, can you help us figure them out and we should just invest with you. So when you go through a bit of a tough time, they start to recognize the power of what we bring.

Yes. Let's switch to AI. I think probably the most important thing we can leave you with today is that of course, we're testing in all the strategies and things in the backbone of AI. But AI is pervasive across many things, and it affects a lot of things that we actually do in other ways. So if we just -- if we think that Sam, just how would you put that category of artificial intelligence, like all of the different things, all the categories?

Yes. Well, there's probably 3 things I'll touch on, and then a new genes might talk about operationally what -- how it's impacting us. But first and foremost, there's just been a huge domino effect from all the CapEx associated with AI and AI infrastructure going into utilities, midstream and all parts of the economy, even just transportation, moving all these supplies around. So it's affected the organic growth backlog in our business dramatically.

But overall GDP is up 2% because of AI. But particularly in the U.S. but the sectors specifically around it or even more?

For sure. And -- but then there's 2 things where we are directly impacted, I'd say. First, obviously, we set up a fund. So we have a new flagship fund that hopefully, we'll grow it, as I mentioned, or to be many billions of dollars in scale and the program itself, I think we've talked about $100 billion in capital spend. So that's new, and that's going to be very meaningful to us. What's interesting and Connor often talks about how he invests in businesses that didn't exist a couple of years ago, whether it's batteries and nuclear. But in the case of AI, we have new asset classes that didn't exist.

So a lot of the behind-the-meter power solutions, weren't things that people were thinking of a couple of years ago, and now we have a $25 billion program with Bloom Energy to deliver that to the data center community. And that's just $25 billion. I started at $5 billion just less than a year ago, already growing at $25 billion. I'm sure it'll grow even bigger. Maybe even more meaningful is the creation of compute as an asset class. And Bruce, you were on stage with Jensen and a couple of others, not that long ago, talking about a $500 billion program to finance chips. And essentially, what's happened is chips has gone from being -- it's called compute.

It's gone from being a consumable to basically a hard asset class that's going to be financed in scale for a 5- to 10-year period depending on your view of how long you think the chips will last. And that's something that's incredible.

And when you think about it -- so you asked why they come to us? Well, yes, of course, we have money. Of course, we have some skills. But really, what it is, is we're one of the specialists of taking assets and figuring out what's the right capital structure and placing it into the right capital market, whether it's private or public. And what NVIDIA wanted to do is to take that industry that they've created and make it into an investment asset class. So what we're doing is figuring out securitization structures to place those assets for the right duration, right time, right credit in the structures. But maybe flipping to energy.

Maybe before getting to energy, just to reiterate something that Bruce and Sam mentioned. We're not going to get through any of these questions AI infrastructure and AI is undoubtedly the biggest theme at Brookfield today. The biggest mistake that could be made is assuming the only way we're playing it is through the AI infrastructure fund. It is absolutely the prominent driver of the AI infrastructure fund, but it is driving -- the biggest driver of our traditional infrastructure business, the biggest driver of our energy business today. And usually, I'll hand to you shortly because what you're doing with it in operations is exceptional.

Obviously, the increased demand for energy as a result of AI has been incredible for our energy business. Our ability to provide solutions on a global basis at scale to the largest and greatest corporate credit counterparties around the globe is something where we're highly differentiated. But it's also unlocking a bunch of smaller super accretive value adds within our business. We have 25 renewable power development companies around the world. They start power projects 3, 4, 5, 6, 7 years ago, some of those projects that are just coming up to FID now, instead of putting a solar farm on them, which was your plan when you started 3 or 4 years ago, they are perfectly tailored for a data center at a time where scarce grid connect for data centers is incredibly valuable and we're seeing opportunities within our existing portfolio to pivot from solar and batteries to data centers. And when we do that, it's worth 3, 4, 5x what we underwrote.

So it's very, very accretive. But like, we talked so much about infrastructure and energy. And as you turn around businesses for a living, I just gave you the biggest turnaround tool.

Before we go to [indiscernible] just wait. I know you're excited on that. But Paul, he just said he's taking solar sites turning them into data centers, but you're doing the same, right?

Yes. Look, let them talk about that. That's helpful. But we do sit on a lot of real estate in our real estate group logistics.

The big logistics site you had in France.

Yes. So it's -- we have logistics sites really around the world that are if they have access to power and they're in the right location, they are great data center sites. And whether that's we turn them into power land and sell it to somebody else to build it or we develop it ourselves. We have those options, and they're very attractive to the end users. So there's a lot of big opportunity and things -- some of the things we never even thought about just turned out to be that way. Some of it -- a lot of it and the things that we're focused on now.

Look, it's also changing our -- in general, our logistics business, what's happening in logistics and the automation that's happening in those assets. requires power. And if you have the right assets with power, the value is much higher.

Look, the applications of this stuff across real businesses in the industry is incredible. And everyone always wonders -- there's all this investment in AI, who is ultimately paying for it? Is there real productivity gains in the market. And early on, we're already seeing some pretty incredible stuff happening. We got about use cases underway across our portfolio. Today, early days, we're seeing a $300 million EBITDA uplift across that cross-section. And that's about 10% in some companies of a bump over $3 billion of value. That's real money.

And these aren't things -- this isn't -- I'm not talking humanoid robotics in our manufacturing. I'm not talking things that are 5 years out. I'm talking about predictive maintenance in a manufacturing facility. Just knowing to go fix a machine or tighten up earlier than you might have before are finding problems before they cause a bigger issue that increases throughput, it reduces maintenance CapEx. It's very real. And we're really excited about it. We buy business at 20% margins. We use determine a 3% margin. Now we can terminate 40% margin so it's quite transformational for what we do.

And Lowell, just turning to -- like all of this sounds great, and it is amazing, but we need to keep discipline, keep credit card and party risk at the highest levels because this is a time when you should not -- we should not be taking overall risks at a big way. And we often talk about what we do, and we report on the things we do, do, but we don't often talk about the things we didn't do or don't do. Are there a lot of those things today in real estate or any other -- anybody else who wanted to answer that.

Yes, like I would say, often probably the most important things we do are the ones we avoiding mistakes. And you're right, we never really talked about them, but they are incredibly powerful. Look, in real estate, I would say, at a very simple level, there's 3 things we focus on in every deal. It's the high-quality nature of the assets we're buying, finding a way to buy them at a very attractive value and then creating growth in the underlying profitability of the asset. And in today's market, I would say that third one may be the most important. So what we're avoiding today in a market with sticky inflation, high interest rates is even if we can find a great asset and buy it incredibly cheap, if it's fully locked in and there's no ability to grow your cash flows, but that's something we're not going to spend time on it.

We actually -- some people would call that core real estate in low risk, we would actually say that Scott more risk attached to it because if you end up in a place with higher interest rates and higher exit cap rates, you have no ability to grow your way through that because real estate generally has huge pricing power today, which it didn't have 5 years ago, but rents are going up in everything because of the inflation effect, et cetera. I think what we're going to see across real estate and it's still not that clear to everyone, but over the course of the next year or so, the return of significant growth across almost every asset class.

You're right. It's really easy to market the things you did that went well. It's very tough to market the things you don't do, but I'd say on the energy side, which has grown so rapidly over the last 5, 6, 7 years, we're almost -- in a lot of ways, we're more proud about some of the things we haven't done. And the biggest example that sticks out to us was offshore wind, where relative to the size of our platform, we have one of the largest platforms in the world. We're very, very underweight and we questioned it. There was tremendous growth. There was tremendous opportunity, but we just we couldn't wrap our heads around the risk-adjusted returns. And therefore, we're incredibly selective when we invested. And in a lot of cases, only invested when things had kind of toppled over and we're beginning to rebound.

But I think it's important to recognize that that's not this bet on us being perpetually smarter. There's a structural benefit to it, which is across all of our businesses, we have access to as much deal flow as anyone in the world and therefore, we never feel we have to stretch to do a deal in order to deploy capital. There are so many opportunities to choose from. So in Lowell's example, if he isn't getting 1 of his 3 things, he doesn't have to take that risk. He can be disciplined and he can wait. And I think what we're seeing in today's environment where there are so many capital needs and we have such leadership in the asset classes we invest in, we can really put a tight filter on things.

Only the best assets in the best markets with the best contracts and the best corporate credit counterparties and only when those 4 things come at the right price.

Which for both all the things Sam is doing and all the things we're doing in energy and any data centers you're doing in real estate, Lowell. What's -- I think the most important thing out of that is that because of our scale and because of our corporate relationships and because of how many things we see, we can be really, really choosy and it's really important to be choosy today. Would you agree with that, Sam? Like just the dealing with a random [indiscernible] of AI would be a bad idea. I don't know which ones those are, because we don't deal with them, but we need to be very, very careful.

But the things where we need to stay disciplined is in our infrastructure business, we don't take technology risk. So people would say, "Okay, well, I talked about compute. Are you taking technology risk there?" No. whoever we're contracting with is assuming all the risk related to the chips, we're providing financing to investment-grade counterparties. And only the best ones.

And we're vetting the credit quality of that party so that they will be there to pay even if they make a mistake.

100%. And we're not taking -- in all our businesses, we -- particularly infrastructure, we avoid merchant revenues. We try to ensure that we have as much contracted cash flow as possible and look for opportunities to add value by increasing capacity and bring on new customers into the system. Those are all things we have to...

Which because of what's going on and because of the scale of what's going on, we don't have to compromise. Like that, that's then we can grow -- we can't even do what people want us to do today. And we don't have to compromise.

Well, and this feeds back into your point and the point Sam made, our returns have stayed the same, if not got better as we scaled for this reason.

Fundraising. Most people -- the common thing you hear in the street of financial markets is fundraising is tough for PE. Is that true? Or are you just good and good looking or -- what -- how do you -- like why -- what would you attribute?

Well, it's not the looks. So it is, you know what, private equity fundraising is tough, no doubt, if I had to put a blanket statement across the whole universe, it is tough. But it's interesting, 60% of private equity allegations over the last 15 years are basically on the tech whether it's software, technology. And then if you take consumer and growth in health care, it's probably 80%, 90%. I don't even think that -- those are necessarily bad sectors. It's just probably most of our partners today, mostly what we hear is that they feel overallocated to those sectors. And what they realize is they're probably underallocated to heavy asset services, industrials, what's being called now the Halo trade.

And so we are really a beneficiary of that when they think of us as probably the best industrial and heavy asset services investor because of this broader ecosystem in the world, those increased flows are coming our way. That, in addition to the fact that they want to work with fewer managers in a bigger way. I'd say we're definitely going to have the biggest flagship we've ever had, and we're definitely going to have the largest PE fundraising across all of our verticals that we've ever seen before.

So it took us 25 years to be in the right spot.

You have to sometimes be a little patient to get a little lucky. I hope it lasts a little while longer.

And well, in real estate, you talked about some of the newer strategies or core plus value-add strategies that you're deploying. Are those in specific sectors or areas or countries? Or how are they -- how do they?

The good thing on it, it's a pretty wide open opportunity set for us, fully white space for us. And so we're going, we have the highest conviction and the opportunity set and what's happening. So it's -- right now, we're doing things like housing and logistics. We've raised our first regional funds in Europe and regional funds in Asia Pacific. But there's a lot of opportunity to grow that beyond. And we're looking at things like luxury hospitality has good tailwinds, triple net lease, which we think is interesting. So it's evolving, and it's early, but we'll be able to pick our spots and because it's so wide open to us there's a level -- and you just did a housing fund in the U.S.

Housing in the U.S., look, I'd say housing and U.S. is probably is one of our highest conviction views and it really is rental housing specifically, and it relates to the fact that homeownership is so far out of reach for people. And what we're excited about is the ability to invest in rental housing across all the subsectors of it which is pretty unique. So we're renting to people from the time they're students through when they're in apartments to single-family rental, manufactured housing, senior living. So finding the demand drivers that are really diverse.

And do you think this can get legs and get and grow a lot?

Yes. I think there's a lot of scale for it. And what's interesting is the competitors of ours that focus on that sector or on specific sectors are generally way smaller than us. So they aren't able to provide to the big investors the opportunity to invest in scale, which we can do.

The -- Anuj, on Bob's presentation, which I thought was excellent on risk and discipline of credit. One of the things that I guess, helps us versus others. Now we have both a private equity franchise and a deep credit franchise together to work? And how does that work together and help us facilitate greater scale transactions, et cetera?

Look, it's been transformational for us. I think the integration of the group, even though we've been partners with Oaktree for a very long time, I probably underestimated just how powerful this combination could be practically on a day-to-day basis in our business. We see a lot on the origination side. Both of us have footprints of experts around the world participating in different parts of the capital stack of the same kind of end market companies and being able to surface opportunities through their credit platform or us surfacing opportunities for our equity platform that then can cross over to the others.

We're able to see far more opportunities and probably put more capital to work in a better, more disciplined way. And then we have different sets of expertise that helps us on more operations side to understand the running of a business a bit better than on sometimes the structuring on the credit side to understand some of the other dynamics that play on a business we might be looking at, it definitely makes us better investors.

Anuj, I think it's probably be helpful Oaktree often gets characterized as a credit shop, and they are dominant and market-leading in credit but they also have a lot of strategies that probably do fit in the private equity category like Bob became best friends overnight. You talked 3 times a day now. I don't think any of us expected that -- and it's not just the credit side but also some of the more opportunistic equity strategies that are creating that overall they on a football team.

Absolutely. They're a lot cooler than we are.

Look, we've obviously known Bob for 10 years. I like them for 10 years, but we talk now every week, it's because of the intersection of our businesses. There's so much more that we're doing together. I said once to you in passing that [indiscernible] never realized just how much they touch private equity. So it's been really, really powerful.

Which is the -- I would say, our private equity groups, even though we're more disciplined than most or hopefully all are generally pro optimistic and our credit people are generally pro pessimistic. And the combination of those 2 things is highly powerful because it brings better disciplined decisions, probably in everything. We can bring -- you can help them be more optimistic, and they can help you have less mistakes when you make investments. [indiscernible]

So Lowell, if you had $10 billion today, [indiscernible] were as it go to work?

Yes. Look, we obviously like to be diversified. So I don't like to pick one place, but if I had to pick one, it would be the rental housing that we talked about a little bit. It's just -- this is a crazy statistic. But in the U.S., the median age of a first-time homebuyer 7 years ago was 33. To date, it's 40. So it is -- the U.S. is becoming much more of a renter nation.

Well, and I think we were -- at the peak, we were $2.3 million in sales, COVID, normally, it's like 1.7 million sales of homes. Today, we're $800,000, $750,000 this year. That is shocking. It's a drastic change. And so being able to provide quality rental housing is a place you want to be. And interestingly, the couple of the biggest transactions we've done recently were in senior living where we love the demographics of the tailwinds of growth for the 80-plus cohort, and there's very little supply in that space.

We're getting our spaces ready, Sam and I.

And manufactured housing, which is a fantastic substitute -- affordable substitute for homeownership. So being able to pick your spots that pick up those tailwinds is pretty exciting.

Yes. The manufactured housing business is amazing because it's really -- we own the land and we lease land to homeowners that put their house. We own the appreciating part of real estate.

Connor?

The 2 fastest-growing parts of our business today, batteries and nuclear and it's not even close. And that's against the backdrop where renewables continue to grow at their fastest pace in history.

What do you like best?

[indiscernible] got to cut them off.

Why do you like the best?

Well, look, the fastest growing is AI infrastructure. But the one thing we should mention is, even though we've talked about that, we still invest $20 billion in the last like year or 2 in other stuff. It's outside of infrastructure. We've got tons of things that are investing, whether it's transmission in Australia, New Zealand investments, midstream, there's -- we've also built in all our businesses. I think we've got pipeline outside of data centers and our Intel investment, we're investing tens of billions we have $10 billion of projects underway in all other verticals, whether it's utilities, midstream, transportation.

And because everyone is chasing the shiny toy over here, the valuations are and returns we can get are better, easier to earn your proper return?

Look, there's competition for everything, and we pick our spots. I think the I think some people are distracted by the shiny toy. So I think you're right, but I wouldn't want to say that it's easy pickings anywhere else.

Sam is tough on us. What about private equity?

Look, I think our core of industrial has been really exciting. You buy great businesses for single-digit multiples and there's a lot you can do with them to improve them.

Connor, flipping to -- we're getting short on time, but flipping to monetizations, Hadley had a slide up there on what we've been doing. Is that still going? Has it slowed a little? Does it depend on industry?

Well, maybe others can speak to their industry. We'll have our best year ever in terms of selling assets in the Energy Group in the exact same year that we'll have our biggest year for new investments as well. And the biggest thing that explains that is we're seeing very, very significant demand for stabilized cash generative, long-term operating contracted assets. And we have developers around the world that build 10 gigawatts of new power every year, we're selling those stabilized assets to lower cost of capital buyers and reinvesting that capital back into accretive development, and that's been an incredibly lucrative cycle, and it looks like it will continue going forward.

What about real estate?

Yes. Look, in real estate, I would say it's bifurcated. There are 2 places where we have a lot of success exiting. It's either smaller portfolio single assets. There's a lot of private capital chasing or it's best-in-class businesses that we've grown where they're very unique to very special real estate businesses that we sell as a business. And there, you can sell in pretty large size. I'd say what's been challenging is that middle which is large portfolios of just assets. There's not a lot of capital yet chasing that, although that's been a great opportunity for us on the buy side. So we're finding ways to leave within the...

And it was coming back. I think, Brian, Kevin, Ben are going to talk about this later, but it was coming back. But this interest rate worries going up has tempered it a little bit.

Yes. Look, I think tenure at 5% puts everyone sort of on watch a little bit to pause on some of that. The good thing is the fundamentals are really good. So we just continue to get growth. I think people will get accustomed to where the rates are and be back.

Or what's amazing is you roll over leases at 50% up from where they were. 25 basis points does not mean a lot. And that's probably the biggest difference today than before.

It goes back to what I said earlier. If we have high-quality assets and they can compound growth, we can be patient if we need to be.

Do you have anything else, Connor to say?

You get the last word. You're the CEO.

No, it's fun waking up in businesses where it's not can you grow. It's how much can you grow and can you do the right growth. And I think that's what we're all spending our time on in different ways, but it's certainly a growth environment for all of us. Hadley slide, you started with that. That seems pretty readily achievable.

So thank you all for listening. I think we're going to turn it over to you to take any questions from the crowd if anybody has any, and then we're going to take a break. And then go to the BN session afterwards. Thank you. Thank you all for listening.

So maybe just very quickly before we get to Q&A. Thank you all for your interest and support in Brookfield Asset Management. Four things to leave you with. We have a purpose-built structure that is unique and highly effective in being able to raise capital from the largest pools of money around the world and turn around and invest it into the largest and most attractive investment themes. Secondly, while we spend a lot of time focused on growth, we're equally focused on increasing the resiliency and stability of our underlying earnings, in particular, by continually diversifying our business.

As Hadley mentioned, we have several growth engines to support our long-term growth targets going forward that are on track or ahead of where they've been in the past. And then lastly, we could not be more excited to be partnered with Oaktree we were excited when we announced the transaction. We're more excited today, just the opportunities across sourcing, across product development, across working together, it does simply feel like we're only scratching the surface. So with that, we do have a few minutes to answer questions. If there are questions here in the room, there are mic runners. And if not, we do have an iPad, and we'll take questions from online. Are there any questions?

Cherilyn Radbourne from TD Cowen. I hope I articulate this properly. It seems to me that some of the biggest pension and sovereign wealth funds for a long time thought that they could invest on their own and some of the unique asset classes that you have expertise in. But the need to combine those with AI has like sort of changed that equation a little bit. And so there's a slide in here like $10 billion of investor solutions. And so I'm kind of wondering where that goes over time in your mind. And how does that look like on a fee basis. So sorry, a lot of parts there.

No, absolutely. And maybe 3 things to focus on there. different investors around the world over time do automate from doing more fund investments to swing to more direct investments and then sometimes swinging back and we've seen that over the last number of years. It happens in different places at different rates around the world. And we're well equipped to navigate that and grow throughout. The second thing is the largest investors around the world, the ones that we take so much pride in partnering with, they do have incredible rec capabilities but they still look to partner with us and invest in our funds because we can offer them things that even as fantastic direct investors they sometimes can't get.

It's access to our sourcing, it's co-invest, it's [indiscernible] to right. It's investing alongside of us, so they get the benefit of our operating capabilities in their direct investment. And I think we've said this before, we generally feel that co-investment is misunderstood. On the one hand, people sometimes say, you don't get to charge the same fee as you maybe would in your fund. On the other hand, our ability to offer co-invest at levels that few in the industry can drive some of our greatest fund commitments and allows our best platforms to continue to scale. Maybe to your last point on ISG, to clarify it, ISG in and of itself is not an independent revenue item. But what Howard, who chairs the [indiscernible] from Oaktree and Alper who runs it for us do is they work with those investment partners to build that bespoke tailor-made investment solution using multiple products from Brookfield.

So the funds in the [indiscernible] they secure shows up through deployment in the existing strategies we all have. And that's largely our funds, but it can also be co-invest and SMAs. But the revenues from ISG show up in our existing platforms and strategies. We'll go there, but maybe just wait for the mic and then Alex will go next.

Mike Cyprys of Morgan Stanley. Just a question on M&A. You've done a number of deals over the number of years here. Just curious as you look out from here, how do you see the pace of that partner manager and M&A activity evolving? Does it slow? Does it accelerate? Is it a higher bar today just given the acquisitions that you've done, can you remind us of the criteria that you have? And what gaps are there when you look across the platform relative to you to see the opportunity and the clients are looking for?

Sure. So maybe to comment that in parts what is the criteria? For us, it is always a build versus buy decision, first and foremost. In general, it is cheaper and you have more control if you can build it itself. I always say this quite casually. Sam has the best infrastructure platform in the world. We're probably not going to go buy another infrastructure manager if he wants to expand as he's demonstrated he can do in the past, he'll do it organically. We look to buy when we feel that one, we either would be unable to build it organically or two, couldn't build it fast enough to capture the market opportunity set.

Then the criteria. It has to be value accretive, not accretive day 1 on our share price, but accretive against a very attractive organic growth profile that we have that we believe we will meet or exceed. Two, it has to have a commercial rationale. It has to bring something that we don't already have in our business, a capability, an LP base, an asset class expertise. Three, I know this is going to sound a little soft and gushy. We like transactions where that business will be more valuable as part of the Brookfield ecosystem, not because that makes everyone feel warm and fuzzy, but you tend to have a very sophisticated counterpart on the other side. And it's tough to close that bid-ask read, unless there's some joy that can be shared to close that gap.

And then four, there has to be alignment on principles and culture. And that's what we were so fortunate to find with Oaktree. Every business has its own culture, but on core principles, we were dead aligned. In terms of going forward, we very much like what the partner manager program does to us. It really drives home that point that investors around the world are concentrating their capital with managers that can offer more. And having more partner managers creates more first-time entry points to Brookfield as well as more that we can offer to existing investors.

What will we do going forward? I would say 2 things. The market opportunity to do these transactions is growing very rapidly. Two years ago, there was lots of opportunity to do these transactions. It got quiet for a couple of years. We certainly seeing back. But going forward, I think we have an extremely high bar. We want only the best in terms of what we do because it has to fit into what we already have across 5 platforms where we think we're already market-leading. In terms of areas, there's largely 3 or 4 that tend to be the most likely.

We continue to see opportunities around businesses that would enhance capabilities around distribution and placement. That's one credit, specifically some of the niche expertises within credit, maybe certain components of asset backed. The third one would be select components of private equity. And then the fourth one continuing within the insurance vertical. But a lot of that we would expect would be done at the end.

Alex Blostein, Goldman. Apologies ahead for probably a bit of a long-winded question, but back to AI. And the way I would like to frame it is there's clearly tremendous amount of capital that will be required for the build out obviously, private markets are a big part of that. And there's very few managers like yourself that have kind of all the pieces as you outlined, whether it's infrastructure, really, energy, et cetera. So as you look out and the projections you provided over the next 5 years, how much of the capital raised will be related to AI thematically, sort of broadly? And which parts of that ecosystem, whether it's compute or real estate or power you think you will be most active in deploying capital?

It's a little bit tough to splice because as mentioned in the panel, I think the biggest mistake would be assuming the only way we're playing AI and AI infrastructure would be within our AI infrastructure fund. Sam is -- we expect going to raise one of the largest infrastructure funds ever that is absolutely supported by the demand and the opportunity created by AI, but he was probably going to do that regardless. Given that it is one of the largest themes across Brookfield, it's creating deployment and growth across our verticals, across both equity and credit across both our private funds and our listed entities.

If you asked us to [indiscernible] it, somewhere between 25 and 40%, I would say, of what we're doing around the world has some direct or indirect length to digital infrastructure growth around the world. But I think it's important to recognize that digitalization was a long-term multi-decade trend even before AI went parabolic in the last 3 years. So it was a growing theme for us in 2021, and nobody was really talking about AI back then.

Bart Dziarski, RBC Capital Markets. Connor, I wanted to ask around private wealth. So you had talked about AllianceBernstein partnership, and we should expect more to come. So can you maybe help us understand what are you looking in terms of future partnerships, what they bring to BAM? And then maybe tie that in more broadly into your target to scale private wealth fee-bearing capital by 5x over the next 5 years?

So split that into 2 parts. Maybe just important to be specific about the 401(k) and the retirement market. We took a view a number of years ago that this was an incredibly large and attractive opportunity. We staffed up a dedicated team to pursue it with the most important market participants in that space. But we very consciously took a specific strategy. We didn't simply want to throw our products on shelves of plan providers because we haven't seen much take-up in that across the industry. What we wanted to do was work with the most important plan administrators to be the real asset investment provider of their recommended or default funds.

That is where we see the greatest opportunity to deploy our investment capabilities into the 401(k) and retirement market. And that is exactly what we did with AllianceBernstein. We will deploy that through largely our existing strategies that already exist. And it's going to drive growth across our super core and our infrastructure debt and our real estate funds that already are part of our product suite. The second thing is our growth in private wealth and the high net worth channel. This continues to be one of the fastest-growing segments at Brookfield, well north of 30%, 35% CAGRs. And here, we would reinforce this point that we have chosen, we have chosen to build these businesses in what we think is the right way, often being a little bit more methodical, thoughtful about how many platforms we go on initially -- and then once that platform has delivered performance and is positioned for scale, then we ramp it up to be a market leader.

Exactly what we did on VII. I think there is something incredibly powerful when we can say things like BII has never had a quarter of net redemptions. The same thing is true across our BDC. We've honored all redemption requests over the last 12 months. There's not many that can say they've done that. It really goes to building the businesses the right way. Maybe it's slower growth upfront, but rapid growth into market leadership in the future.

Do we have time for one more question? And then -- one more question.

Sorry, I think we just cut into everyone's break. Sorry about that, everyone. Ritwik Roy, Jefferies here. Thank you again for holding this event. Maybe this is year, you accept me on LinkedIn, but I'm holding and waiting for that one. So going -- alluding back to some comments on the monetization deployment environment, understanding that your private equity business is a little bit more less so corporate PE oriented and you see what's happening in BBU, et cetera. But in terms of that and across other classes even in real estate, are you seeing that your -- the success you're having in monetization and also finding new transactions to be occurring with other sponsors? Or have you seen an increasing degree of that versus strategic transactions occurring across asset classes, but maybe PE in particular, versus maybe a year ago?

I would say it's pretty balanced. But thinking about it more specifically, a lot of our organic growth is partnering with the largest corporates around the world. So when Sam talks about his organic growth pipeline in infrastructure, we've talked about it in energy. A lot of that organic growth is more working with strategics. I think certainly, what we're seeing on the private equity side is our approach of investing in high-quality industrial businesses that are cash generative across the cycle where the majority of the value creation comes from operational improvement, it makes a much more liquid market for us to sell into because we don't need an astronomically high multiple to generate our returns. We're generating our returns through the operational improvement over the life of the investment. And I think that's why Anuj has seen lots of opportunity to monetize in this environment while there's certainly a narrative and backdrop where others are struggling to send back capital. Jason, thank you.

Thank you, Connor. Thanks, everyone, for joining us for the BAM session. We appreciate everyone's engagement. Stick around for the break, stick around after BA session. We're happy to continue the conversation. Talk to you soon.

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Good day, and thank you for standing by. Welcome to the Brookfield Asset Management Second Quarter 2026 Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jason Fooks, Investor Relations. Please go ahead.

Thank you for joining us today for Brookfield Asset Management's Second Quarter 2026 Earnings Call. On the call today, we have Connor Teskey, our Chief Executive Officer; Hadley Peer Marshall, our Chief Financial Officer; and joining us this quarter, Sikander Rashid, our Global Head of AI Infrastructure and Head of Europe.

Before we begin, I'd 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 in the meaning of applicable U.S. and Canadian securities law. 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 the U.S. and Canada and the information available on our website.

Connor will begin with an overview of the quarter, including our record fundraising and strategic partnerships that continue to strengthen our platform. Sikander will discuss our AI infrastructure strategy in greater detail, including the differentiated position we've built, our growing momentum and the opportunity ahead. And Hadley will review our financial and operating results and our balance sheet. After our formal remarks, we'll open the line for questions. [Operator Instructions]

With that, I'll turn the call over to Connor.

Thank you, Jason, and good morning, everyone. Similar to last quarter, we expect 2026 will be a record year for Brookfield and not by a small margin. Reinforcing this, the second quarter was exceptional by almost any measure, record fundraising with both earnings and fee-bearing capital growing well ahead of our long-term targets. It sets us up well for what we expect to be a record year across the board.

Fee-related earnings for the quarter were $808 million, up 20% from the prior year. Distributable earnings were $707 million, up 15%, and fee-bearing capital reached $672 billion, up 19% over the last 12 months. Perhaps most importantly, the quarter delivered $77 billion of fundraising. Our strongest fundraising quarter ever and was led by 2 of our flagship strategies and the $40 billion Just Group mandate. This mandate increases the insurance capital we manage by more than 1/3 and further extends our reach into retirement. It also reinforces our differentiated insurance model.

Brookfield Wealth Solutions holds the assets and liabilities on its balance sheet, while we manage the capital for a recurring fee. For BAM, that means recurring fee revenue at scale on an asset-light basis without assuming any insurance liabilities. However, even if we set the Just Group mandate aside, the second quarter would still have set a record for organic fundraising driven by momentum across our 2 flagships, both of which are on track to be the largest vintages of their kind, alongside a broad set of complementary strategies. This brings year-to-date fundraising to $98 billion and fundraising over the last 12 months to $163 billion.

These results reflect the strength and diversity of our franchise, the depth of our client relationships, and the growing importance of the assets and businesses we own. Both our earnings and our fee-bearing capital are compounding above the long-term targets we set out and they are doing so across essentially every part of the platform. That breadth is especially valuable in the current environment. Last quarter, we discussed that we have limited exposure to the areas under the greatest pressure like software and sponsor-led direct lending. But at the same time, we have outsized exposure to the areas where there is high demand. The developments of the past quarter have reinforced both sides of that equation.

Our non-traded BDC sits within a broadly diversified suite of products, representing less than 1% of our fee-bearing capital. However, the team has been prudent in raising and deploying capital over the past several years, delivering strong performance and allowing the fund to enter this period underlevered and with ample capital resources. This quarter, redemption requests fell below 5%, which the fund met in full.

At the same time, we continue to see robust inflows into our other wealth strategies, particularly infrastructure. But more important than the strong downside protection is how we are positioned for the greatest growth opportunities in the market today. Three areas stand out. The first is real assets. In today's environment, marked by pockets of uncertainty and volatility, investors gravitate towards high-quality, cash-generative assets and essential services businesses. Real assets tend to outperform in periods like this because they offer precisely what investors are seeking, capital preservation, inflation protection and both cash generation and value appreciation. This is exactly where we have leading strategies, and that strength is showing up across fundraising, deployment and monetization.

The second area is credit. Last week, we completed the acquisition of Oaktree, fully combining the 2 businesses. Together, our credit platform has leading scale and depth of capability across asset-backed finance, real asset finance and opportunistic credit and is well positioned to perform across market cycles. Full integration lets us source and underwrite more effectively and deliver the full breadth of our combined capabilities on behalf of all our investors.

And the third area is AI. Our leadership across the entire AI infrastructure value chain, data centers, power generation and compute gives us a rare and differentiated set of capabilities, notably, the ability to raise capital at scale to source proprietary opportunities and to build relationships with the hyperscalers, sovereign governments and other key players across the AI ecosystem. Our ability to bring these skills together to meet one of the largest investment opportunities globally is why this has become one of the fastest-growing parts of our business.

And we're pleased that Sikander is joining us today to walk you through the momentum in our AI infrastructure fund. That leadership is now translating into partnerships that are scaling rapidly. We have expanded our framework with Bloom Energy to finance quick-to-deploy power solutions for AI infrastructure fivefold from $5 billion to $25 billion in just 9 months, a measure of the sheer scale of what lies ahead.

Through our sovereign AI infrastructure initiatives, we've increased our development framework with France from EUR 20 billion to EUR 30 billion, and we've partnered with Naver and NVIDIA to accelerate the expansion of South Korea's sovereign AI infrastructure. NVIDIA, who joined our AI infrastructure fund as an investor and a founding partner, is also both a cornerstone investor and our technology partner in the compute platform at the center of that build-out. Through Westinghouse, we are continuing to support the U.S. government's effort to accelerate nuclear deployment. Most recently, the Department of Energy issued a $17.5 billion financing commitment to support the development of up to 10 Westinghouse AP1000 reactors. And Sika will discuss our recently announced deal to build a large AI factory in Kentucky.

We are also forming new relationships that broaden the opportunity set. We partnered with OpenAI to launch a company focused on accelerating commercial AI adoption, including within our own portfolio of industrial and manufacturing businesses. And the same partner of choice dynamic extends beyond AI. We partnered with AllianceBernstein to bring private market real assets into their target date funds, an example of our growing involvement in the 401(k) market, a segment that we feel is well suited to our real asset focus and one of the largest long-term growth opportunities we see anywhere.

Taken together, these partnerships demonstrate the strategic value of our platform. Few firms can bring together capital, operating capabilities, energy, digital infrastructure and strategic relationships at this scale. So to conclude, we are entering the second half of the year with record results, exceptional strategic momentum, limited exposure to the areas causing the most concern and meaningful exposure to where capital should continue to flow. We are positioned not simply to navigate this environment, but to outperform through it.

With that, we will hand the call over to Sikander to give you more color on the strong momentum in our AI infrastructure strategy.

Thanks, Connor. AI is not only shaping our AI infrastructure strategy it is becoming an increasingly important theme across all of Brookfield. It is influencing capital deployment in our infrastructure, energy and credit businesses and business plans within every portfolio company, including efficiency and revenue growth in 600 businesses and assets in our portfolio. A brief word on the underlying thesis. We estimate $10 trillion in annual economic productivity potential for AI, requiring $10 trillion of CapEx across the AI value chain, including energy, data centers, compute and strategic adjacencies.

For investors, the important point is that this is a physical infrastructure, the critical backbone of economies that are becoming more digital, not a technology bet on which model chip or application ultimately wins. This opportunity led us to launch our dedicated AI infrastructure strategy, which is off to a great start.

We held our first close at the end of the second quarter. Fundraising momentum remains strong, and we have deep and growing pipeline of high-quality investment opportunities. Although [ BAF ] is a new strategy, the core capabilities behind it are not new to Brookfield. We own and operate approximately $85 billion of digital infrastructure and are one of the largest energy businesses.

BAF differentiation lies in its ability to integrate the broader AI value chain while capitalizing on Brookfield's access to capital, power and global relationships. Drawing on our leadership positions across the real estate infrastructure and energy businesses, we can source and entitle power land, develop and operate large-scale AI factories, deliver behind the meter and baseload power, provide contracted compute and pursue partnerships with some of the major stakeholders, including semiconductor players and hyperscalers.

Not many firms can bring all of that together. This integrated capability is increasingly what the largest companies and governments are seeking. They are not well positioned to coordinate multiple providers for complicated and capital-intensive developments where speed to market is key. They want a trusted partner capable of combining capital, development and integration across the full value chain. Our large-scale partnerships with Microsoft, Google, Intel, Deutsche Telekom, Bloom and NVIDIA as well as sovereign initiatives in Canada, European Union, South Korea and other parts of the world demonstrate our approach and capabilities.

The opportunity is substantial, but leadership in this market is not about deploying most capital or moving the fastest. It is about originating the best opportunities, being selective about which ones we pursue and maintaining discipline. Questions about whether too much infrastructure capacity is being built are reasonable. As with every major infrastructure cycle, whether it be the railroad revolution in the 1800s or the fiber build-out in early 2000s, it is inevitable for some capital to be poorly allocated.

Our approach does not require us to forecast the AI market perfectly. It requires us to exhibit discipline in the investments we make and the risks we assume, as we always do. We do not commit capital speculatively and remain thoughtful about our counterparties and infrastructure locations. We're building the backbone of AI, the infrastructure that underpins the AI economy.

As such, we will build AI infrastructure backed by hard assets and long-term contracts where we seek a return on and off of our capital over the contract term. Our base case returns are not dependent upon a market exit or imprudent renewal or financing assumptions.

Same disciplined approach is applied across all of our key verticals, data centers or AI factories, behind-the-meter power and compute. The Paducah American Energy Hub announced last week demonstrates our approach. Brookfield was selected by the U.S. Department of Energy to develop a major AI campus on a former uranium enrichment site in Kentucky. Rather than competing for conventional private sites requiring speculative capital outlay and limited grid capacity, Brookfield is repurposing federally owned industrial land with existing transmission, water, fiber and transportation infrastructure.

At its peak, this site supported approximately 3 gigawatts of electricity demand and consumed 30 million gallons of water per day, illustrating its industrial scale. The proposed development is expected to attract up to $100 billion of private investment and support more than 2 gigawatts of compute capacity. This Bring Your Own Power structure, which includes development of over 2 gigawatts of new generation and battery storage addresses one of the largest constraints facing the AI industry while protecting existing consumers from cost of new generation and grid infrastructure. Paducah highlights what differentiates Brookfield, our ability to originate strategic opportunities, assemble complex partnerships and deliver integrated solutions across the full AI value chain while protecting our downside. It is also worth taking a minute to explain how AI infrastructure fits alongside our flagship infrastructure and transition funds.

BAF is distinct from but complementary to our other strategies. The mandate is new, but the playbook is familiar. Five years ago, we launched a dedicated transition energy strategy when the opportunity, investor demand and investment pipeline became too large and specialized to solely reside in our flagship infrastructure fund. That strategy has since become the largest of its kind globally.

We believe AI infrastructure can follow a similar trajectory. Each strategy has a clear role. Our flagship infrastructure fund invests in data centers as one sector among many, often through established, stabilized, operating businesses. Our transition fund develops and contracts renewable power for a broad range of customers.

BAF by contrast, targets large-scale AI factory development and directs power specifically towards AI capacity. Also, more than half of BAF's scope will be outside data centers altogether, behind-the-meter power, compute and adjacent platforms where competition is thinner and we believe returns are more attractive. A word on scale.

BAF is targeting $10 billion, but it will anchor a broader investment program capable of pursuing roughly $100 billion of opportunities, supplemented by significant co-investment from our partners and prudent asset level financing. That structure allows us to pursue the largest opportunities without overconcentrating the fund while creating additional economics for Brookfield. Our partnerships with Bloom Energy on power and NVIDIA on compute infrastructure are good examples of how quickly these opportunities can scale.

Last October, we formed a $5 billion partnership to finance Bloom's rapidly deployable, highly reliable behind-the-meter power solutions for AI factories. Less than 9 months later, on the back of strong customer demand, we expanded the partnership fivefold to $25 billion. That creates a significant additional investment opportunity for our partners in an area where we believe the risk-adjusted returns are particularly attractive.

I'll conclude by reiterating that taken together, we believe Brookfield is uniquely positioned to lead this build-out. We have the scale and capabilities to pursue the largest opportunities, but just as importantly, the discipline to be selective and structure these transactions as infrastructure investments backed by hard assets, strong counterparties and contracted cash flows.

And with that, let me turn it over to Hadley.

Thank you. As Connor discussed, we delivered another strong quarter, and I'll cover our financial performance, capital positioning and why we're on track to deliver a record 2026.

Fee-related earnings, or FRE, in the second quarter increased 20% from the prior year period to $808 million or $0.50 per share. Over the last 12 months, FRE has grown to $3.2 billion, up 19% from the prior year period. Distributable earnings or DE, were $707 million, or $0.44 per share in the quarter, up 15% from the prior year period, bringing DE over the last 12 months to $2.8 billion. Growth in DE continues to closely track growth in FRE, underscoring the reoccurring resilient nature of our earnings profile.

Turning to margins. We continued to grow the business, delivering strong profitability with margins of 57% for the quarter and 58% over the last 12 months. Beginning next quarter, our reported margins will reflect the completion of our Oaktree acquisition, which will lower our consolidated margin due to business mix. We also plan to make the transition to the new partner manager presentation we've previously discussed. We think this new presentation will provide additional transparency into the revenues and expenses of our partner managers as they have grown to become a more meaningful part of our credit business.

Before turning to fundraising, I want to touch on share repurchases. We prioritize deploying capital into initiatives to expand our platform, including acquiring partner managers' interest and seeding complementary strategies. However, given the public market volatility this year, we believe our shares are meaningfully undervalued and so we've been more active in repurchases. In the second quarter, we opportunistically repurchased $200 million of stock, bringing our total year-to-date buyback activity to nearly $575 million.

Now let me turn to the details of the record $77 billion we raised in the quarter. Within our Infrastructure and Energy businesses, we raised $12.5 billion, including $9.3 billion for infrastructure flagship strategy. We expect to hold a sizable first close in the coming months. The strong demand reflects both the powerful secular tailwinds, supporting infrastructure investment and the exceptional track record of the strategy itself, which stands us apart. Infrastructure is our largest flagship franchise. Across 15 years and 5 vintages, through a wide range of market environments, the strategy has remained focused on the same 5 core sectors and most importantly, has consistently generated returns in the mid-teens. That consistency makes the strategy straightforward for clients to underwrite. They understand the investment approach and know what to expect. In addition, we continued to see consistent strong demand for our super core infrastructure strategy and our infrastructure private wealth strategy, each of which raised $900 million this quarter.

Within our private equity business, we raised $8.9 billion, primarily comprised of $6.7 billion for our private equity flagship strategy, which we expect will be the largest ever. We also continue to raise capital in our complementary strategies, including for our Middle Eastern and financial infrastructure strategies. Our credit business continues to benefit from broad-based demand. In periods of heightened uncertainty, investors tend to favor strategies backed by tangible assets, contractual cash flows and strong downside protection, which is supporting allocation to real asset credit and asset-backed finance. Further, the continued pockets of uncertainty bodes well for our next opportunistic strategy.

This quarter, our credit business raised $51 billion of capital during the quarter, including $45 billion from Brookfield Wealth Solutions. Beyond insurance, we also saw strong fundraising across Oaktree and other partner managers. Demand for our infrastructure debt strategy also accelerated, with $600 million raised during the quarter as we approach its final close. The transaction environment for real assets and essential service businesses that form the backbone of the global economy continues to work in our favor.

During the quarter, we deployed $21 billion and monetized $11 billion with broad-based activity across the portfolio. This was particularly evident in real estate, where sentiment continues to improve and more market participants are coming off the sideline. As an example, we deployed our first investment for BREVA-H, our value-add strategy to focus on the housing sector into YES! Communities, one of the largest manufactured home community owners in the U.S. marking an important step in our value-add strategies. Our pipeline remains robust with over [ $10 billion ] of attractive transactions already announced or under contract. Based on the breadth and depth of activity underway, we expect transaction volumes to continue building through the second half of the year.

Turning to our balance sheet. We maintain a highly flexible asset-light balance sheet that supports growth while preserving substantial liquidity. During the second quarter, we issued $1 billion of senior secured notes comprised of $550 million of 5-year notes at a coupon of 4.832% and $450 million of 10-year notes at a coupon of 5.298%. We ended the quarter with $3.1 billion of corporate liquidity. Since quarter end, we completed the acquisition of Oaktree using a portion of that liquidity, leaving us in a position with ample flexibility to support ongoing operations, strategic initiatives and growth across the business.

Lastly, we declared a quarterly dividend of $0.5025 per share payable September 30 to shareholders of record as of August 31. We've entered the second half of the year with considerable momentum and are well positioned to deliver another record year despite continued market uncertainty.

With that, we'll open up the line for questions.

[Operator Instructions] And our first question will come from Bart Dziarski from RBC Capital Markets.

Maybe picking up on that last sentence there, Hadley, clearly, a very strong fundraising quarter. You're running at about $60 billion year-to-date if we adjust for Just Group. And so would love for you to just unpack the fundraising outlook for the back half of the year, including some of the key drivers that underpin that outlook.

Thanks for the question. Yes. So year-to-date, we're obviously on a record-setting fundraising pace at almost $100 billion in the first 6 months. We still expect to do a lot more this year. And as a result, we expect to far exceed the business's previous high watermark both on an absolute basis and if you excluded large insurance transactions. Perhaps the most important thing about that guidance is we expect to raise very significant amounts of capital throughout the remainder of the year. But it's very nicely balanced across 4 channels. We have -- we expect it almost to be roughly equal across flagships, complementary equity strategies, debt strategies, and insurance inflows. And that diversity gives us a lot of comfort that even if there are some changes in the -- unforeseen changes in the market over the next 6 months, we're certainly going to well -- land well into record territory almost no matter what.

Our next question comes from Cherilyn Radbourne from TD Cowen.

Given that you just closed the acquisition of the remaining stake in Oaktree, maybe you could give us an update on your view of the credit landscape in 2 respects. One, whether there's enough depth to finance the scale of what has been proposed industry-wide in AI? And then an update on your view of the opportunity set for Oaktree in sort of the 2027, 2028 time frame?

Thanks, Cherilyn. Maybe just an overarching comment to frame this. We see credit markets as incredibly robust right now. Yes, but it's the small kind of pockets of uncertainty and very specific corners of credit markets. But by and large, the appetite for credit from banks, from insurance companies, from institutions, in particular for high-quality real assets remains incredibly strong. And across all of our verticals, we're setting record financing levels at very attractive rates. So is there enough capacity and funding to support the build-out we're seeing in infrastructure and AI infrastructure? Absolutely. And candidly, we expect to play a fairly significant role in that.

In terms of the opportunities for Oaktree, Yes, we closed the transaction on Monday, but candidly, the integration has been happening since last October. And where we really see the upside for that business is on the revenue front. The ability to include Oaktree into Brookfield's broader distribution, product development, multi-asset programs with our largest partners. We're already seeing the benefits of that flow through their business.

Perhaps just the last comment I would make, and it goes a little bit to the previous comment on fundraising. We're also seeing an incredibly nice staggering of major fundraises going forward. This year, obviously, is our infrastructure and private equity flagships. We very much expect our credit flagship Oaktree ops to be in the market in 2027. We expect our real estate flagship to be in the market in 2027. And then we expect energy to be back in the market in 2028. We're seeing all those flagship time lines being pulled forward just based on our deployment and demand.

Our next question will come from Worthington from JPMorgan.

I wanted to follow up on your prepared remarks on AI infrastructure investment, lots of firms and lots of funds are raising money for AI infrastructure. Demand seems big, but fundraising has been big here, too. Is infrastructure and AI infrastructure investing getting crowded? And what is competition like for the largest deals? And then along the same lines, you have a number of AI infrastructure partnerships across different regions. How important are these in future partnerships to be able to scale your infrastructure build-out given the substantial dedicated and co-mingled capital you are raising?

Ken, it's Sikander. Thank you for the question. I can take this one. Look, so on competition, yes, we -- we agree the risk competition since we launched our dedicated AI infrastructure strategy last year, we've noticed the launch of several AI funds. But look, despite the competition, the demand for our AI infrastructure fund remains very strong, both from institutional investors, but also industrial partners, a host of whom we are in advanced discussions with at the moment.

And the investor interest in our fund boils down to really our differentiators, which are as follows: number one is energy. So in the AI value chain today, energy is the largest bottleneck. For context, the U.S. alone needs 100 gigawatts of power for AI infrastructure in the next 10 years, but the grid can only make 30 gigawatts of that available. And what that means is, in the future, compute needs to migrate towards the power sources.

And when you look at our energy business today in the U.S. or around the world, we are the largest energy business, and we've been developing large-scale power plants for decades. Secondly, we have strong digital infrastructure capabilities. As I mentioned in my remarks, we have an $85 billion business, which includes 6 distinguished data center platforms in 5 different continents.

And lastly, look, our focus is not on data centers, only data centers. This is not a data center fund. Our fund is focused on the full AI value chain, and that includes data centers, AI factories, power and compute. Power and compute will account for 60% of the capital in the next 10 years. And I think that's going to be a differentiator for us going forward.

And on your question on strategic partnerships. Okay. Look, on question on -- I'll just finish my remarks. On strategic partnerships, look, they are an important differentiator as well. Our industrial partners, whether it's NVIDIA or Bloom, Today, the bottleneck is chips and power. So the fact that we have all these operating capabilities and relationships with some of the best OEMs in the world, further solidifies our position as a top AI infrastructure investor.

Our next question comes from Alex Blostein from Goldman Sachs.

I wanted to actually just piggyback on some of the thread that Ken was talking about and expand a little bit more on how the AI-related boom is likely to benefit Brookfield, the asset manager more explicitly. Obviously, lots of momentum around very large deals and tens and hundreds of billions of dollars that you guys are citing. But as you think about the flow-through from that to management fee growth or opportunities around maybe capital markets, how would you frame that for investors in terms of fee growth over the next kind of 12 to 18 months that could perhaps be better relative to expectations based on kind of the deal activity that you're seeing?

Thanks, Alex. I appreciate the question because it probably allows us to highlight one dynamic we're seeing AI infrastructure is, without a doubt, probably the largest and fastest-growing theme at Brookfield today. But the only -- but that is not to say the only way we capitalize on that theme is through one AI infrastructure fund. The deals we are doing across energy, across data centers, across gigafactories across compute, these are not all going in the AI fund.

As Sika just said, the AI fund is not a data center fund. And therefore, we're seeing AI infrastructure investments support growth in our real estate strategies, in our credit strategies, in our infrastructure strategies outside the AI fund and then obviously in our energy strategy. So the fee growth out of this trend is very significant beyond just our recently launched dedicated Brookfield Artificial Intelligence Fund.

The other thing that we would say is, yes, these deal sizes are very large, and this has always been a key differentiator and value-add for Brookfield. This allows us to give co-invest to some of our largest investors that drives very significant fund commitments across our business. And then you said it given the scale of some of these transactions, we would expect them to drive incremental capital markets and transaction fees. But our business grows at, call it, 15%, 20% a year in general. We're certainly seeing our deployment and activity in AI infrastructure meaningfully, meaningfully above that level, probably kind of double those run rates.

Our next question comes from Craig Siegenthaler from Bank of America.

In Roughly 4 weeks, S&P will announce their next Index Rebalancing, including for the S&P 500. This is going to be the first rebalance post your August 3 Oaktree consolidation, which improved your U.S. headcount mix. On our math, it's going to add roughly 1,200 employees with more than 60% of them based in the U.S. So how do you see this transaction changing the potential for the S&P 500 add just given the U.S. headcount mix has been a factor in the past?

Thanks, Craig. I mean, overall, we are well positioned. And as you just pointed out, our story keeps strengthening. Historically, you've heard us talk about the changes we've made to our business like our headquarters moving to New York as an example. But in the past, call it, 18 months, our businesses continue to evolve in ways that further reinforces our position as a U.S. company. We've significantly increased both our assets under management and revenues in the U.S., which remains our fastest and largest growing market.

And picking up on the theme of the last few questions around AI as an example, where we heavily see the opportunity set is in the U.S. And that's the case for all of our businesses. So the recent closing of Oaktree does further strengthen that. You pointed out the employees, the assets under management. All of that continues to bode very well for us, where we will be above 60% on the employee count. And then you think about the growth of our business, that will continue to strengthen. So given these developments, we plan to provide the S&P with an updated submission shortly and believe that the evolution of our business warrants that reclassification.

Our next question comes from Mike Brown with UBS.

I wanted to ask on the Wealth Solutions side of the business. You've had a few developments in the channel over the last 12 months or so. So how would you characterize the product suite today and maybe where you want it to go over time? How would you compare it to some of your peers in terms of size, scale and again, that product suite?

And then can you just touch on some of the strategic partnerships I know you have one with Fidelity Canada and SocGen. Maybe just give us an update on any developments there and then touch on the AllianceBernstein partnership as well.

Great. Thank you for the question. In terms of what we're seeing on the private wealth side, it's very much -- continues to be a significant growth vertical for us. We continue to see significant net inflows into our platform today. Obviously, there's some relative softness in kind of the non-traded BDC space. But even there, Oaktree's product clearly has significantly outperformed the market. And any softness there is being more than offset by significant inflows we're seeing in other of our private wealth products, in particular, infrastructure which continues to go from strength to strength.

In terms of how we build that product suite out we're going to continue to be very methodical and disciplined in how we build out our private markets business as we have been in the past. It's -- we've been expecting this business to grow at 30% plus CAGRs, even with the softness in the BDC space, we expect to be close to that level this year and back to that 30% to 50% growth rate going forward. And that's really driven by 2 things: growing new products. In particular, we expect to add some new products on the credit side in the near term.

And then secondly, we have a very large pipeline of platforms that will be distributing our products coming online over the next 2 to 3 quarters. Maybe just a comment on the AllianceBernstein partnership we're very excited about that. As we've said for probably over a year now, we view the 401(k) market as one of the largest long-term opportunities for our business and one that our focus on real assets is really well positioned to capture outsized share in.

But in our approach to that market, we didn't simply just want to stuff our products on shelves and not get it distributed. We've taken the approach of being in the recommended or default fund of some of the largest target date in interval fund designers and distributors. And that's what we did with AllianceBernstein. And we expect to announce other partnerships like that, hopefully before the end of the year.

Our next question will come from Michael Cyprys from Morgan Stanley.

Just a question on AI infrastructure. Today, AI compute clearly a scarce and heavily constrained resource. Just curious how you see that perhaps evolving over time as more capital and resources are brought to bear over time. Do you see that ultimately becoming more of a commodity? And then how do you envision the right longer-term home or vehicle for these data centers and related infrastructure? Would you envision like a series of core, core plus strategies over time, similar to what we've seen develop in real estate for stabilized properties? Just how big of an opportunity could this be? And maybe talk about some of the steps we could see from Brookfield over time.

Yes. Michael, this is Sikander. I can take the first question, and then I'll hand over to Connor for the second one. So look, firstly, we agree. Compute is completely constrained at the moment. And in fact, the full AI value chain has bottlenecks, whether it's memory -- whether it be memory, GPUs or power and this significant supply/demand imbalance is a big positive for us. As I mentioned earlier, we have strong operating platforms literally across the world. When you couple that with the shortfalls in GPUs and power that, in fact, positions us really well to enter into very attractive long-term take-or-pay contracts with some of the best counterparties in the world, whether it's the technology firms or the sovereign governments. And I think that is a huge positive for us. So maybe with that, I'll hand over to Connor for the second one.

Certainly. So in terms of where we see in terms of a product suite from here, no different than with our largest investment strategies around the world, we always want to start with building and scaling a flagship and going from there. Maybe tying back to one of the previous questions, the important thing to recognize is we actually already have a lot of vehicles that can absorb and deploy into digital infrastructure.

So the demand and the deployment we have will not just support the AI infrastructure fund, but a number of our strategies. But make no mistake, from here, do we think we will have more products related to AI infrastructure in the future? Absolutely, yes. Our focus today is on the flagship, not dissimilar to what we did when we launched energy transition. But is this a market where we think we will be so sizable in our deployment investment and operating going forward that it will require more than one strategy and more than one investment vehicle? Yes, it will. And we do expect there to be multiple vehicles dedicated to AI infrastructure over time.

Our next question will come from Dean Wilkinson from CIBC.

Connor, I just want to circle back on the AllianceBernstein collaboration. Just a point of clarification. Does that open up the door to the existing [ $100 and change billion ] of target date solutions they have? And what would you expect the cadence of sort of your deployment into those programs look like, say, over the next 2 to 3 years?

So what is being done is a product, I would say, is being created, where AllianceBernstein will provide the credit, Brookfield will provide the real assets and Carlyle will provide the private equity. That product will begin distributing in 2027, and it will grow from there. And as we've said with this space, we do expect it to be very significant over time, but it will grow incrementally off pretty modest origins.

There's 2 points I think that can be helpful, though, is this structure, this product has been designed such that it can be deployed through other target date providers beyond AllianceBernstein as well. That's point one.

And two, we also expect to enter into other partnerships like this with other product providers and distributors because what we're seeing in the market is Brookfield's leadership in long-duration, cash-generative, inflation-linked real assets is such a perfect complement to these -- the desires and objectives of long-term retirement pools of capital, we're seeing all the product developers reach out to us to try and get our products as part of their solutions.

Our next question comes from Dan Fannon from Jefferies.

So obviously, you've talked to a very strong 2026 in terms of fundraising, which also is leading to strong FRE growth. I was hoping to get a little bit more context as we think about next year and what we'll be able to sustain some of the momentum and some of the products you expect to be in market with still raising and growing within 2027?

Great. So we'll come at this in 2 different ways. Obviously, we expect fundraising to be very significant in the latter half of 2026. But is 2027 going to be as big as 2026? Probably not, but it will be very, very strong nonetheless because you're going to get the final closes of our private equity and infrastructure flagships, and you're going to get the launches of our real estate and credit flagship funds next year. And we're really liking the sequencing of that and the fact that both those credit and real estate flagship launches are being pulled forward from their original forecast.

To your comment on kind of fee and earning outlook going forward, I would say the fee trajectory feels rock solid through the end of the year and into next. Obviously, in Q4, we lap a very strong prior year quarter, which may reduce the quarter-over-quarter growth for one quarter. But as we turn to 2027, the exceptional fundraising in 2026 positions us to maintain that accelerated growth trajectory into next year.

Perhaps the last point, I would make is one thing we're pretty excited about, which is due to significant investment outperformance in some of our strategies since we spun out at the end of 2022, we expect to begin generating and realizing carry earlier than we previously forecasted with some carry generation some carry realization expected this year and certainly pulling forward larger carry realization from the latter part of the decade into the next few years, and that's certainly going to be an upside to our earnings that we probably weren't forecasting 6 or 12 months ago.

Our next question will come from Mario Saric from Scotiabank.

Just maybe, Connor, just following up on the commentary on kind of late '26 and 2027, while it sounds like '27 might not be as big as '26. Do you envision the growth being delivered to remain above your 5-year Investor Day forecast? And if so, like how much of that growth do you feel is baked in for lack of a better way of describing it today versus being contingent upon a more uncertain macro environment?

So as we look out to 2027, I would say the core growth trajectory of the business remains very strong, and I would say, in line with our long-term targets. There are potential upsides to that number, particularly around outperformance in our public market vehicles. That is a little bit market dependent. But if some of that comes through, we certainly could see ourselves above our long-term targets.

And our next question will come from Crispin Love from Piper Sandler.

In the prepared remarks, you called out the comments about too much digital infrastructure capacity being built is reasonable. If that thesis does turn out to be correct, can you just share how you're protected beyond being able to be more selective now because of the many opportunities you're seeing? Just curious if you can dig into that a little bit further, key risks from your end as you look out over the next several years and then how you're able to mitigate those?

I think the most important thing when we think about AI infrastructure and our approach, is it's absolutely no different to our broader market-leading infrastructure business and the discipline and approach we've been using there for multiple decades. How do we protect ourselves the same way we protected ourselves across our real assets business. We don't build on spec. We only build against long-term revenue constructs that are already secured.

And importantly, we can focus on only building the best projects in the best markets with the best revenue constructs backstopped by the best credit counterparties. That ability to be selective and ensure that we are always going to get both a return of and on our capital in the contract -- in the initial contracted life that you are building the project against without taking any recontracting or terminal value risk, that is where we are very differentiated versus some others in the space. And it's very just reflective of applying the same infrastructure discipline that's driven our platform for 2 decades to this rapidly growing AI infrastructure asset class.

It's the best contracts with the best counterparties, no different than when we build real estate. It's with the best tenants against the longest term leases or when we build power plants, it's with the best offtakers against 20- or 25-year corporate offtakes.

And our next question will come from Jaeme Gloyn from NBCCM.

I just wanted to go to Oaktree what the acquisition now closed. What can you tell us about the evolution of fee rates in the credit -- in the credit business today likelihood of sustaining levels we've seen in the last few quarters -- in the next few quarters and the ability to potentially expand that fee rate over time.

So the inclusion of Oaktree, we wouldn't expect to dramatically impact the fee rates. We're really not changing Oaktree's the front side of Oaktree's business in any way other than growing it going forward. Into Q3, there might be a modest mix issue just as we acquired 25% more of the business.

But in terms of what we expect in terms of revenues and profits from that business going forward, we do think the combination of the 2 platforms will drive significant earnings growth in that business on the revenue side. And then similarly, we do think the combination of the businesses will drive significant operating leverage on the back office side. I guess that goes a little bit more to margins and profits than fee rate, but that's what we expect to see going forward.

And I am showing no further questions at this time. I would now like to turn it back to Jason Fooks for closing remarks.

Okay. Great. If anyone should have any additional questions on today's release, please feel free to contact me directly. Thank you, everyone, for joining us, and we'll see you next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day and thank you for standing by. Welcome to the Brookfield Asset Management First Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Jason Fooks, Managing Director, Investor Relations. Please go ahead.

Thank you for joining us today for Brookfield Asset Management's First Quarter 2026 Earnings Call. On the call today, we have Connor Teskey, our Chief Executive Officer; Armen Panossian, Co-CEO of Credit; and Hadley Peer Marshall, our Chief Financial Officer.

Before we begin, I'd 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 U.S. and Canadian securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They're 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 the U.S. and Canada and the information available on our website.

On the call today, Connor will begin with an overview of the quarter and highlight the strategic momentum across our business. We're also pleased to have Armen join us to provide an update on the Oaktree integration and share his perspective on how our combined platform is positioned to be opportunistic in today's market. And finally, Hadley will discuss our financial and operating results and balance sheet. After our formal remarks, we'll open the line for questions. [Operator Instructions]

And with that and I'll turn the call over to Connor.

Thank you, Jason and good morning to everyone on the call. 2026 will not only be a record year for Brookfield but one where we expect to exceed our long-term growth targets and we are already off to a great start with a strong first quarter. Fee-related earnings for the quarter were up 11% to $772 million and distributable earnings were $702 million. We raised $21 billion of capital this quarter and fee-bearing capital increased 12% over the last 12 months to $614 billion. Including the fundraising we have announced associated with the Just Group mandate and our flagship private equity fund, year-to-date fundraising stands at $67 billion, more than half of the $112 billion we raised in all of 2025.

More important than the numbers is what they reflect. The continued strength of our franchise, the quality of our client relationships and the increasing importance of the areas where we invest. We are operating from a position of strength with scale, liquidity and a portfolio centered on essential assets and businesses that form the backbone of the global economy. This year is being supported by a number of important strategic developments across the broader platform. In early April, Brookfield Wealth Solutions completed its purchase of Just Group, a leading pension risk transfer platform in the U.K. And through that, BAM was awarded an additional $40 billion asset management mandate, further extending our presence in retirement and insurance-related capital.

We are also very close to completing our acquisition of Oaktree, where we -- which we expect to close in the second quarter, which will further strengthen and integrate our global credit franchise. In a few minutes, Hadley will speak more specifically to the financial impact of both those transactions. At the same time, this year, we have one of the broadest product sets in the market. This includes our flagship private equity strategy, which has already closed $6 billion and will be holding its first close in the coming months. And it also includes our flagship infrastructure fund. In fact, all of our infrastructure funds alongside a growing number of complementary strategies. We are also seeing excellent momentum across our partner managers, where each of Primary Wave, 17Capital and Pinegrove recently held fund closes that not only exceeded their targets but in all 3 cases, represented the largest fund of their kind. That breadth is driving strong fundraising momentum and setting us up well for the balance of the year.

Against this backdrop, we continue to expect 2026 to be Brookfield's largest fundraising year ever. One of the clearest ways our platform is evolving is in how we engage with our largest clients. For some time, we have said that investors are consolidating more of their business with fewer managers, particularly with firms that can invest at scale across asset classes, geographies, products and up and down the capital structure. Our partners are not only asking us for a view on one sector or one fund but rather, they are asking what we are seeing across the $1.2 trillion of assets in our ecosystem, how capital is moving across markets and how those linkages are shaping investment opportunities. More and more, those conversations are leading to broader strategic relationships where we start with the clients' objectives across income, appreciation, duration, diversification and liquidity and then build customized solutions across our strategies to help meet those goals.

We are seeing tangible momentum for multibillion-dollar partnerships across multiple strategies and we are investing behind it through our Investment Solutions Group, a dedicated team focused on delivering those insights and tailored solutions at greater scale. While this capability has long been a differentiator for our business, its importance has become more acute in recent years and we expect it to be a key competitive advantage as alternatives continue to expand into retirement, insurance and individual markets. In the near term, geopolitical uncertainty remains elevated. Trade and energy markets continue to adjust and investors are assessing what that means for growth, inflation and rates, while also considering how quickly AI may disrupt certain business models. Those issues matter and they can move sentiment and market prices in the short run. But our view is that those movements are temporary and manageable, while the long-term trends we invest behind remain firmly in favor and continue to accelerate.

Our job is to own good businesses, operate them well, protect downside and compound cash flows over time. That discipline has served us well through many cycles. And today, we are seeing it in the continued performance of our assets and we believe that this period will be no different. It's also worth reiterating something we have said before. We are fortunate to have outsized exposure to the largest and most attractive segments of the alternatives market and limited exposure to the areas where investor concern is currently the most concentrated. We have very limited exposure to software across our strategies. Sponsor-oriented direct lending is an immaterial part of our business. And our listed private wealth credit vehicles are disproportionately small with our private BDC representing less than 1% of fee-bearing capital.

But we would caution against viewing our position as simply defensive. Limited downside does not fully capture where we sit today. In our view, we are not only protected from many of the areas under pressure, we are positively exposed to the areas that should outperform in this environment. The first reason is that in this environment, real assets win. When there is uncertainty around growth, rates or the durability of earnings, investors move toward high-quality cash-generative assets and essential service businesses. That is exactly where we are concentrated. In real estate, we are clearly seeing the recovery accelerate. Sentiment is improving, financing markets are materially stronger. New supply remains muted in many sectors. And in a number of cases, assets can still be acquired well below replacement cost.

In private equity, our strategy has always been focused on essential industrial and service businesses where value creation comes from operations, not financial engineering. That approach is particularly well suited to the current market. And lastly, in infrastructure, where digitalization, rising energy demand and deglobalization are all creating sustained demand for capital. We continue to see exceptional client interest and a very large opportunity set. The second reason is that concerns regarding AI disruption are equally balanced by accelerating AI adoption. That is not a headwind for Brookfield. It is a very significant tailwind. AI requires enormous physical infrastructure, data centers, power generation, transmission, fiber, computing, cooling systems and industrial capacity across the supply chain. We are already deeply invested across those areas. We have leadership positions in data centers and renewable power. We can combine real estate infrastructure and energy into integrated solutions at scale.

And increasingly, that is exactly what the largest hyperscalers, governments and enterprise customers are looking for. This is also why all of our infrastructure, energy and AI infrastructure strategies are seeing such significant interest. As AI adoption accelerates, Brookfield's market-leading position and a very large portion of our assets become increasingly valuable. The third reason is credit. If current concerns in select pockets of credit persist or the natural credit cycle continues to turn, that is precisely the type of environment where our platforms should be at its best. We have been disciplined in how we built our credit business. We have always preferred areas where underwriting matters, where structure matters and where there is real downside protection, notably real asset credit, asset-backed finance and opportunistic credit.

And lastly, we could not be more thrilled with the timing of our integration with Oaktree. Through the combined BAM and Oaktree platform, we have what we believe is the preeminent opportunistic credit franchise in the world. When liquidity becomes scarce and capital is repriced, that is when disciplined investors with flexible capital and deep experience have historically generated some of their best returns. We will turn the call over to Armen in a moment, who will speak more specifically about the current credit environment and how Oaktree is seeing the opportunity set today.

In conclusion, our message is simple. We are entering this period with strong results, significant strategic momentum, limited exposure to the areas causing the most concern and meaningful exposure to where capital should continue to flow. We are positioned not just to navigate this backdrop but to outperform through it. Armen?

Thank you, Connor. It is a pleasure to join you at such an exciting and dynamic time at the firm, taking on the role of Co-CEO of Brookfield's credit business. The integration of Oaktree and Brookfield will meaningfully strengthen our already differentiated platform, allowing us to bring more of the combined firm's capabilities to clients across asset classes and up and down the capital structure. Over the past 6 years, this partnership has already proven itself and our cultures and investing principles are already well aligned. We share a long-term vision, a deep respect for disciplined capital allocation and a focus on building client relationships over years and cycles, not quarters.

But there have also been natural limitations to how much we could do as 2 separate companies. Bringing the platforms together eliminates those barriers and creates immediate benefits, simplification, better alignment and broader access to the combined capabilities of our firms. While this combination creates clear operating and financial benefits, its greatest significance and most meaningful impact will be on the strategic side. As an example, clients increasingly want broader solutions, whether that means flagship strategies, complementary strategies, customized multi-asset portfolios or co-investment opportunities delivered at scale.

Our combined platform positions us to meet that demand more effectively to serve clients more comprehensively and to compete for larger and more complex opportunities than either firm could do on its own. And that matters especially in the market we are in today. Over the past 5 years, credit markets have undergone an extraordinary transformation. As economies reopened in 2021 and governments injected significant stimulus, inflation surged, prompting one of the most aggressive rate hiking cycles in modern history. Short-term rates moved from near 0 to over 5%, fundamentally reshaping capital markets.

That shift created a meaningful dislocation and subsequently immense investment opportunity. Traditional bank lending and broadly syndicated markets pulled back, particularly for middle market borrowers and private credit stepped in to fill the gap, offering capital at initially wider spreads, which helped drive very attractive returns, often in the 10% to 12% range. Those returns attracted capital, fundraising accelerated, competition increased and spreads compressed back towards pre-pandemic levels. In response, parts of the market leaned into higher leverage, looser covenants, noncash pay interest loans or PIK structures and greater exposure to certain sectors like software to gain higher returns.

Today, we're entering a new phase. Recent headlines have raised legitimate concerns around certain parts of private credit, rising impairments, questions over valuations, the use of leverage, liquidity mismatches, refinancing risk and software exposure in an increasingly AI-driven world. But it's important to separate the fundamentals of private credit from the excesses in select parts of direct lending. Private credit itself, tailored nonbank financing is a proven model in which Oaktree has been actively involved for over 3 decades. It works, providing capital to help businesses grow and delivering fair and attractive returns across the cycle. The issue is that in a period of abundant capital and low rates, underwriting standards in the market become looser. That's not unusual. Risk tends to build in strong markets and only becomes visible as conditions turn and become more stressed. What we are seeing now is less a systemic issue and more a period of recalibration.

Taken together, today's environment is characterized by tighter spreads, higher leverage in certain segments and increasing dispersion in credit quality. That creates both risk and opportunity and it's exactly the kind of environment in which we thrive. Both Oaktree and Brookfield have a long history of investing through cycles. Our approach has always been grounded in discipline, patience and a willingness to prioritize risk management and long-term value over short-term growth. We didn't maximize deployment during the recent years of heightened competition. Instead, we maintained conservative leverage in our funds and remain selective in underwriting, even when that meant sacrificing near-term growth.

As a result, we entered this period with a resilient platform, ample dry powder and the flexibility to act as opportunities emerge. And that flexibility matters today because as rates come off their peak and spreads -- and spread becomes a larger driver of returns, credit selection matters more than ever. We are already seeing greater differentiation across vintages, sectors and structures and the winners will continue to differentiate themselves as time progresses. We don't view private credit in isolation. We constantly compare relative value across performing credit, liquid markets, asset-backed finance and opportunistic strategies. When we see early signs of stress in one area, it informs how we position elsewhere, both defensively and offensively. That perspective is even more valuable in collaboration with the Brookfield ecosystem.

Together, we will have a fully integrated information network across credit and equity teams, industries and geographies and public and private markets. We are already tracking dozens of emerging opportunities in real time, sharing notes across teams and identifying dislocations earlier through direct exposure to underlying businesses, assets and capital structures. Brookfield's strength as an owner-operator, combined with Oaktree's leadership in credit creates a differentiated platform for sourcing and executing complex capital solutions. While today's market presents real risks, it is also creating exactly the kind of environment where our experience, discipline and scale can drive meaningful outperformance.

Thank you for having me on today's call. And with that, I'll pass it over to Hadley.

Thank you, Armen. I'll cover our quarterly results, capital positioning and why we are on track to deliver a record 2026. Fee-related earnings, or FRE, in the first quarter were up 11% from the prior year period to $772 million or $0.48 per share. Over the last 12 months, FRE has grown to $3.1 billion, up 18% from the prior year period. Distributable earnings, or DE, were up $702 million or $0.43 per share in the quarter, up 7% from the prior year period, bringing DE over the last 12 months to $2.7 billion. Growth in DE continues to closely track growth in FRE, reflecting the high-quality, recurring and stable nature of our revenue base.

Turning to margins. We've maintained strong levels alongside this growth, with margins of 57% for the quarter and 58% over the last 12 months. As previously discussed, once the Oaktree acquisition closes, likely in the second quarter, we'll report a consolidated margin that includes 100% of Oaktree. We'll also provide more transparency in our partner managers, which will impact the presentation of our margin but will not reflect any change in the underlying economics of the business. Importantly, while our partner managers operate at lower margins, they're highly accretive and strategically beneficial to our platform. As Connor mentioned, they're also expected to be meaningful growth contributors to Brookfield. As they continue to scale, we will benefit from their inherent operating leverage, further expanding their margins as well as our consolidated margin.

Before turning to fundraising, I want to touch on share repurchases. Historically, share repurchases have not been a primary use of capital as we have had compelling opportunities to invest in the growth of the business, including acquiring partner managers' interest and seeding complementary strategies. However, given recent public market volatility, we believe our shares are meaningfully undervalued and so we have been more active in repurchases. In the first quarter, we opportunistically repurchased $375 million of stock and have so far repurchased an additional $200 million in the second quarter. This brings our total buyback activity over the past 7 months to nearly $800 million.

We also remain committed to our objective of broader index inclusion. The continued growth and scale of our U.S. business, including the acquisition of Angel Oak and our increased ownership of Oaktree further support our path toward broader U.S. equity index eligibility over time. Now let me turn to the details of the $21 billion we raised in the quarter, which was driven by our complementary strategies and insurance inflows. Within our infrastructure business, we raised $3.4 billion, including $800 million for our supercore infrastructure strategy, which now has over $20 billion of capital and $800 million for our infrastructure private wealth strategy, which now has over $8 billion of capital.

Within our private equity business, we raised $1.4 billion, including $1 billion for our private equity special situation strategy, which held its first close of $2.4 billion. Within our credit business, we continue to see broad-based demand. We raised $13 billion of capital, including $4.7 billion of long-term private funds and $3.8 billion from Brookfield Wealth Solutions. 17Capital completed the final close of Credit Fund 2, adding $2.5 billion in the quarter, bringing the strategy to $7.5 billion, the largest NAV lending strategy raised to date.

Our fundraising benefits from strong performance, built our investment disciplined approach, focused on fundamentals and risk-adjusted returns. That approach has led both Brookfield and Oaktree independently to limit exposure to areas such as direct lending and software, where we saw less compelling risk-adjusted opportunities. This discipline has reinforced our clients' confidence in our capabilities and continues to support fundraising. Fundraising is also well diversified geographically. We continue to see strong traction around our high conviction strategies and the trend we have previously discussed, large clients concentrating commitments with fewer strategic managers that can offer a broad range of strategies at scale, appears to have become even more pronounced. These drivers, together with our flagship fundraising and recently awarded Just Group investment mandate position us well for a record year of fundraising.

Turning to deployment and monetization. We invested or committed $34 billion and generated approximately $8 billion of equity proceeds from monetization. Based on our deep pipeline, we expect activity to further build as the year progresses. Overall, M&A has picked up, particularly in larger strategic transactions where buyers are moving with greater conviction. Despite pockets of uncertainty, both corporates and sponsors are increasingly willing to transact. In many cases, that uncertainty is driving activity rather than constraining it as companies are using stronger access to capital to reposition portfolios in response to structural shifts, including AI, geopolitics and evolving supply chains. At the same time, sponsors are seeking to return capital, which is contributing to increased deal supply. While a normalized rate environment requires discipline on valuations and greater operating expertise to drive returns, we're seeing markets adjust to this environment. This creates opportunities for us.

Our focus on high-quality real assets and essential services businesses aligns where demand is strongest, particularly where durability and cash flow visibility are at a premium. In addition, our scale, global platform, operating capabilities and access to capital position us to be both an active acquirer and a disciplined seller in today's environment. As M&A activity broadens, we expect to benefit from both increased deployment opportunities and improving backdrop for monetization.

Turning to our balance sheet. We continue to operate with a strong asset-light financial profile that provides flexibility to support growth while maintaining healthy liquidity. Subsequent to quarter end, we took advantage of an attractive opening in the market and issued $1 billion of senior unsecured notes comprised of $550 million of 5-year notes at a coupon of 4.832% and $450 million of 10-year notes at a coupon of 5.298%. We ended the quarter with $2.5 billion of corporate liquidity, providing ample flexibility to support ongoing operations, strategic initiatives and growth across the business. We are off to a great start in 2026 and remain well positioned for a record year. While markets remain uncertain, our scale and expertise position us to navigate the environment and execute effectively.

With that, let's open up the line for questions.

[Operator Instructions] Our first question comes from Kenneth Worthington with JPMorgan.

Armen, thanks so much for your comments. I wanted to dig further into Oaktree and the distressed market. I think as you stated, we've been in a very strong credit environment for an extended period. How much money does Oaktree have to invest? And how much could Oaktree reasonably deploy if a distressed window opens briefly or for a more extended period? And what does that mean for Brookfield's credit business?

Thanks, Kenneth. I appreciate the question. So Oaktree does have funds under management and relationships with LPs that are considerable. I want to hesitate to answer questions specifically about fundraising but we have a lot of dry powder to invest into the market currently and have a long-term track record of really leaning into the markets when distressed opportunities present themselves. Today, we don't see a broad-based macro condition that would result in meaningful -- meaningfully higher deployment patterns than what we've seen over the last 5 years. But we always see sector-specific distress. Today, we see distress in software, building products, chemicals, autos, packaging. And so that sector-specific distress, I would say, gives us sort of a more normalized pattern, a more normal pattern of deployment in these years. It numbers in the billions but it doesn't number in the tens of billions with our kind of risk control way of investing.

Now if we do see a dislocation, our deployment capabilities measured in a 12- to 24-month period would be in the tens of billions. We have done that in the past. We are prepared to do that in the future. And we are right now watching what is unfolding in a variety of respects globally. We're looking at inflation caused by energy prices. We're looking at the software industry. We have a target list of credits that we are watching closely and willing to buy at the right prices. So we are constantly boiling the ocean and looking for the opportunities. We don't think at this moment, it is the time to really lean in hard but we are seeing the beginnings of a real opportunity set developing. And I think part of that has to do with the maturities that we see in a lot of LBOs, some software, some outside of software really coming to play in 2027 and 2028. So we're getting ready for a big opportunity. It's probably not measured in the quarters -- in the immediate quarters to come. But in the next couple of years, we would expect to deploy a considerable amount of capital.

Great. And then, Connor, you mentioned that partner capital companies have raised their largest vintages ever. Can you quantify how Brookfield's acquisitions of these businesses is impacting that fundraising? And to what extent the strong fundraising has been influenced by Brookfield's bigger sales force and your broader client relationships?

Thanks, Ken. There's no doubt. Whenever we acquire a partner manager, we specifically pick market leaders in a given sector where we think we can accelerate the growth profile of that business as part of the Brookfield platform. And I think we're really beginning to see that play out. We had 3 partner managers raise new funds this year that were not even biggest of their kind but biggest in their industry. And partner managers are increasingly driving earnings growth across the consolidated business.

Our next question comes from Cherilyn Radbourne with TD Cowen.

I was hoping that you could touch on a few aspects of AI, how fundraising is going for your funds? In what respects do you think you're differentiated versus peers? And I guess more strategically, how do you -- like how do you manage the balancing act of leaning in enough to AI without getting overallocated to it?

Thanks, Cherilyn. AI, which for Brookfield really means a focus on AI infra is undoubtedly the largest and fastest-growing theme across our broader business. And this is derived from the fact that we've always been a leader in the historical inputs into AI, real estate, energy, digital infrastructure but we've also recently expanded into leadership positions in the new forms of AI infrastructure, sovereign AI and actually selling the compute itself. To your questions around growth and what we're seeing, maybe to point to something tangible and it's very representative of what we're seeing in the market is the first deal we did in our AI infrastructure fund was our partnership with Bloom Energy. That was announced, I want to say, 6 or 9 months ago, a $5 billion partnership. We are already in conversations to expand that partnership, not by percentages but by multiples. And that's very reflective of the opportunity set and the scale that we expect to play.

And then the last point I would just make on how do we remain balanced. It's important to recognize, while there is a significant amount of capital flowing into the sector, the investment opportunity set is incredibly vast. And as a result of that, we can be incredibly selective. We can focus on the best assets in the best markets with the best revenue constructs and the best corporate credit counterparties. And even in being that selective, we can still deploy very, very significant sums of capital. So we do see all the activity. But in terms of some of the risk-adjusted returns that we're actually executing on, they're certainly some of the most attractive opportunities we're seeing in the market.

Our next question comes from Alexander Blostein with Goldman Sachs.

I was hoping we can start with a question for sort of the broader outlook for the rest of the year for you guys. Now clearly, the business is facing a number of structural tailwinds, you mentioned energy, AI, many other things. So Connor, encouraging to hear you kind of reaffirm the expectations to exceed your Investor Day goals for 2026. Couple of questions here. So first, just a point of clarification. Are we talking fee-related earnings per share for '26 off of the '25 base, just to confirm that. But then also more importantly, how has the fundraising backdrop sort of evolved in the last 3 to 4 months, given the changes in the landscape we're seeing to kind of build on that momentum? So what's feeling better? What's feeling worse? What's feeling the same?

So, thank you for the question, Alex. You're absolutely right. We have an incredibly positive outlook for 2026. We expect it to be a record year for fundraising and not by a little bit. We expect it to be a significant record year for fundraising. In response to your question, outperformance, yes, it's going to be largely on the FRE side and that outperformance for the remainder of the year feels largely secured other than the limited market exposure we have through our listed affiliates. And that's really driven by run rating of strong performance through the end of last year, very strong growth in our partner managers and then some big step change revenue adders that start this year and will candidly carry into next year as well, our flagship PE fund, our flagship infrastructure fund, the Just Group mandate, the Oaktree acquisition.

In terms of what are the big things that will drive that FRE growth, it's exactly those. We expect to see incredibly strong demand for our 2 flagships. PE is off to a great start. We expect that to be the largest vintage of its kind. And obviously, we're in a very fortunate position that we have all of our infrastructure funds in the market right now at a time where we're in the greatest infrastructure capital deployment environment in the history of time. So I would say those are the biggest drivers. We're seeing growth across everything on the infrastructure and energy side and then outperformance relative to past precedent on the private equity side.

Our next question comes from Bart Dziarski with RBC Capital Markets.

Wanted to ask around capital allocation. So nice to see you stepping in on the buyback, take advantage of dislocation. Just curious how you're thinking about the buybacks going forward? And related to that, you issued debt in the quarter, the commercial paper program and the senior notes. Maybe just an update in terms of your funded position and maybe more broadly, philosophically, how you think about the buyback versus issuing more debt component?

Yes. Thanks for the question. So when we think about our options, obviously, when it comes to liquidity, we have a lot of attractive opportunities within Brookfield. And that's around our partner managers, around seeding our complementary strategies. And so we're always assessing those attractive opportunities to grow our business. When we see irrational undervalued stock prices associated with Brookfield, that is an opportunistic time for us to take our underlevered position as an asset manager and use that capital to really generate attractive returns for us. And so that's something that we do opportunistically. We have been active starting in the fourth quarter up until now and that's about that $800 million of buybacks that we've executed.

In terms of our liquidity, we did access the bond market earlier this year back in April when we saw an opening in the market that was quite constructive to add liquidity. And so we issued $1 billion with strong execution. But that puts us in a position where we have $2 billion plus of excess debt capacity. And remember that as our DE grows, our debt capacity grows as well. So that positions us to continue to be opportunistic with the opportunities that we see within Brookfield holistically, as well as continuing to support the -- buying our partner managers, the remaining stakes as well as our complementary strategies.

Our next question comes from Sohrab Movahedi with BMO Capital Markets.

Connor, you highlighted a bunch of issues that have been kind of hurting the sector, one of which was retail redemptions. And in the past, I think you've highlighted the importance of retail, both from a fundraising and from, I guess, individual participation and probably a big important source of growth for you guys on the funding side of it. So I'm just curious, as you've been kind of watching what's been happening, you are always methodical, I suppose and disciplined. Is the -- are you rethinking your retail ambitions based on what we've seen more recently? And some of your peers, I guess, would have been first movers to the extent you are not rethinking those ambitions, is this one of these cases of the second mouse gets the cheese? Is there an opportunity or a disruption where you get to run in as folks are running out? And maybe like an Oaktree acquisition that you had done, which has aged well, an opportunity maybe present itself? And how willing would you be to expedite those retail plans?

Thank you for the question. In terms of what we're seeing and what that leads to in terms of our approach going forward is, we're very proud of how the private wealth, retail and individual market. And we think our approach is paying dividends now and the market is coming to us. Obviously, private wealth is a smaller portion of our business relative to some of our peers as we've been very methodical and thoughtful in how we built that business for the long term. I think it's important to recognize that our private wealth business grew versus this point last year despite perhaps some of the concerns in private wealth credit. We continue to see tremendous inflows to our private wealth products on the real asset side. So this continues to be a more modest part of our business today but one that's growing very quickly. It's been growing at about 40%, 4-0 percent for the last couple of years and we expect that growth to continue, particularly as investors in that market continue to pivot increasingly towards real assets.

I would also mention

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individual market. And in this regard, we think our growth and penetration of the individual market is perhaps accelerating far faster than people appreciate. Obviously, we have the growth on the private wealth side. On the 401(k) and retiree market side, we're in advanced discussions with some of the largest target date fund providers who are interested in putting Brookfield's real asset products into some of their default portfolios. They're recognizing the role that long-duration inflation-linked cash-generative downside protected investments can play in those portfolios. And then we're certainly the market leader in terms of introducing real asset exposure into insurance policy and annuity portfolios through our partnership with BWS. So I would say our approach is working. It plays very well in this market. We're going to continue to lean in but it's more of the same as opposed to some major shift in strategy.

Our next question comes from Brian Bedell with Deutsche Bank.

Maybe just shifting to the topic of energy transition. Obviously, you guys are a leader in that space. And the energy platform broadly kind of rebranded from the renewables side. So can you talk about -- does that change your -- any of your marketing strategy within those types of products? And maybe just talk about how you link energy and infrastructure. A lot of those themes are similar. And I would imagine the investor, the LP investor base has similar ambitions. How do you, let's say, sell those products maybe as a solution to LP investors? Is that something that you're thinking about? And then maybe just your view on the demand for energy transition given the power needs that we're seeing for AI and the disruption of supply chains amid the geopolitical backdrop.

So I'll perhaps address that in reverse order. The demand for energy is at an unprecedented high and will continue to be at an unprecedented high throughout the end of this decade and well into the next one and perhaps beyond. This is going to require, take your slogan, take your catch phrase, it's going to require any and all or all of the above type energy solutions. And we're fortunate to be a leading player across all of them. The big ones are obviously going to be low-cost renewables, flexible gas and dependable nuclear where we.

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formatting thing than anything else, it changed nothing in terms of our allocation strategies in our business.

Our next question comes from Dan Fannon with Jefferies.

So I just wanted to follow up on the strength in fundraising. As you think about this year, I was hoping to get a little bit of help, Hadley, around the management fee cadence given the timing of this and also catch-up fees as we think about first and final closes as the year progresses. Any timing and/or guidance around that would be helpful.

Yes. So our timing, we've already closed for our flagship private equity strategy. We've had an initial first close of $6 billion and we will have the final first close later this year. We anticipate with our infrastructure flagship fundraising to have a first close, a meaningful first close also in 2026. So fees should be turning on for both of those strategies very shortly. And so as you take this particular quarter as an example, we didn't have any catch-up fees but you'll see that build throughout the year.

Our next question comes from Craig Siegenthaler with Bank of America.

So BAM's stock-based comp payout is the lowest in the U.S. alt peer group but it does jump around a little bit. But I know part of this is seasonal but I was hoping you could refresh us on not just the seasonal drivers but also how stock-based comp fits into your overall employee compensation program because this is actually a pretty important input for a lot of us with valuation.

Sure. Perhaps I can take it from a corporate side. We use stock-based comp as our primary form of compensation for the entirety of the senior leadership team at Brookfield. And then beyond that, we include stock-based comp as a component of every single investment professional across the firm. We think that is unique in that it aligns the broader firm such that investment professionals are not only focused on driving value in their individual strategy but driving value across the entire firm such that whenever we see an opportunity, it doesn't matter what vertical, what group, what geography a man or woman or -- is in, if they can add value to a transaction or an initiative, they get brought in. So we use stock-based comp extremely wide across the firm, in our view, far wider than almost anyone in the peer group.

Our next question comes from Mario Saric with Scotiabank.

Maybe for Armen, coming back to the Oaktree integration. As you mentioned, the relationship between Brookfield and Oaktree has been in effect for some time now. Can you provide some examples of low-hanging fruit that may not be as apparent to kind of people on the outside that comes from owning 100% ownership interest out of the integration that may have a direct incremental impact on FRE for Brookfield more so than existing as separate entities?

Sure. Thanks for the question. So, couple of things. Oaktree and Brookfield obviously established their partnership in 2019 and that partnership and the relationships between the 2 institutions has grown and become a lot closer. So we've gotten to know each other very well. We're very, very aligned. Foundation is very strong. And I think we share a lot of the same cultures and investment principles, including taking a long-term view through the cycle. So it's been -- it's not early days. It's several years in the making now. And so we've had a chance to think about the synergies. The synergies are, I would say, are largely revenue synergies, in that the combination of the 2 institutions gives us the ability to offer more tailored solutions to some of the biggest clients in the market, a broader solution base that taps into the strength of Brookfield as an owner/operator and the strength of Oaktree as a credit manager, having invested through many cycles as a -- largely as a distressed investor, as our single largest strategy over 30-plus years.

So that tailored solution opportunity is executed through a new group at Brookfield called the Investment Solutions Group that has portfolio analytical capabilities to advise clients on how to adjust their portfolios over time and how possibly Brookfield, Oaktree and partner manager solutions could really be brought to bear. I think the breadth and depth that we have as a combined institution now is really unmatched and being able to offer those products in a seamless way in a one firm type of way is new and exciting. I think the other combination that is helpful is, Oaktree had a balance sheet on its own. Brookfield had a balance sheet on its own.

And optimizing the 2 balance sheets separately was not as efficient as it could have been. And so bringing those 2 balance sheets together in a single platform really helps to think about a single unit of shareholders that own that balance sheet and we could maximize the value for the benefit of the shareholders without having disparate ownership between one balance sheet and the other. So that's a little bit harder to quantify and harder to assess but that efficiency is very, very strong.

And then finally, Oaktree is a very large and well-built out credit platform. We do other things outside of credit but I would say credit is our tentpole. As a result, we have a very large middle and back office that's able to support our strategies and more. And so as we grow our credit capabilities in partnership with Brookfield in a more integrated way, we are able to layer on additional revenue, additional AUM, with modest increase in cost. And we don't really -- we don't need to staff up to grow in any sort of meaningful way because we're already a scale player. So there is a cost benefit or a cost synergy. It's not really with taking a big knife to our cost structure, either at Brookfield or at Oaktree. But it is certainly a platform that we could use and in a scaled manner to drive profitability as we grow.

Our next question comes from Michael Cyprys with Morgan Stanley. Mike, you might be on mute.

Our next question comes from Crispin Love with Piper Sandler.

First on real estate, Connor, you hit on the recovery accelerating in your prepared remarks. Just curious if you can dig into that a little bit further. Which areas of real estate are you seeing the most opportunities today to put capital to work? And then relatedly, just your outlook on office.

So in addressing that 2 things. The real estate recovery and its very rapid acceleration, I would say, is part of -- the part of our business where -- what we're seeing on the ground is far ahead of what you're reading in the headlines. In fact, we are seeing very significant increases in transaction activity, deal volumes and recovery in valuations. I think across our real estate platform, this is on the asset side but not the equity side. We're looking to do about $20 billion of real estate transactions in a 2-month period here just to give a sense of the pace and breadth of deal volume. In terms of where we're seeing that deal activity, it's primarily in what I will call the alternative forms of real estate, hospitality, logistics, housing, we have seen lower deal volume activity to date in office and retail but we think that is coming because the fundamentals for office are absolutely flying.

And it comes down to one thing. On a relative basis, nobody started new construction. There was no new supply generated starting in 2020 because of the pandemic and then following 2020 because of the rise of rates and then following that because of work-from-home concerns. So we've now seen a recovery in demand that's being matched by essentially 0 new supply in the market. And in Tier 1 markets, we're seeing the top come off rents. Rents legitimately 50%, 70%, 80% higher than they were 5 years ago and that's beginning to flow through the numbers. If that continues, it's only logical that we're going to see the deal activity return to that sector as well.

Our next question comes from Michael Cyprys with Morgan Stanley. Michael, please check your mute button.

Our next question comes from Mike Brown with UBS.

A lot has already been covered but I wanted to maybe ask 2 that are a little more impactful for the model here. So the margins have expanded to the high 50s but you will be consolidating Oaktree and that's at kind of a cyclical low in terms of margins, so it would be dilutive. Can you maybe talk a little bit about that medium-term margin trajectory as we think about 2Q and then how as Oaktree normalizes and you have more operating leverage to the platform, how does that margin continue to kind of rebuild? And then on the fee rates, just because there's an implication for margin there, too, can you just talk about some of the puts and takes in 1Q? Just some of those fee rates came in lower than expected? And then for 2Q, there's going to be a bit of noise around some of the partner buy-ins as well. So maybe just unpack any implications for 2Q as well.

Sure. So on the margin front, I think you and others now appreciate that in second quarter, assuming we close Oaktree, which is the anticipated date, we will adjust our margins to show our partner managers in a more transparent way. We also have 100% of Oaktree flowing through, which given that they operate at a slightly lower margin, we will have an offset there. And so that will come through. But what is important to note is that across all of our businesses, we -- when we look at our projections for the year and going forward, there is operating leverage for each of the businesses. And that will continue to showcase on a apples-to-apples basis. So that's very important to emphasize around our margins. In terms of the fee rates, overall, we're seeing no spread compression around fee rates. And so we continue to see strong fundraising, transaction fees play a part of that. And so when you look at our 2026 numbers, as Connor explained, this is going to be a record year in all categories.

That concludes today's question-and-answer session. I'd like to turn the call back to Jason Fooks for closing remarks.

Okay. Great. If you should have any additional questions on today's release, please feel free to contact me directly. And thank you, everyone, for joining us.

[Audio Gap]

today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Brookfield Asset Management Fourth Quarter 2025 Earnings Call.

[Operator Instructions]

Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Jason Fooks, Managing Director of Investor Relations. Please go ahead.

Thank you for joining us today for Brookfield Asset Management's earnings call for the fourth quarter and full year of 2025. On the call today, we have Bruce Flatt, our Chairman; Connor Teskey, our Chief Executive Officer; and Hadley Peer Marshall, our Chief Financial Officer.

Before we begin, I'd 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 U.S. and Canadian securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They're 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 the U.S. and Canada and the information available on our website.

Let me quickly run through the agenda for today's call. Bruce will begin with an overview of the quarter and the market environment. Connor will discuss our activity in 2025 and outline the key drivers of our growth for 2026. And finally, Hadley will discuss our financial results, operating results, balance sheet and dividend increase. After our formal remarks, we'll open the line for questions.

[Operator Instructions]

And with that, I'll turn the call over to Bruce. Thank you, Jason, and welcome, everyone.

2025 was another strong year marked by continued growth across the business and consistent execution against our long-term strategy. Let me start with a few highlights. We raised $112 billion of capital during the year, reflecting strong demand from institutional, insurance and individuals for our diverse suite of strategies. We also invested a record $66 billion of capital over the past year into high-quality assets and businesses that form the backbone of the global economy. We made these investments in areas where we have deep competitive advantages and strong operating capabilities, positioning us to generate very attractive risk-adjusted returns. At the same time, we monetized $50 billion of equity from investments at very good returns, demonstrating that stabilized high-quality assets and essential service businesses continue to attract strong demand.

As a result of all of this activity, fee-bearing capital increased 12% over the year to more than $600 billion. Fee-related earnings reached a record $3 billion, up a very strong 22% year-over-year, driven by growth in our capital base and continued operating leverage across the business. Distributable earnings were $2.7 billion, an increase of 14% from the prior year. Our distributable earnings are almost entirely fee-based, as you know, and long duration, and our cash flows are further reinforced by the diversification of our platform across asset classes, products, geographies and client channels. This diversity and lack of reliance on any single segment or product provides our business with many growth options, providing a platform to grow across economic cycles and varying market conditions.

Turning to the broader market environment. We entered 2026 with a constructive backdrop. Interest rates have stabilized, economic growth is resilient and transaction activity has increased due to improved confidence in valuations and market liquidity. In this environment, we are seeing renewed global demand for real assets that generate stable cash flows and provide inflation protection, areas where we have focused for decades. While near-term conditions are supportive, what matters most to our business are the long-term structural forces that shape global capital allocation. We are fortunate to remain at the forefront of the largest global investment trends. These trends remain firmly in place and continue to expand the opportunity set for private capital.

An important structural shift is also taking place in how capital is allocated. Individual investors are increasingly gaining access to private assets through retirement and long-duration savings vehicles. This represents a significant expansion of the addressable market for private assets. Retirement and individual portfolios are among the largest and fastest-growing pools of capital globally, and they are naturally aligned with long-duration income-generating real assets. With our scale, track record and diversified platform across infrastructure, power, real estate, private equity and credit, we are well positioned to meet this growing demand.

Our ability to invest through cycles, recycle capital and partner with long-term investors continues though to differentiate our platform. This combination positions us to deliver strong growth over time and supports our long-term objectives, including doubling the business by 2030 and generating a 15% annualized earnings growth.

Now before I turn the call over to Connor, I want to touch on our leadership announcement today. As part of our long-term succession process, we announced that Connor Teskey has been appointed CEO of Brookfield Asset Management. I will continue as Chair of the Board as well as CEO of Brookfield Corporation. We began this process 4 years ago when Connor was appointed President of BAM. Over that time, Connor has taken on running virtually everything. So this title change merely matches title to substance. There is hence no real transition and our partners and people have all been involved in this. Connor has played a central role in building Brookfield's investment strategy, scaling our renewable business globally and developing many of the leaders who now run our businesses. He brings deep investment expertise, strong judgment and a long-term mindset that is fully aligned with Brookfield's culture. He's actually closer to what the next backbone of the global economy is, and we are excited about that. I've never been more thrilled about the prospects for our business than I am now.

I intend to continue supporting Brookfield, focusing my energy where I can be most useful and will remain fully invested and involved to assist the whole team. Of course, as CEO of Brookfield Corporation, we have a substantial interest in ensuring Connor and BAM are hugely successful. With that, I'll turn the call over to Connor to discuss our performance in more detail and how we are positioned for a strong 2026.

Thank you, Bruce, and good morning to everyone on the call. I'm honored to be assuming this new role, especially at such an exciting time in BAM's growth story. With Bruce's support and the incremental approach to transition we have been taking for years, we are already fully operating under our new structure. I look forward to continuing to work closely with our team to deliver strong results for our clients and our shareholders and continue to grow our business around the megatrends shaping the backbone of the global economy.

With that, now let's turn to our results. 2025 was not simply about raising capital. It was about putting that capital to work at scale and doing so with discipline. On the deployment side, we were active throughout the year across all of our businesses, investing in high-quality assets at attractive values. In renewable power, we invested in Neoen, a leading global developer with long-term contracted clean power assets, and we acquired National Grid's U.S. renewables platform, expanding our footprint in North America. In private equity, we invested in Chemelex, a global industrial technology business with mission-critical products. Our infrastructure business acquired Hotwire Communications, a leading U.S. fiber-to-the-home operator serving both residential and commercial customers; Colonial Pipeline, the largest refined products pipeline in the United States and a part of Duke Energy Florida, a vertically integrated electric utility with long-duration regulated cash flows to name only a few.

Our real estate business recently acquired Generator Hospitals, a differentiated hospitality platform benefiting from structural growth in experiential travel and urban tourism, and we acquired National Storage REIT, the largest self-storage company in Australia. Collectively, these investments reflect our focus on essential assets and businesses with durable cash flows, strong downside protection and meaningful opportunities for operational value creation. 2025 was a record year for investment activity, and it gives us a strong foundation as we look ahead.

Turning to fundraising. 2025 was also an excellent year across the platform, continuing our momentum to be market-leading in each of our businesses. We completed final closings for 2 major flagship funds, the fifth vintage of our real estate flagship and the second vintage of our global transition flagship. Both were the largest funds we've raised in their respective series and exceeded our targets with broad and diversified support from existing investors as well as new relationships. These fundraises are particularly important given where we are in the cycle. In real estate, we have significant dry powder at a point in the cycle where we're seeing attractive entry points, particularly in larger, high-quality assets where there are a limited number of players with scaled available capital.

In transition, demand for power continues to accelerate globally, driven by electrification, AI growth and energy security. Together, these dynamics create a growing opportunity set for long-term capital, and we are well positioned to capture it. While our flagship fundraises were successful, the overwhelming majority of our fundraising this year, nearly 90%, came from non-flagship strategies, underscoring the growing breadth and durability of our fundraising engine. These complementary strategies included continued momentum across our infrastructure and private equity platforms through a range of products as well as further expansion of our private wealth platform. We raised capital across a wide range of funds, [indiscernible], demonstrating the depth of investor demand for our products and our ability to raise capital consistently across market environments and flagship cycles. A key theme this year has been the continued scaling of our credit platform. Through a combination of organic growth and strategic acquisitions, we have meaningfully expanded our origination capabilities and product breadth.

When combined with our long-standing partnership with Oaktree and the full integration of that business, we are building one of the most comprehensive global credit platforms in the industry, spanning real asset credit, asset-backed finance, opportunistic credit and insurance-oriented strategies. We are also preparing for a meaningful expansion of our asset management mandate with Brookfield Wealth Solutions upon the closing of their acquisition of Just Group, which we expect in the coming months. These 3 initiatives alone, Oaktree, Just Group and the credit managers we acquired in the fourth quarter are expected to generate more than $200 million of incremental annualized fee-related earnings, which positions us well for a very strong earnings growth in 2026 as that is all before any additional fundraising from our flagships and the approximately 60 strategies we will have in the market or deployment.

Looking ahead, 2026 is shaping up to be another record year for fundraising with strong momentum across the business that we expect will drive meaningful growth, especially within both our infrastructure and private equity platforms.

Starting with private equity, we recently launched the seventh vintage of our flagship fund at a time where clients value our differentiated approach. Our private equity business focuses on value creation driven by operational improvement rather than leverage or multiple expansion. We have executed this strategy for 25 years because it works across market cycles. However, today's environment plays directly to our strength as a long-term owner and operator of mission-critical, essential assets and businesses. Private equity was the first fund we launched more than 25 -- we've delivered some of the strongest returns in the industry. With market conditions aligned with our approach and a deep pipeline of opportunities, we expect this vintage to be our largest private equity fund to date. Alongside our flagship fund, we continue to broaden our private equity platform.

We recently launched a new strategy tailored for the private wealth market, which is well aligned with client demand. We also saw strong fundraising across our complementary strategies, including our financial infrastructure fund and our Middle East partner strategies, both of which we expect to reach final close this year as well as our venture technology platform, Pinegrove, which recently held a final close on its inaugural fund at $2.2 billion, exceeding its target.

In our infrastructure platform, we also see a meaningful step change emerging in 2026, driven by the breadth of strategies we now have in the market and the scale of the opportunity in front of us. This year, we will have all of our infrastructure strategies fundraising concurrently, including the launch of our next flagship infrastructure fund, which we expect to be our largest to date. Alongside the flagship, our infrastructure debt strategy is in the market and both our open-ended supercore infrastructure fund and our private wealth infrastructure vehicle continue to scale with each seeing record inflows in the fourth quarter.

Further, later this year, we expect to launch the second vintage of our infrastructure structured solutions strategy. Together, these strategies position us to raise and deploy capital across the full spectrum of risk and return within the infrastructure asset class, taking advantage of our leading platform and the strong market conditions and growing investment opportunity set.

Building on this foundation, last year, we launched a $100 billion global AI infrastructure program, anchored by our inaugural AI infrastructure fund with a $10 billion target. The fund already has strong momentum with $5 billion of commitments at launch, reflecting the early conviction in the opportunity. Our objective is to deploy more than $100 billion of capital across the full AI infrastructure value chain from land and power to data centers and compute capacity. leveraging Brookfield's existing scale and digital infrastructure and energy to deliver integrated, long-duration solutions that support the global build-out of AI. We've already announced several transactions for the strategy, including most recently a $20 billion strategic AI joint venture with Qai, focusing on developing integrated AI infrastructure in Qatar.

These initiatives reflect a growing opportunity for long-term private capital to fund infrastructure that has historically sat on corporate and government balance sheets, and Brookfield is uniquely positioned to lead in this space. Taken together, our execution in 2025 and the initiatives already underway position us extremely well as we enter 2026. With strong fundraising momentum, a scaled deployment platform and clear drivers across private equity, infrastructure and credit, we feel very good about the growth outlook for the business and expect 2026 to be at or above our long-term targets.

With that, we will turn it over to Hadley to walk through our fourth quarter financial results and discuss the durability of our earnings in more detail. Hadley?

Thank you, Connor. As mentioned, we've had a great quarter as well as year, and I'll provide an overview of these results and how we're positioned for 2026. In the fourth quarter, we delivered strong performance. Fee-related earnings, or FRE, were up 28% from the prior year period to $867 million or $0.53 per share in the quarter, bringing FRE for the year to $3 billion. That brings our margins to 61% for the quarter and 58% for the year. Our business has significant operating leverage. So as our growth initiatives scale, our margins improve. That said, after buying the remaining stake of Oaktree, which operates at lower margins, it will bring down our consolidated margin even though the transaction is highly accretive and strategically strengthens our platform. Plus, Oaktree's margins are near cyclical lows, reflecting the countercyclical nature of its business.

In that same quarter, we will also enhance disclosure around our partner managers as these businesses have scaled, becoming more meaningful. Instead of reporting only our share of their FRE, given their smaller historical contribution, we will break out our share of partner manager revenues and expenses, which will not impact FRE or DE, but should provide investors with clear insights as our platform continues to evolve. Distributable earnings, or DE, were $767 million or $0.47 per share in the quarter, up 18% from the prior year period, bringing distributable earnings over the last 12 months to $2.7 billion. Growth in DE continues to closely track growth in FRE. This reflects the high-quality, recurring and stable nature of our revenue base and the limited reliance on carry or transaction-driven income.

The primary driver of earnings growth in 2025 was our strong fundraising and deployment activity. Over the past year, we raised $75 billion of capital that became fee-bearing, and we deployed $16 billion of previously raised capital that also became fee-bearing. As a result, fee-bearing capital grew by 12% year-over-year or $64 billion to a total of $603 billion. This growth reflects both strong inflows and disciplined capital deployment across the platform, even as we continue to return capital at an accelerated pace to clients through realizations and distributions.

Turning to fundraising. The fourth quarter marked our strongest fundraising quarter ever, with $35 billion of capital raised across more than 50 strategies. This success underscores the breadth, depth and diversification of our platform that enables us to sustain consistent momentum regardless of individual fund cycles. Within our infrastructure business, we raised $7 billion, including $5 billion for our AI infrastructure fund. We expect the first close for the strategy in the coming months with a target size of $10 billion. We also raised $900 million for our super core infrastructure strategy, bringing the fund to $14 billion and $900 million for our infrastructure private wealth strategy, our largest quarter yet, which puts the strategy at $8 billion.

Within our private equity business, we raised $1.6 billion, including $900 million for our private equity special situation strategy. And we had our final close of prime's opportunistic strategy at $2.2 billion, exceeding our target, a very successful outcome for our first-time fund. Within our credit business, we raised $23 billion of capital, which represented a record quarter. Driving our credit fundraising was real asset and asset-backed finance strategies as well as our insurance channel. This includes nearly $9 billion of capital raised from Brookfield Wealth Solutions. We also raised $5.6 billion from our long-term private funds, $1.4 billion of which was for our fourth vintage of our infrastructure mezzanine credit strategy, $4 billion for our perpetual credit funds and $3.2 billion for our liquid credit strategies.

Over the past decade, we've been intentional in evolving our business to become more diversified across not only client types, but asset classes, strategies, products and geographies, which has reduced our reliance on any single market cycle or source of capital. Along with our long-term disciplined approach, this has allowed us to compound earnings across varying economic environments and strengthen our resiliency. Today, our earnings base is well balanced across each of our businesses, infrastructure, renewable power and transition, private equity, real estate and credit, with no single business contributing more than 1/3 of our fee-related revenues.

As an example, the introduction of our transition platform 5 years ago and the expansion of our credit platform have meaningfully broadened our earnings mix and enhanced durability. In 2026, we will be fundraising across nearly 60 strategies compared to only 4 in market just 10 years ago, enabling more consistent and diversified fundraising. We now serve more than 2,500 institutional clients globally, alongside a private wealth platform reaching nearly 70,000 clients and insurance solution business managing over $100 billion of fee-bearing capital on behalf of approximately 800,000 policyholders.

Importantly, this breadth allows us to grow through different market environments by shifting capital toward asset classes and regions where opportunity is strongest, while also creating a stable, resilient earnings stream that can perform consistently in different market environments and continue to grow across cycles. Looking ahead, a more balanced share of our fundraising will come from individual investors as private wealth, annuities and more retirement and 401(k)s will be able to allocate to alternative investments.

Turning to our balance sheet. We continue to operate with a strong asset-light financial profile that provides flexibility to support growth. In November, we issued $1 billion of new senior unsecured notes, including $600 million of 5-year notes at a coupon of 4.65% and $400 million of 10-year notes at a coupon of 5.3%. We ended the year with $3 billion of corporate liquidity, providing ample flexibility to support ongoing operations, strategic initiatives and growth across the business. As we look ahead to 2026, we are positioned for another very strong year, and I will emphasize again that the best is yet to come. Our performance as a disciplined investor sets us up to capitalize on the strong momentum across the business with continued capital inflows from institutional, insurance and retail channels and a pipeline of opportunities to deploy capital at attractive returns.

Given our strong financial position and significant growth prospects ahead, I'm pleased to confirm that our Board of Directors has increased our quarterly dividend by 15% to $0.50025 per share or $2.01 per share on an annualized basis. The dividend will be payable on March 31, 2026, to shareholders of record as of the close of business on February 27, 2026.

That wraps up our remarks for this morning. We'd like to thank you for joining the call, and we'll now open up for questions. Operator?

[Operator Instructions]

Our first question comes from Cherilyn Radbourne with TD Cowen.

So clearly, manager consolidation is continuing, and the recent emphasis seems to have been on private credit and also secondaries. With regard to secondaries in particular, is that an area that you consider strategically important and a gap that you might look to fill?

We've made a few complementary acquisitions in recent years focused on areas where we wanted to expand and build out the platform. Looking ahead, we would expect probably to be slightly less active, focused primarily on the further acquisition of our existing partner fund managers. Beyond that, we'll continue to be incredibly selective and opportunistic. In terms of secondaries, it is a space we track very closely. It's growing rapidly. It's a segment of the market where our expertise would be very clearly differentiating, and it would add an additional service that we could offer to our clients. So we do track the space, but we will be very opportunistic, only looking at opportunities that would be highly additive and complementary. But you would be correct that if we were going to do something, secondaries is probably near the top of the list. we would focus on a platform that we thought would grow significantly as part of the broader Brookfield ecosystem.

Our next question comes from Alexander Blostein with Goldman Sachs.

Connor, congrats. Obviously, I think well deserved on many fronts. Question for you guys around the growth for 2026. So it sounds like a lot of momentum in the business on multiple fronts as you highlighted. When you refer to at or above long-term targets, I just want to dig into that a little bit more. I believe your long-term targets, you generally talk about FRE. I think at the Investor Day, you talked about that being 17%. So is that what you're referring to when you think about '26? Do that include Oaktree and Obviously, those are going to be additive to that FRE? So I was hoping to just unpack that a little more and if possible, get a sense of the sort of organic FRE growth within that statement for the year.

So we expect 2026 is going to be very strong. We had strong momentum that accelerated throughout the past year and positions us very well going into next year. You are absolutely correct. In our 5-year plan, we expect growth rates in, call it, the mid- to high teens, and we absolutely have an outlook today that exceeds that level. Maybe just to put some substance around that, there are 3 initiatives, the acquisition of the remainder of Oaktree, the closing of Just Group and some of the acquisitions we made in Q4 that will add $200 million to FRE growth that have already been funded.

Beyond that, the earnings this year and going forward will benefit from what we expect to be a further step change in our fundraising. And we thought we had a strong year this year. Next year is going to be even better. And this is driven by continued growth in credit and then outsized growth in both PE and infrastructure where in each of those platforms, we'll have all of our strategies in the market.

And then the last thing just in terms of 2026 outlook, in terms of investment and monetization, obviously, this will be market dependent. But based on the very constructive environment we're currently experiencing, the major trends that we continue to be on the forefront of and the large pipeline of deals that we have in the near term. If market conditions hold, we see no reason why 2026 wouldn't also be a market step-up from 2025 in terms of deal activity as well.

Our next question comes from Michael Brown with UBS.

So a lot of anxiety surfaced in the market yesterday around AI-driven disruption, including within the alternative space. Based on our analysis, your exposure screen's below peers, but could you maybe break down Brookfield's software exposure broadly across private credit and private equity funds? And then additionally, for the industry, Connor, I'd love to hear your high-level views on how AI-related disruption could flow through the private asset ecosystem. And if there are major losses, how do you think LP allocations to private assets could react?

So there's really 2 punchlines from our side. First and foremost, this is a strong net positive for our business. It validates our focus on digital infrastructure and servicing increased power demand to support the growth and increased penetration of AI. These are some of the largest and most active platforms we have at Brookfield. And the announcement's not yesterday, but the increasing tailwinds over the last several months only provide further support for those initiatives. Obviously, this question is topical given the significant market move yesterday. But given our firm-wide focus on AI, this is a trend we've been tracking for a while. And as a result, the punchline is our exposure across the organization is very minimal. As a reminder, our portfolio is almost entirely focused on long-term contracted real assets where we don't take any technology risk or build on spec.

Maybe to get into some of the specifics you asked about, within our private equity portfolio, we have less than 1% exposure to software businesses. Within our credit business, our focus has been on areas of expertise such as infrastructure and real estate credit, real asset lending and asset-backed finance where we get benefits from the Brookfield ecosystem, and we have no software exposure. And then within our corporate credit portfolio, we've been actively positioning to where we see the best risk-adjusted returns. And as such, our opportunistic credit strategies have very little software exposure and our performing credit strategies are significantly underweight relative to indices.

Taking that all together, our firm-wide focus has been being positioned to benefit from increased AI penetration. And therefore, the headlines yesterday just further reinforce our conviction in that theme. And our disciplined approach to building our credit business has once again put us in a favorable position to manage through this volatility and to continue to be a net beneficiary of the impacts from AI.

Our next question comes from Bart Dziarski with RBC Capital Markets.

Connor, also echoing the congrats on the CEO appointment. I wanted to ask around liquidity, just given you pay out most of your free cash flow. And so with the $2.5 billion of debt outstanding now, would you consider the business in a place where it's fully funded? And just related to that, could you give us a high-level sense of the duration over which the $130 billion-ish of uncalled commitments could get called?

Yes, sure. So this is Hadley. I'll take that question. In terms of our balance sheet and liquidity, we're in a really good place. We've got over $3 billion of liquidity. Now part of that is in anticipation of funding our share of the 26% of Oaktree that we currently don't own. And so that's a critical component. So we're well capitalized from that perspective. But then looking forward, we've been instrumental in supporting our business, whether that's through initiatives around our complementary strategies and the growth there as well as our partner managers and buying additional stakes related to our partner managers.

So we're in a really good position. For some time, we've benefited from the cash on hand from the spinout, but it slowly entered the bond market earlier last year and anticipate when we look forward in terms of our leverage, obviously, the capacity is quite ample and will continue to build as our business grows. But when we look at 2026, we'll be much less active than we were in 2025, given we were obviously in a big growth area and wanting to support that growth.

When we look at our other area of liquidity, that's the uncalled capital at $130-ish billion, that's a significant amount of capital that can turn into fee-bearing capital. And this is a critical component of our business. We always want to be in a position where we've got liquidity to take advantage of the environment that we're in. So a good example of that is our BSREP, our flagship for real estate closed its fundraising earlier in '25. And so in a great position to have ample liquidity to be quite active. And in Peakstone, the announcement we made yesterday is a good example of that. And so our flagships obviously have built into some of that uncalled capital.

But separately, our credit strategies, which are also heavily in market last year and some into this year, have uncalled capital that will get deployed over time and become fee-bearing capital. So that will take a few years to get called, but it puts us in a really good position no matter what environment we have going forward.

Our next question comes from Craig Siegenthaler with Bank of America.

And Connor, first just big congrats on your promotion to CEO of Brookfield. And I think you're probably the youngest CEO in asset management, too. So my question is on artificial intelligence. So Brookfield has really built a leading business servicing the AI industry. So like your peers, it's a lot of picks and shovels, not actually the AI models. So data center and power. Can you talk about the mix of capital being deployed today between equity and also debt? And on the equity side in data centers, is it mostly investment-grade tenants like the hyperscalers? And I'm sorry, but one more I'm going to squeeze in, if you can address this one, too. And on the leases, they're, I think, almost all 15-year plus leases. Are there scenarios where they can be broken early or no, because there's a financial benefit to the data center provider when it's broken? Sorry about the 3, but they're all kind of related.

So in terms of themes across Brookfield, AI continues -- AI and AI infrastructure and the value chain that supports the increased penetration of AI remains at the top of the list. And this is not only the digital infrastructure, but also the energy generation that is required to support these data centers. Just as a general comment as to why the market opportunity is so robust today, you've got 3 dynamics that are all compounding on themselves. One, more data centers are being built. Two, the data centers that are being built are now larger. And then the third one is historically, the financial investor in a data center typically funded the rack in the shell.

Increasingly, there is an opportunity for those that have the scale and the operating capabilities to not just fund the rack and the shell, but to fund the rack, the shells, the chips, the servers, the power supply, the grid redundancy, the substation, the interconnect, the whole system, if you will. And that's creating a very large and attractive investment opportunity on both the credit side and the equity side because while that wallet is getting bigger, it's still backstopped by that same long-term take-or-pay offtake with one of the greatest either hyperscaler or sovereign credits in the world.

In terms of our pipeline today, it's as large as it's ever been, and we expect it to only continue going forward. There's 2 things that perhaps we would highlight that are of interest. There is the largest component of growth for AI demand is the hyperscalers. And we are absolutely leading in supporting and investing the infrastructure to support their AI initiatives. But there's also a growing opportunity to support sovereign AI. This is the AI offtakes from countries to support the national interests of those regions. Again, very high-quality credit offtakes, large-scale investment opportunities where our skills can be brought to bear. And this is an area where we do think we're market-leading given our announcements with Sweden, France, Qatar, et cetera.

The last point I'd simply make here is this is not just an investment opportunity. We are seeing incredible demand from our clients to get exposure to this investment theme. We announced our AI infrastructure fund with a target of $10 billion. We've already secured $5 billion. We expect we'll hit our targets and expect the broader program to be well north of $20 billion when we include the co-invest given the size of some of these investment opportunities.

And sorry, I'm just seeing here. The second part of your question, these are very strong long-term offtakes, very similar to what we would expect in other infrastructure asset classes. These are take-or-pay where if we continue to provide the asset, the offtaker is locked in. And similar to what we do on the power side, the real estate side, the infrastructure side, AI infrastructure is no different. We spend a lot of time ensuring it's a great revenue construct backed by a great high-quality credit counterparty.

Our next question comes from Michael Cyprys with Morgan Stanley.

Maybe just sticking with AI and data centers. I understand the U.S. administration wants to see new data centers stand up their own power generation. Curious, how do you see that impacting bottlenecks? And as you invest in data centers, talk about how you're bringing together your greenfield power capabilities, which is a major differentiator for you? And how you're expanding your capacity there given bottlenecks?

There is no question. The bottleneck to AI growth today is not capital. It is not demand. It is electricity supply. And unlocking that electricity supply and the slogan, bringing your own power, is a key differentiator. And while electricity grids around the world are doing everything they can to increase their capacity as much as possible, they very simply cannot keep up with the increased level of demand that we've been seeing in recent years, it's only going to accelerate going forward. And therefore, our ability to bring unique solutions beyond just simply flowing power through the grid is a key differentiator. Our ability to bring quick to deliver power through our investment in Bloom Energy, longer term, our ability to use nuclear solutions through Westinghouse and then behind-the-meter energy storage and renewable solutions that can be hooked up directly to these data center complexes.

All of these are different ways that we can look to capture this significant demand and essentially not be restricted by the growth of the grid that is not going to keep up with the opportunity set we see in front of us.

Our next question comes from Dean Wilkinson with CIBC.

Congrats, Connor and Bruce. Just want to circle back on credit overall. I mean there's been concerns around private credit, I guess, going back to September of last year. Can you comment just on what you're seeing in credit within the portfolio, a general view and maybe a comment on some of the redemptions that you're seeing in the industry in the private wealth strategies.

So the market demand for credit continues to be very robust, and it's driven by the same drivers we're seeing across our equity business, huge capital requirements to build out assets around key themes of energy and digitalization and deglobalization. And maybe to dive into what we're seeing, we continue to see very strong demand and attractive spreads in real asset and asset-backed lending where, quite frankly, demand continues to outweigh supply. And we expect that dynamic to continue going forward.

We are seeing incredibly tight spreads in select pockets of more commoditized segments of the market. And while that subset specific, some uncertainty in this space is significantly increasing the pipeline for our opportunistic credit business, which we have seen increase its activity over the last couple of months. In terms of credit flows, you're absolutely right. Across the market, there were modest increases in retail redemptions or wealth redemptions late last year. For us, these were very modest and very manageable. But what they shouldn't overshadow is on the institutional side, we're still seeing very robust inflows into credit, especially those products that are well positioned to outperform in this market.

Our next question comes from Dan Fannon with Jefferies.

Just wanted to follow up on just the outlook for wealth flows. You've obviously had very good momentum exiting 2025. Can you talk about your product road map as you look into 2026 and beyond as well as just the continued momentum?

So 2025, our growth in the wealth channel was a little bit north of 40%, 4-0 percent. We expect that to continue in 2026, particularly on the back of a number of new products we launched in the space at the end of the last year, notably in the credit and private equity segments. And those are seeing great early receptions. In terms of our outlook for the business, we're going to continue to build incrementally. This is an amazing opportunity in terms of the scale, the potential scale for our business. And we absolutely intend to capture it, but we want to go about doing it the right way. We're focusing, first and foremost, on getting the right products on the right platforms. Here, we're having an incredible amount of success.

Secondly, we're very focused on raising prudent amounts of capital to ensure that through these wealth products, we deliver the same strong and consistent returns that have defined our business for years. We feel that is the right way to build this business over time so we can lead in this space the same way we lead in the institutional space. And it's clearly not restricting our growth taking this approach given our 40% plus CAGRs. And then maybe lastly, the one thing we are doing is taking some incremental steps in 2026, really around brand awareness for Brookfield and also filling out our product offering, most notably on the credit side.

Our next question comes from Crispin Love with Piper Sandler.

First, congratulations, Connor. And then just on my question, FRE margins have expanded nicely in recent quarters to 60% plus. Can you share your views on the margin trajectory from here? How do you feel about sustainability of current margins, potential for further expansion just given some of the tailwinds that you've discussed for the business broadly? Just any puts and takes there would be great.

Sure. So I can describe that. I mean you're absolutely right about the margins and the operating leverage that we've seen play out. As a reminder, when we close the 26% of Oaktree, that will have a shift in our margins just because of where they operate and the cyclicality of their business. But the other thing that we mentioned that we're going to do, which is really just a onetime presentation change is take our partner managers, which have continued to grow as a business and our share has grown, which is reflecting more into our numbers, we're going to actually bifurcate their revenues and expenses, the portion that we own, whereas today, we include only their FRE.

So this change won't impact FRE or DE, but it will increase the reported revenues and costs as a result, impact the margins. Now the reason why we've always just shown their FRE is because they were a small part of the business. But as mentioned, they continue to grow, and we're quite excited about that. So we want to provide more transparency around that. And this should also help investors better understand the components of our credit business specifically as well as the underlying fee rates for our credit strategies.

But importantly, to get to really the crux of your question, the margins for our business will continue to improve because of that operating leverage that's built in across all of our platforms. In fact, when we look forward, every -- especially for 2026, every business should have stronger margins, except maybe real estate only because they don't have the catch-up fees. So we're quite excited about the business in general for 2026 and onwards, and that will be reflected in the margins.

Our next question comes from Mario Saric with Scotiabank.

I just had a quick follow-on question with respect to the emerging pursuit of the individual investor and wealth channel. I think, Connor, you highlighted 3 initiatives for '26 on that front, including brand awareness. I'm just thinking from a cultural perspective, Brookfield's culture has been very consistent, very strong, excellent institutional culture to make Brookfield where it is today. How do you balance the drive for brand awareness on the private kind of individual wealth side with maintaining kind of that institutional culture that you've had historically?

Our culture is one of our biggest and most valuable assets, and it is not going to change going forward. It guides how we operate, how we partner with our clients, how we're disciplined and take a long-term view to investing. When we speak about increasing brand awareness, one of the important things is it's about increasing the awareness of the Brookfield brand, which, to your point, is very distinct. It speaks to stability. It speaks to discipline. It speaks to long-term focus. And that's all we will be reinforcing. One thing we're incredibly proud of at Brookfield is everybody represents the brand. And that's really what we're going to look to reinforce. As we do increase the brand awareness, it's just ensuring that people know who Brookfield is and what we stand for.

Our next question comes from Jaeme Gloyn with National Bank.

Congrats as well, Connor. On the private wealth market as that continues to evolve and access for private markets and 401(k)s expands, how should we be thinking about the potential impact on BAM's fee-bearing capital and FRE? And what do you need to have happen for that to become material?

So when we think about the large opportunity in the future for the individual investor, we think about that in 3 parts: the retail and high net worth channel, the insurance policy and annuity holder and the 401(k) and retiree benefit market. In that third bucket, we do expect the opportunity set to be very, very large, but we expect it to grow incrementally over time. In terms of what's happening in the near term, we do expect guidance to come later this week, which we expect will be highly supportive of alternatives in 401(k)s and will include -- we expect initiatives that will create catalysts for increased reviews of alternatives within these portfolios. And we are very well positioned to capture these opportunities in the DC channel.

We are already working with leading target date fund managers to provide the best of Brookfield strategies to improve participant plan outcomes. We've been focusing on professionally managed portfolios and target date funds where we can co-develop sleeves and solutions with the existing providers of those products. And in that regard, we're very confident that we can demonstrate value for cost while meeting the regulatory requirements. And that really goes to the strength, track record and durability of our private investment strategies.

Maybe the last point just on this market because we're very excited about it. From all stakeholders, we continue to receive very positive feedback that our focus on high-quality downside protected real assets that provide cash yield and inflation protection is uniquely suited to the objectives of these plan participants. And that's what we'll be looking to offer on an increasing basis going forward.

Our next question comes from Kenneth Worthington with JPMorgan.

Connor, congratulations. My question is for Hadley. There was a more meaningful increase in the long-term fund and co-investment revenue in both the transition and private equity businesses this quarter. For transition, it went from like $5 million to $28 million sequentially. In private equity, the revenue went from $44 million to $62 million sequentially. What drove the jumps here? And to what extent is this sequential jump in revenue this quarter sustainable at these levels? Or were there one-offs that we should be accounting for?

So one thing to keep in mind, and we've mentioned this for PE is Pinegrove, and they had a great first fund with a final close of $2.2 billion, and that had catch-up fees. So that's what you're seeing there. So there's some catch-up fees there, but that is capital that's now going to be earning FRE going forward. So very exciting outcome there. On the transition side, what you're seeing there is one of our partners that we have in terms of some revenues that they generated from there. That is probably a little bit more one-off generated that the overall business is performing quite well, but they did have a solid wind. And so that's something that you're seeing flow through there.

Our next question comes from Sohrab Movahedi with BMO Capital Markets.

Congrats to Connor as well. Hadley, can you just give us a sense of how you arrived at the 15% div bump and whether or not you expect to be below 100% payout ratio next year?

Yes. So look, we do a lot of forecasting and analysis around our business by each business, tops down and bottoms up. So this is a thorough analysis that we conduct. It does make it a little bit easier when we've got $200 million of FRE coming in for 2026 that we can forecast with incredible certainty around Oaktree and Just Group. So that's quite supportive. And when we think about our payout ratio over time, as you know, we target around the 95%. And so that is the goal that we're going to be leading into, especially as we get in carry, which is the second leg of our growth. So what gives us that confidence around 15% is the analysis that we performed and then the overall long-term goal from that perspective.

That concludes today's question-and-answer session. I'd like to turn the call back to Jason Fooks for closing remarks.

Okay. Great. If anyone should have any additional questions on today's release, please feel free to contact me directly, and thank you, everyone, for joining us.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Okay. Thank you. Good morning, everyone. It's my pleasure to introduce Bruce Flatt, CEO and Chair of the Board of Brookfield. Over the last several years, the Brookfield ecosystem has evolved into a leading global alternative asset manager, with over $580 billion in fee-bearing capital across a wide range of strategies. The firm also operates a fast-growing insurance business and annuities business on the other side of the house now under BN, with deep expertise across the investment landscape. We look forward to hearing Bruce's perspectives on the environment, obviously, what's in store for Brookfield over the next year and beyond. So thank you for being here. It's always great to spend some time with you at this time of the year as we turn the page on to 2026. So thanks for doing it.

Thanks for having me.

So I wanted to start with a bit of a bigger picture question for you guys, really on the back of some of the targets you announced at the Investor Day a few months ago, which effectively calls for a doubling of the business. And you have lots going on. You're on your way there. 2025 was a strong start in terms of the fundraising targets that you laid out. But as you look out into 2026, talk to us about the fundraising environment and how you expect that year to shape up for Brookfield from a fundraising perspective?

So I think probably the most important thing for us is we have a very diversified business. We have a big real estate business, a big infrastructure business, big renewables business, a big credit business, a big private equity business. And each of those is spawning other strategies as we go. I think next year; we have 50 funds in the market. So this is a broad and diversified franchise, which just means that no one single business is so important to the franchise.

And secondly, the asset management business, when it was spun off is largely fees today, and it grows into carry over 5, 7, 10 years.

Sure.

But today, it's largely just -- it's just fee-bearing capital that's generating fees not influenced by carry.

And as a result of that, the resiliency of the business is extremely strong. And we just haven't had -- maybe because of the diversification and because of the operations mentality and because of the quality of the type of business we have, we just haven't had issues raising money. We raised $120 billion last year -- in 2024, I think.

Yes.

We've raised $100 billion this year. I think next year will be larger because we have a lot of our big funds in the market next year coming or starting now and through into next year. So we just haven't had the issues with fundraising that a lot of people have had.

When -- I think the issues have been if you're in a single industry or an industry that got hit a lot, like clearly, some of those issues affected us. But when you have a broad, highly diversified and highly global business, we just get the benefits from that.

Yes. Let's spend a couple of minutes on some of the bigger initiatives' you guys have coming up. Obviously, AI, all things AI, AI infrastructure has been incredibly topical for the space, but really for you guys as one of the leaders in the space.

You've actually described AI infrastructure as a multitrillion dollar capital formation cycle. You've been executing against that opportunity well with obviously a number of partnerships. You're in the middle of raising your large AI infrastructure program as well. You talked about that space being $100 billion of assets to Brookfield at some point of time potentially.

So what are the priorities into next year as you're building out this ecosystem, how the fundraising dialogues coming along as you're embarking on this kind of next leg of your journey?

So maybe the first thing just to step back and identify is that the single number one thing that's important for artificial intelligence as we build out the backbone of intelligence is power. The biggest gaping hole in virtually every single country in the world, but in particular, in the United States is the fact that we do not have enough power to power AI.

So we're -- we happen to be extremely lucky that we've been in the power business for our whole -- in fact, the whole company's history, but in particular, in the last 40 years. And we're the largest builder, operator, owner of power plants in the world in many different types of technologies. So that's the most important thing.

Second, what's going on now is that the fundamental backbone layer of artificial intelligence is being laid down. And the way I would refer to it is, in years past, we laid down railways, and we put down roads and we put down water systems, and we put down in the last 25 years, fiber and mobile networks. And now what's happening is we're laying down this artificial intelligence network. And countries need to have artificial intelligence networks, or their companies and their systems of government will fall behind.

Right.

So every single country in the world and every hyperscaler who are leading this are looking to build artificial intelligence infrastructure to warehouse compute capacity for their companies and for their countries.

And what's probably the most important thing because leave aside the stock market. There's only a certain number of stocks out there. Therefore, when money tries to push towards one set of stocks, the PE multiples go up.

Right.

But if you look at the fundamentals of what we do is we just build backbone infrastructure for companies or countries. So we've done transactions and we provide them power or we provide them compute capacity or data centers. We've done transactions with Microsoft and Google and Sweden and France and Qatar this morning, and we continue to build out in the United States. And all of that is really just the necessary backbone.

So I think probably the most important thing to leave you and everyone with is no matter what happens in stock markets, this artificial intelligence backbone build-out is very large, will be going on for 15 years. And those that have the operating capability to lay down the fiber we'll be doing it for 15 years and the counterparty contracts in it are extremely good. And if you know what you're doing, very few mistakes will be made. And that's probably the most important thing.

So this -- back to your original question is how big is this going to be? It's going to be very, very large. And it affects everything. It affects our power business because we can't build enough.

Right.

It affects our infrastructure business because all data centers and all types of infrastructure are getting affected by it. We set up a separate fund up because we didn't want to engulf our infrastructure fund with artificial intelligence only. Therefore, we're -- we have a separate fund for that. It affects our real estate fund because many of our industrial sites that we have today, we're reverting away from industrial logistics to data centers if we have power and if we can locate the building.

So it's affecting all of these businesses. And of course, when these conditions exist, one has to be very careful, and I know that we will be and some others will be and some will not be. And they'll make mistakes along the way like always.

Yes. So just maybe double-clicking on that, given your exposure to this ecosystem and given all the headline concerns that we've seen, especially in a couple of months around the AI theme and potentially areas of overheating, how do you make sure you don't make some of those mistakes? So what areas you're avoiding and where are you leaning in?

I would just say that we've been building backbone infrastructure for the global best in various forms for our whole existence. And this backbone infrastructure is no different, the technology may be different. The companies or countries you're dealing with may be different. In fact, difference number one is they're all better credits than we used to deal with when we dealt with mining companies or forest companies or businesses that rented our real estate. But this is actually the same thing. This is really just a real estate business.

We build things, rent them to people, take credit risk and make sure that we have long enough contracts to get all our money back and a return on that capital. It's really -- this is really simple. People will make mistakes, but it's really simple as the fundamental basis of it. And the good news is, is we have huge operating teams in all of these places to build out this infrastructure, but people will make mistakes when they don't know what they're doing on construction and building.

Yes.

They don't have financing properly put in place; they make missteps on contracting with counterparties. Those are the 3 risks. But they're all the same 3 risks that have always been in place, but every type of infrastructure in the world. And I think the most important thing here is this is just for what we do anyway. Like we're not a technology provider, and we're not intending to be. We're just behind the scenes providing infrastructure like we always have.

Yes. So back to your original point where there's really not enough capital in the world today to support it. It's certainly not enough government capital to really support this. So when you think about your initial leg into this theme, you have the big AI fund that you're fundraising today. What other vehicles? What are the products? What are the strategies you think could evolve around that? And when I think about Brookfield's history of building businesses, transition business is one of the examples, more recent examples. How big do you think the AI infrastructure business will be for you guys over the next several years?

First point is there is enough money in the world to fund this because there's $60 trillion in sovereign institutional plans around the world. There's $40 trillion, $50 trillion of retail money that's out there. So there's $100 trillion. The funding, and we're talking $10 trillion. What you need to do, it all sounds like small numbers.

But what you need to do is figure out what's lacking is people to convert the $100 trillion into the $10 trillion. You need owner operators that know what they're doing and have the trust of countries and hyperscalers to be able to do that. That's really what it is. It's the skilled intermediaries to build infrastructure and raise money from that $100 trillion to build out the $10 trillion. And so there is enough money. It's just -- we just have to figure that out.

And I would say what's important today is that the hyperscalers don't have enough money on their balance sheets. They're spending, I think it's quoted this year, $600 billion. It's estimated at $500 billion to $600 billion a year, over the next 5, 7, 10 years. That's a lot of money even for $3 trillion to $5 trillion companies if they keep stacking it on the balance sheet. So they need access to groups like us that can convert the $100 trillion into investments that support their business and infrastructure. And the bottom line is that's what we've been doing in various businesses we have for many, many decades.

Great. Okay. Let's pivot away from AI for a minute. To your point earlier, Brookfield has a really diverse set of businesses across a number of different verticals. Where else are you finding interesting deployment opportunity? It feels like the pace of deployment has steadily been picking up. What else is interesting for you guys in terms of capital deployment over the next 12 to 18 months?

So I think in '25 to date, we invested $110 billion across the business, and it's pretty well -- it's pretty well diversified. We've done a lot of private equity businesses. We've put a lot of money into real estate. We just announced a transaction in Australia, buying storage for $2.5 billion with GIC as a partner. We've done a lot of infrastructure deals, renewable power deals. We just did the deal with Westinghouse on nuclear. So it's pretty broad.

And I'd say that's the success of our business is keep broadening the business and over time, keep growing it, but never concentrated in any one area because when you're building a business for the next 20, 30, 40, 50 years, being diversified helps. And it means that we're never subject to the markets. And if things are valued too high in one sector, we can just allocate capital somewhere else.

Yes. The other side of that coin is obviously monetization activity. It's been a place where the industry has sort of struggled for the last couple of years. It's really nice to see finally turning the corner in 2025. It's certainly been a -- it's been a better year for realizations for the space. It's been a better year for you guys as well. I think over $75 billion of sales year-to-date through Q3. It's really across the franchise.

How should investors think about Brookfield's monetization outlook in 2026? And then within that, maybe talk a little bit about what are the segments or the product categories that are likely to be the biggest sellers?

One never knows what the future brings, but fundamental conditions out there are favorable towards continued monetizations and increasing monetizations for groups.

Now still, there are some groups that are having difficulties because it's the type of businesses that they own. And I would say, in general, over the past 3, 4 years when monetizations were less, we did much, much better than average because most of the things we buy are cash flowing, high-quality, long-term businesses, which we've been able to sell. And as you said, we sold $75 billion of investments this year.

And if I took it in general, it was operating businesses, even in real estate, it was operating businesses, which were very high quality that had teams to grow into the future. And largely, we did better monetizing outside the United States than inside the United States. With interest rates now coming down in the U.S. and with capital markets back, I'd say, probably as efficient as they've ever been, you're going to see a lot of more monetizations in the United States, and that's good for us, but it's also good for the industry in general.

And the quantum, again, with the caveat that nobody has a crystal ball, but is the expectation '26 to be better than '25, so?

Yes, probably. I would say for us; it all just depends on the life cycle of different investments. We're not selling things just to sell. But generally, we sell $75 billion to $100 billion a year. Generally, we invest $100 billion to $125 billion a year. That keeps growing all the time as our funds get bigger and broader. But I think $75 billion to $100 billion next year is probably a good number.

Great. Okay. All right. Let's pivot a little bit. I would love to spend some time on insurance and BWS, which is obviously part of Brookfield, the corporation, BN. It's been growing rapidly. You guys obviously established this platform as an investment-led insurance organization. It's really important to BN. It's really important to BAM. It's obviously very important to shareholders across probably both sides of that aisle.

So when you think about 2026 and beyond, can you talk about what are some of the levers you're pulling on to sustain the growth, number one? And number two, and perhaps more importantly, to continue to deliver 15-plus percent type of ROEs?

So for Brookfield Asset Management, I guess the simple point for it is it doesn't take exposure to insurance risk. It manages assets for institutional clients, retail clients and insurance businesses. And the largest client it has is Brookfield Corporation.

Increasingly, it will become even a larger client because 4 or 5 years ago, we took $25 billion of the equity capital we had and we stuck it into an insurance business, into the equity of an insurance business. And now it's almost -- it will be almost $200 billion of assets shortly. And a lot of that capital is getting allocated in various strategies at Brookfield Asset Management. And we can't think of a better group to manage our capital.

So I'd say that's what's important for Brookfield Asset Management. At the parent company, our goal is to continue to seek financial services businesses that are -- can both earn us a very good long-term return on capital. But in addition, are symbiotic with the businesses that we have today. So insurance was super important to us because we thought we could invest into at a point in time, build the skills, make the early mistakes you always make when you're starting out in a business by getting into it at a point which was very fortuitous because interest rates were 0.

Yes.

But the -- we thought it was a good business in itself, but it's an excellent business for the combined group because it will be a $500 billion business someday and all of that capital gets allocated to our asset management arm. And so it's -- there's a double win when we can do that. And increasingly, we continue to -- like really, our goal is seek capital with as little risk as possible on the liability side of the balance sheet and try to out-earn to earn excess returns by investing wisely.

Right.

And that's always what we've done for our own balance sheet. That's always what we've done for our clients, and now we're just doing that for our insurance company is -- but we're not trying to take insurance risk and why we say it's an investment-led insurance company. The difference is that we're not trying to take insurance risk to make money. What we're trying to do is minimize insurance risk receive float and invest wisely. And that's -- it's just -- it's a different model that -- there are some that are like this, but it's different than most monoline insurance companies.

Right. So given, I guess, how important the investment capabilities are going to be for BWS to sustain the sort of 15% ROE, maybe even grow it over time. Talk to us a little bit about how the asset side of the balance sheet could evolve versus where it is today? What runway you see for utilizing more of Brookfield's asset management capabilities on the BWS balance sheet?

So our strategy so far has been as opposed to running an insurance company, which just invests into traditional -- in traditional ways into both liquid and private credit. Our strategy has largely been a barbell approach not unlike what Berkshire Hathaway has always done, which is hold very large amounts of cash, which we hold today. And that allows you to put significant money into equity strategies, which earn much higher returns.

So don't try to earn 7%, earn 3% in 14%. And if you can earn 3% in 14%, that averages to 7%. But in our view, you can; a, earn a higher return on average if you do your job right; but b, you can take less risk because of the things that we know that we're doing. And the advantage that we have is that the strategies that are the underpinning of Brookfield Asset Management are long-term yielding cash flow type assets in renewables, infrastructure, real estate that are very well treated and earn excellent low risk returns in an insurance company.

Got you. Another one on insurance topic for you, property and casualty. So I know when we talk about BWS, mostly is the annuities business. It's mostly the business that's been quite aligned with alternative asset managers when we look at a lot of your peers that are kind of participating in the same. You do have a small P&C business. What sort of strategy behind P&C? Is that a -- is it an opportunity? Do you see space to grow organically or maybe even via M&A? And how does that play into the symbiotic relationship with the asset manager because that's quite a different type of risk and probably different asset management strategy as well.

So the property and casualty business is a very diverse business, and most people think of it as we're underwriting hurricanes. That's not generally where we want to put our capital longer term because you're making risk and taking insurance risk.

Our -- the business is small today. What we'd like to find is a relatively low-risk P&C area where we can become globally dominant and create float to be able to invest into our strategies, in particular, our higher earning equity strategies.

And as an example, we underwrite -- today, we underwrite insurance for real estate construction in New York City. And you might think we -- I hope you think that we have some knowledge to underwrite construction risk insurance in New York City as one of the largest owners of property in the city. So I don't know if that's one that we could take across the U.S. and then take across globally, but it's possible.

And so it's -- we're always trying to use the knowledge we have from our businesses and optimize our capital, but earn low risk -- take low risk and earn a reasonable return by doing it. But find areas where we have something special. I think we have something special in that. So we've been now under -- we're now underwriting warehouses. We're a huge owner of logistics warehouses across the United States and globally. So we're now writing insurance for warehouses. We're writing insurance for renewable facilities. Of course, we know how to run renewable facilities and know how to replace it and are one of the largest insurers on the other side.

Yes.

So we know exactly what we're paying. So we're trying to figure out -- we may never find one or we're going to find an amazing area where we can be a globally dominant player where we have more information than anyone else, and therefore, we can take risk that nobody else can. And then if we can do that, the goal is -- sorry, the goal is just take small amounts of risk on the liability side, create float to be able to allocate to our asset strategies.

Sure, sure. And if you don't find something like that inorganically, is there appetite to just write that kind of business organically and just kind of chug along and make it somewhat additive to the whole ecosystem?

Yes. I -- look, maybe we'll find one to buy. I don't know. In the absence of that, we'll just keep growing it organically. In the absence of that, we won't do it.

Right.

Like the fact is that we have many things like that, that grow organically. Sometimes we find acquisitions. If we can't find it and it doesn't work, we'll shut it down.

Yes.

So it's not -- these are all options. What our goal is how do we find low-risk float to be able to invest into using our investment skills to earn a higher return than we're paying on the float.

Yes.

And that's the simple strategy of BN. And Brookfield Asset Management is just there every day trying to put the money to work.

Great. Okay. Let's go back to Brookfield Asset Management discussion for a couple of minutes. I would love to get your thoughts on private credit. Obviously, been super topical for the last couple of months. It's your largest business. It accounts for about 1/3 of Brookfield's asset management, management fees.

Now a lot of the concerns in the market have really been surrounding direct lending and some of the more levered part of the ecosystem. You guys actually don't have a whole lot of exposure there. But when you kind of zoom out and when you think about the multi-asset credit platform that you've built, what are some of the more attractive areas to deploy capital, number one? And how do you think about that platform growing over the next few years?

So again, it's important, but it's not everything. To us, we're highly diversified. So that's, I guess, the first point.

Second is our -- we spent the last 7, 8 years putting -- knitting together both organically within Brookfield and with a number of partner manager partnerships. We've been knitting together really a highly opportunistic credit business, which is our Oaktree franchise, alongside asset-backed finance, which we think will continue and continue to grow on the private side. So when you think about it, it's funding of real estate, it's funding of infrastructure, it's funding of airplanes. It's funding of all of asset-backed finance. And our goal is to become the best asset-backed finance lender out there.

And again, the reason is we think we have more information than most people who do this. Therefore, we should be able to earn either higher returns or take lower risk and earn the same returns. And so we're continuing to grow that business. We're quite excited about it. And to the actual -- just the industry of private credit, I would say the private credit has caught a lot of headlines recently. I think everyone needs to just step back and consider the credit industry, of which Goldman Sachs participates in as well.

Last time I checked. Yes.

And the credit industry right now, there aren't that many defaults. Defaults are very low. Credit is generally pretty strong. And you haven't seen a lot of issues. Now there's a few that came about that have been headlines, but this industry is not going away. There's going to be liquid credit and there's going to be private credit.

Private credit is really what banks did for years, and a lot of that got pushed off the balance sheet to be able to ensure that they optimize their capital ratios. And all private credit is we're accessing those clients we have over here with the $100 trillion to be able to put their money directly into loans. And our specialty is asset-backed finance and opportunistic, but everyone else -- others will have their own specialties within each area they're in.

Great. All right. Another important area I wanted to make sure we talk about is real estate. Again, not the whole franchise, as you pointed out, you guys a diversified platform, but it's an important one. And it's important for both for a variety of reasons, right? It's important for BN on one end, and it's important for them on the other one.

So over the last few quarters, you've been pointing out signs of recovery, both on the fundamental side of the picture, but also the capital markets healing and hopefully, the lower rate environment will make it easier to start to sort of transact in the real estate space as well.

So as you look out into 2026, maybe talk to us a little bit about your plans for further monetization's out of the BN portfolio and sort of lessons learned so far in terms of the appetite for the assets that you're bringing in the market? And then on the fundraising side, at what point do you see healthier transaction activity translate into a more favorable fundraising outlook for real estate strategies?

So on fundraising, we just raised our big fund. I think it ended at $17.5 billion, if I'm not wrong, and circa that number. And therefore, there's no lack of money out there for good sponsors who have good track records. That's point number one.

I'd say the -- what happens in recoveries in this -- every cycle is different, especially in real estate. Every business, it's different, but real estate, in particular, every cycle is different. And this one is really weird because fundamentals are actually very, very strong. The issues have been in capital markets and some markets in the world, I'll say. But capital markets got affected because of the psyche of people that real estate was bad because everyone went home and didn't go to the office and everyone didn't shop anymore, which both of those have been debunked, I think, would be the word to use.

And so the fundamentals are actually very, very strong. In fact, I was reflecting this morning, we built 5 office buildings during COVID, 5 globally, Dubai -- 1 in Dubai, 2 in London, 2 in New York, either got renovated or built, 3 in New York. They are 100% full today at 50% higher rents than pre-COVID and the highest rents ever signed in leases in each of those cities. That's an amazing fact. That's the worst business we have, let alone storage, multifamily, et cetera, et cetera.

What the issue was is there was this psyche at the bottom of the market, compounded with interest rates went up fast and therefore, affected the capital structures of many people, many groups' assets. And that was really the effect. And that's sorting itself out now. And capital markets are coming back, transaction activity is coming back. All -- most assets are financeable today like in a normal fashion.

And what that leads to is once you can finance assets because real estate can't be purchased without financing, once you can finance assets, sales start to come back. And you're seeing that today across the world. The U.S. was probably the heart of the most affected because interest rates went up the most and the fastest. But as interest rates come down here, you're going to see real estate come back even more.

Great. Perfect. I think we'll leave it there. Bruce, thank you very much for joining us again this year. See you next year, hopefully, as well.

Thank you.

Yes.

Good day, and thank you for standing by. Welcome to the Brookfield Asset Management Third Quarter 2025 Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jason Fooks, Managing Director, Investor Relations. Please go ahead.

Thank you for joining us today for Brookfield Asset Management's earnings call for the third quarter of 2025. On the call today, we have Bruce Flatt, our Chief Executive Officer; Connor Teskey, our President; and Hadley Peer Marshall, our Chief Financial Officer.

Before we begin, I'd 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 U.S. and Canadian securities laws. These statements reflect predictions of future events and trends, and do not relate to historic events. They're subject to known and unknown risks and future events and results may differ materially from these statements. For further information on these risks and their potential impact on our company, please see our filings with the securities regulators in the U.S. and Canada, and the information available on our website.

Let me quickly run through the agenda for today's call. Bruce will begin with an overview of the quarter and the market environment. Connor will walk through key growth initiatives across each of our businesses. And finally, Hadley will discuss our financial results, operating results and balance sheet. After our formal remarks, we'll open the line for questions. [Operator Instructions]

One last item to mention is that the shareholder letter, which this quarter will be a single letter covering the biggest themes across Brookfield will be published Thursday morning alongside Brookfield Corporation's earnings.

And with that, I'll turn the call over to Bruce.

Thank you, Jason, and welcome everyone. We are pleased to report another strong quarter for our business, marked by record fundraising, earnings deployment and monetization. Quarterly fee-related earnings grew 17% over the past year to $754 million. Distributable earnings grew 7% to $661 million, and fee-bearing capital reached $581 billion, an 8% increase year-over-year, all driven by our strongest fundraising period ever. These results reflect the strength of our franchise and the benefits of our global scale diversification and long-term client partnerships.

Our business continues to benefit from the major themes shaping the global economy. The acceleration of AI and data digital infrastructure, the accelerating demand for electricity and the improving strength in the real estate markets. Each of these themes plays directly to our strength as an owner, operator and investor in real assets and together, they are fueling multiyear growth across the business.

In the third quarter, we raised $30 billion, bringing total inflows over the past 12 months to more than $100 billion. This was our highest pace of organic fundraising ever. Our fundraising in the quarter came from strong closes for two of our flagship funds, and increasing capital from our comp to entry funds and partner manager strategies. Our flagship global transition fund, our venture-focused pine growth strategy and our music royalties focused primary wave business, all had closes recently and each exceeded its target.

Turning to the broader market environment. Transaction conditions have improved steadily throughout the year. The global economy remains resilient despite trade and tariff uncertainty. Corporate earnings are healthy. Capital markets are liquid, and the Federal Reserve has begun lowering rates. This is giving the market more confidence and leading to transaction activity significantly increasing.

Global M&A volumes are up nearly 25% year-over-year. The third quarter alone saw $1 trillion of announced deals, the highest level since 2021. This resurgence in large cap M&A and a record backlog of sponsor-owned assets are therefore fueling activity. This is creating a good environment for both deployment and also asset sales. We remained active in this environment, deploying large-scale capital at attractive entry points where operating expertise provides us a competitive edge, while also crystallizing value from our mature investments at attractive returns. Our ability to recycle capital efficiently, returning proceeds to clients while raising new funds for the next generation of opportunities is fundamental to how we compound value over time and continue to consistently grow our business.

Another important milestone was our recently announced agreement to acquire the remaining 26% in Oaktree Capital Management. As you know, one of the most respected names in global credit investing. When we partnered with Oaktree 6 years ago, the goal was to combine our global scale and real asset expertise with Oaktree's deep credit experience and value-oriented culture. That partnership exceeded expectations, enabling the rapid expansion of our credit platform, supporting the launch of Brookfield Wealth Solutions, and driving a 75% increase in Oaktree's asset base. Bringing Oaktree fully into Brookfield is the next natural step. It combines the scale and reach of our nearly $350 billion credit platform, enables deeper collaboration across our businesses from origination and underwriting distribution and analytics. Most importantly, it enhances our ability to deliver the full breadth of Brookfield's credit capabilities to clients.

Turning briefly to overall credit markets. Liquidity remains ample, and spreads in both public and private markets are near historically tight levels. Certain pockets of private credit such as middle market, direct lending and sponsor-backed leverage have become more commoditized as large amounts of capital [indiscernible] for a small pool of attractive deals. We've been disciplined in avoiding these segments of the market and instead of focused on attractive risk-adjusted return opportunities where we have strong competitive advantage. Such as infrastructure, renewable power, asset-based finance strategies and opportunistic credit.

Across our business, our ability to raise large scale capital deployed strategically across the mega trends, and deliver risk-adjusted returns to trusted clients continue to drive record results. Our balance sheet is extremely solid. Our margins are expanding and double-digit growth trajectory is sustainable. With record fundraising momentum, deep deployment pipelines and healthy monetization activity across our platforms, the foundations we've built over the past years have set the stage for an even stronger 2026.

With that, I'll turn the call over to Connor, and thank you for [ the ] results.

Thank you, and good morning, everyone. As Bruce mentioned, this past year was the most active period in our history across fundraising, deployment and monetizations. Our infrastructure and renewable power franchise is one example of this momentum. As over the past 12 months, we've raised $30 billion, deployed $30 billion and monetized over $10 billion at approximately 20% returns, demonstrating strength, scale, and consistency of our platform.

Our franchise is the largest and most established globally, serving as a cornerstone of our business and a key driver of long-term growth. Deployment is centered around sizable investments across all sectors, geographies and positions in the capital structure, including [ by utilities ], from a controlling equity investment for an industrial gas business in South Korea, and a minority equity investment in the United States for Duke Energy Florida across transportation, via structured equity investment in a Danish port, across data with a mezzanine financing for a European stabilized data center portfolio, and across renewables, by an equity investment in a South American hydro platform, and to take private of a global renewable developer concentrated in France and Australia. And finally, across our first AI infrastructure deal with [ Bloom Energy ], which we committed to this past quarter.

AI promises unprecedented improvements in productivity but it is simultaneously driving an unprecedented demand for infrastructure, from data centers and power generation to compute capacity and cooling technologies. We estimate that AI-related infrastructure investments will exceed $7 trillion over the next decade. Brookfield's unique position, owning and operating across the full energy and digital infrastructure value chain gives us a tremendous advantage in capturing this opportunity.

On the back of this generational investment opportunity, we are launching our AI infrastructure fund. A first-of-its-kind strategy that pulls together our global relationships with hyperscalers, our expertise in real estate, and our leading position in infrastructure and energy into one strategy. With the goal of being the partner of choice to leading corporates, governments and other stakeholders looking for integrated solutions that combine development capability, operating expertise and large-scale capital. We are also preparing to launch our flagship infrastructure fund, which is our largest strategy at Brookfield early next year.

Looking ahead, we expect to have all of our infrastructure strategies in the market in 2026, including our flagship infrastructure fund, our AI infrastructure fund, our mezzanine debt strategy, our open-ended super core and private wealth strategies. And in the back half of the year, we expect to launch the second vintage of our [ Infrastructured ] Solutions Fund. As a result, despite raising $30 billion over the last 12 months, we expect next year will be even bigger.

Within renewable power, this quarter, we also held the final close of the second vintage of our global transition flagship at $20 billion, making it $5 billion larger than its predecessor and the largest private fund ever dedicated to the global energy transition. The success of this fund raise also reinforces the scale, credibility and momentum of our energy franchise. Since launching our first ever transition strategy less than 5 years ago, our platform now produces over $400 million of annual fee revenues.

More important, we are investing into an environment that is highly attractive and increasingly constructive for us. Global demand for electricity is increasing at an unprecedented rate. This is the result of the ongoing trend of electrification as large sectors like industrials and transportation are increasingly electrifying. And this growth has now been supercharged in recent years by the surge in electricity demand from data centers to support cloud and AI growth around the world. Data centers are becoming some of the largest single consumers of electricity and the scale of new generation required to support them is immense.

Each of these forces is contributing to a structural shortage of generation capacity. To put it plainly, the world needs more power, and it needs it faster than ever before. Our business is uniquely designed to meet this challenge. We are positioned to provide that any and all power solutions that will be necessary to meet this need. Our leading renewable power business can provide the low-cost wind and solar solutions needed to meet this increasing demand. Renewables continued to see significant growth due to their low-cost position, but also their ability to win on speed of deployment and energy security, as they do not rely on imported fuels.

And in a world where baseload power and grid stability are increasingly important, in addition to renewables, we have leading platforms in hydro, nuclear and energy storage, all of which play a critical and growing role for electricity grids, both independently and as complement alongside natural gas and renewables in the energy mix.

In this regard, we are very pleased to announce, last week, a landmark partnership with the U.S. government to construct $80 billion of new nuclear power reactors using [ Westinghouse ] technology. The agreement reestablishes the United States as a global leader in nuclear energy and positions Brookfield at the center of a historic build-out of clean baseload power, creating one of the most compelling growth opportunities across our transition platform, and potentially one of the most successful investments in Brookfield's history.

Within our private equity business, we recently launched the [ seventh vintage ] of our flagship private equity strategy, which focuses on essential service businesses that form the backbone of the global economy. These include industrial, business services and infrastructure adjacent companies where we can apply our operational expertise to drive efficiency, productivity and scale. Early investor feedback for this strategy reflects a growing recognition that value creation in the current environment is driven less by multiple expansion or financial engineering, and more by hands-on operational improvement, an approach that has long defined Brookfield's success.

While many traditional buyout strategies are navigating slower fundraising cycles, we continue to be differentiated. We have consistently returned capital at strong returns from preceding vintages, and are seeing strong demand for our differentiated, operationally focused model. We expect this next vintage to be our largest private equity fund ever.

We are also bringing our private equity strategy to the private wealth channel with the recent launch of a new fund structured for individuals. Similar to how we structured our successful private wealth infrastructure fund, this new private equities fund will be able to invest alongside all of our private equity strategies. This means that targeting individual investors in the retirement market does not require us to invest differently, but rather simply package our current investment activity in a different way to meet the growing demand from a new set of clients.

Within real estate, we continue to see strong momentum across our property business. Market conditions have improved meaningfully. Transaction volumes are rising, capital markets are robust and valuations for high-quality assets are firming. We are actively monetizing stabilized assets, selling approximately $23 billion of properties, representing $10 billion of equity value over the past 12 months.

At the same time, it is an excellent point in the cycle to be deploying capital into certain segments of the market, and we have significant dry powder to put to work following the successful close of our latest flagship real estate fund, our largest real estate strategy ever. The combination of limited new supply, recapitalization needs and improving sentiment is creating one of the most attractive investment environments we've seen in years. We are also taking advantage of the constructive financing backdrop to strengthen our long-term holdings, including the $1.3 billion refinancing of 660 Fifth Avenue in Manhattan, part of the over $35 billion of real estate financings we've closed year-to-date.

And finally, on our credit business, we will make a few additional points. We continue to see a large opportunity set to invest in the areas that fit our core competencies. The themes driving our equity businesses will require significant debt capital investment and Brookfield is well suited with its expertise and capital to meet that need. Whether it be in real asset, opportunistic or asset-backed finance.

As we look ahead to the rest of the year and into 2026, we see the market continuing to be strong for our business. Capital markets remain healthy. Liquidity is abundant, and the opportunity set across our businesses continues to expand. The flagship strategies we are launching will continue to anchor our growth while our complementary products, including our AI infrastructure fund, and our rapidly scaling fundraising channels such as wealth and insurance, are diversifying our platform and driving our consistent high-teens growth rates.

The secular forces shaping the global economy, digitalization, decarbonization and deglobalization are the same themes that have guided our strategy for many years. Today, they are accelerating. As these trends converge, Brookfield's global reach, operating depth and access to long-term capital position us well to continue leading the industry.

With that, we'll turn the call over to Hadley to discuss our financial results, record quarterly fundraising and balance sheet positioning.

Thank you, Connor. Today, I'll provide an overview of our third quarter financial results, including additional color around $30 billion of fundraising, our recent M&A activities, and the strategic positioning of our balance sheet.

As previously mentioned, we delivered another record quarter of earnings, driven by strong fundraising, deployment and monetization. Fee-bearing capital increased to $581 billion, up 8% year-over-year. Over the last 12 months, fee-bearing capital inflows totaled $92 billion, of which $73 billion came from fundraising and $19 billion came from deployment of previously uncalled commitments.

In the third quarter, fee-bearing capital grew $18 billion, driven in large part by the final close of the second vintage of our global transition flagship fund and continued strong capital raising and deployment across our complementary strategies. Fee-related earnings were up 17% to $754 million, or $0.46 per share, and distributable earnings were up 7% to $661 million, or $0.41 per share. Distributable earnings growth reflected higher fee-related earnings, partially offset by increased interest expense from the bonds we issued over the past year and lower interest and investment income.

Overall, growth was driven by a record $106 billion raise over the last 12 months and record deployments of nearly $70 billion. This activity has been a major catalyst for our business and we will continue to be active on the deployment front given strong investment opportunities in front of us. The simplicity and consistency of our earnings anchored almost entirely in reoccurring fees, gives us a strong foundation to continue to build from, especially as we continue to further our capital base and launch new strategies. Lastly, our margin in the quarter was 58%, in line with the prior year quarter and 57% over the last 12 months, up 1% from the prior year period.

This margin increase was driven by three offsetting dynamics. First, we continue to acquire a greater portion of our partner managers. These businesses have lower margins, and therefore, while these acquisitions are highly accretive acquisitions, they do weigh a bit on our consolidated margin. Second, Oaktree margins are temporarily lower than usual. At this point in the cycle, Oaktree is returning significant capital, but has not yet called capital for some of its deployment, leading to a natural reduction in fee-related earnings and margins. That trend will reverse as it has in the past given the strong growth in the business. Finally, our margins on our core business continued to increase as expected, more than offsetting these dynamics.

Turning to fundraising. In total, we raised $30 billion of capital in the quarter, bringing our 12-month total to $106 billion. Over 75% of that capital came from complementary strategies, reflecting the breadth strength and diversification of our offerings, which allows for sustained fundraising momentum in addition to our flagship cycle. As for our flagships, we also raised $4 billion for the final close of our second global transition flagship, bringing the strategy size to $20 billion. We continue to raise capital for the [ fifth vintage ] of our flagship real estate strategy, bringing in $1 billion from [ SMA ] regional sleeves and private wealth for the quarter with $17 billion being raised to date for the entire strategy.

Within our Infrastructure business, we raised $3.5 billion, including $800 million for our private wealth infrastructure vehicle, bringing our year-to-date total for the fund to $2.2 billion. In our private equity business, we raised $2.1 billion, including a total of $1.4 billion for 2 inaugural complementary funds, our Middle East private equity fund and our financial infrastructure fund. Subsequent to quarter end, we held a final close for the inaugural Pine Grove opportunistic strategy for $2.5 billion, exceeding its initial target and ranking among the largest first-time venture growth, or secondary fund ever raised.

And finally, on credit, we brought in $16 billion of capital across our funds, insurance and partner manager strategies. This included over $6 billion across our long-term private credit funds, including $800 million for the fourth vintage of our infrastructure mezz credit strategy, which has raised more than $4 billion for its first close. We also raised $5 billion from Brookfield Wealth Solutions, including an SMA agreement with a leading Japanese insurance company, marking its first entry into the Japanese insurance market, which should be the first of more to come.

As we head towards the end of the year, we're confident this will be our best fundraising year ever, and we see that trend continuing with strong momentum for 2026. Broadening the scope to the next 5 years, we recently laid out our plan to double the business by 2030 at our Annual Investor Day hosted in New York. We outlined our plan to continue expanding our product offerings by scaling existing offerings and launching new ones, diversifying our investor base, including across Europe, Asia, middle market and family offices, and on the retail side by launching new private wealth related products. These drivers should enable us to double our business over the next 5 years with fee-related earnings reaching $5.8 billion, distributable earnings reaching $5.9 billion, and fee-bearing capital reaching $1.2 trillion. However, our business plan does not include certain additional growth opportunities such as [ product ] development, M&A associated with our partner managers, and opening up of the 401(k) market opportunity, which gives us multiple paths to outperform and to deliver over 20% annualized earnings growth.

Turning now to our balance sheet. In September, we issued $750 million of new 30-year senior secured notes at a coupon of 6.08%, extending our maturity profile and diversify our funding sources. We also increased the capacity of our revolver by $300 million to provide additional flexibility as our business continues to grow. At quarter end, we had $2.6 billion in liquidity, a strong liquidity position. We use our balance sheet selectively to [indiscernible] new products and support strategic partnerships, such as closing the acquisition of a majority stake in Angel Oak, and signing the acquisition, the remaining 26% of Oaktree that we currently do not own, both of which occurred after the quarter.

On Oaktree, we will invest approximately $1.6 billion to acquire their fee-related earnings, carried interest in certain funds and related partner manager interest. Upon close, it will create a fully integrated leading global credit platform with significant scale and capability. The transaction is expected to close in the first half of 2026, and is subject to customary closing conditions including regulatory approval. Lastly, we declared a quarterly dividend of $0.4375 per share, payable December 31 to shareholders of record as of November 28.

In closing, we are confident in our trajectory towards achieving our long-term growth goals. The breadth of our platform, our operational expertise and our global scale continue to give us a clear advantage. Our strategies align with the strong tailwinds of digitalization, decarbonization and deglobalization, and we're expanding in areas where these trends intersect. AI infrastructure, energy transition and essential real assets.

Thank you for your continued support, and we're ready to take questions.

[Operator Instructions] Our first question comes from the line of Alex Blostein with Goldman Sachs.

I was hoping we could start maybe with the commentary around fundraising momentum in the business you're seeing into 2026. A number of pretty robust verticals. But at the same time, it sounds like monetization outlook is also picking up. So maybe help us frame what that could mean for management fee growth as you look out into 2026? So maybe we could start there.

Thanks, Alex. We're very excited about 2026. Maybe if we can start with fundraising. For 2025, I think we guided that fundraising would exceed 2024s levels ex AEL of $85 billion to $90 billion. Through 3 quarters, we're at $77 billion and expect to meaningfully exceed that target.

As we look forward to 2026 with our infrastructure and flagship -- infrastructure and private equity flagships in the market with a bumper year expected in infrastructure fundraising with the closing of Just Group, and the continued growth in our partner managers and complementary strategies, we very much expect 2026 to exceed the levels we'll achieve in 2025.

And then when you turn that towards FRE growth, we expect to maintain our momentum and either reach or exceed what has been laid out in our 5-year plan. And this is really driven by two things. One, with the addition of Oaktree, Just Group, Angel Oak. Those transactions will add almost $200 million to our FRE on a run rate basis going forward. And then when you add the run rating of the growth in 2025 rolling through our numbers in 2026, and the expected growth just laid out from new fundraising in 2026, we expect next year to be a very strong year.

Our next question comes from the line of Sohrab Movahedi with BMO Capital Markets.

I just wanted to focus just a little bit on the credit business, if we can. Obviously, an important source of fee-bearing capital growth as part of the 5-year plan. This quarter, the fee rate, the blended fee rate, if I look at the fee revenues relative to the private credit, or the total credit I should say, funds was a bit higher than what we're used to seeing. Can you just talk a little bit about what was the driver of that, if that is a new rate we're looking at, if the fee rate is a little bit higher? Is that consistent? Or is that a one-off?

And then there's just private credit has been a little bit more in the headlines. Just curious to kind of get a sense of how you think about it relative to your business and the growth aspirations that you have especially coming from credit?

Perhaps I'll start, and then I'll hand to Hadley. In terms of the slightly elevated fee rate this quarter in terms of private credit, it's really driven by two things. Our private credit business continues to evolve -- as the mix shift within our business adjusts through the transactions and the increasing ownership of our partner managers. And what we would say is on a blended basis, our fee rate is going up marginally. We will acknowledge that particularly within our Castlelake business that is performing very well.

There was an outsized quarter with some one-off transaction fee revenue that is creating a little bit of upside in this quarter's numbers, but that shouldn't detract for a broader positive trend that we're seeing across our credit business.

Yes. And I'll just talk a little bit about how we're seeing credit more holistically. I mean, there have been a few high-profile credit events in the market. And what we're seeing across our portfolio, and the broader credit trend, is that these events are very isolated and not a sign of a broader credit cycle. And if you actually look at our portfolio, we don't have any relevant exposure to these issues.

But when we think about our portfolio, our area of focus has really been heavily around real assets, asset-backed finance, opportunistic. And these are where we have expertise around the structuring, the underwriting of the sectors, the sourcing capabilities and then, of course, our scale. And we've been less focused around the more commoditized part of the private credit market related, especially around direct lending.

The one point I would probably also add though, is that if there was a broader credit cycle, that plays to our strength with our opportunistic credit strategies. So overall, we feel really good about our positioning. We have a large, diversified and differentiated platform around our credit business, and that's built for growth and resiliency across the market cycles. And we'll only benefit with the integration of Oaktree.

Hadley, if I can just ask one quick follow-up on that. Given the pleasant surprise, for example, this quarter, as minor as it was, came out of one of the partner managers that you own. Like is there a potential for negative surprises, I suppose, to come from the partner managers as well? And can you dimension what sort of risk management, I suppose, is in place to [indiscernible] that?

No, we don't see that. And it goes back to the area of focus. If you think about our expertise around real assets and the areas within asset-backed finance that we focus on, that's critical because we're doing the due diligence. We've got collateral. We've got strong structures in place, and look, low default rates and high recovery rates. And so that puts us in a really good position. That's why we like that part of credit.

Our next question comes from the line of Cherilyn Radbourne with TD Cowen.

With regard to the pending buy-in of the Oaktree minority stake, can you talk about some of the things that you'll be able to do together as a combined company that you can't do today as a majority owner?

Thanks, Cherilyn. We're thrilled about the transaction that we've announced with Oaktree. And really what it allows us to do is accelerate the combination of the businesses and unlock the benefits of integrating two leading institutions. And maybe to simplify it, we would say the low-hanging fruit near-term upsides are really in three places.

One will be almost instantaneously on closing. Oaktree had its own subsidiary balance sheet. We can immediately collapse that. That's much more efficient for us from a financing perspective. Even further within that balance sheet, there are a number of securities and investment positions, that under Brookfield Asset Management's asset-light model. We will actually monetize those positions and use them to fund a very large portion of our purchase price, making that transaction highly, highly accretive.

The second opportunity is really just around operating leverage. When it comes to fund operations, administration and back office, there's tremendous synergies in operating leverage as both our businesses continue to grow from combining our combined capabilities, and not really as a scale business and putting the two institutions together, will unlock a lot of value.

And then the last one is absolutely the most important. And it's the ability to see upsides in our marketing, our client service and our product development. Our ability to combine the power of the two organizations in terms of the products and solutions and partnerships that we can offer to our clients, we think it's going to be unmatched. And this is particularly valuable for serving the growing portions of the market, whether it be insurance companies and individual investors going forward.

Maybe just on a closing note. The team at Oaktree has been our partners for the last 6 years, and this just takes that partnership to a whole another level. Howard Marks is on the Board of BAM. Bruce [ Karsh ] is going to go on the board of Brookfield Asset Management. And it's early days, but our interactions with [ Arm ] and Bob, [ Todd ] and the fantastic team at Oaktree, we already expect this integration to be far better than we initially hoped.

Our next question comes from the line of Bart Dziarski with RBC Capital Markets.

I wanted to touch on the retail theme. So you talked about the infrastructure wealth product and the momentum there and then the PE evergreen strategy, I think that's in the market now. So one theme, but two parter. Just can you give us a sense of the early indication that you're seeing these products and the momentum into next year? And then just a reminder of the distribution strategy as you build these products out into next year?

Thank you. I think it goes without saying that the momentum we're seeing in the individual market is very robust. And again, that we will highlight. We view this as a market -- the broader individual market. That's your high net worth in your retail investor. That's your annuity and insurance policyholder. That's your 401(k) in your retiree market. We view this as a very significant market opportunity that will continue to grow incrementally for the years and candidly, decades to come.

In terms of where we're seeing growth opportunities in the near term? We are launching new products into this market. We just recently launched our private equity product for the retail channel. That launched just recently and started with an incredibly successful launch in Canada and is now launching in the U.S. And our expectation is that's really the equivalent to our infrastructure product for the retail market. We expect the private equity product to scale even faster than our infrastructure product has. And therefore, we continue to expect this to be an increasing portion of our growth in earnings going forward.

And sorry, just on the distribution strategy?

Certainly. So I think there's two key components there. In terms of distribution into the individual market more broadly, the winners in this market are largely going to be driven by who has the track record, the scale and the credibility. And as a result of that, we are seeing the significant opportunity to get our products placed onto the leading bank distribution platforms around the world for that near-term market opportunity in retail.

As we think ahead more broadly to other components of the individual market, in particular, the 401(k) and the retiree market. At this point, we are preparing our business for that very significant opportunity, making sure we have the right relationships and the right partners with all the stakeholders in that space. That's the advisers, that's the plan administrators, that's the consultants, that's the record keepers. And there's a significant effort within Brookfield. And we feel, given our focus on real assets that lends itself well that growing market, we feel we're very well positioned.

Our next question comes from the line of Craig Siegenthaler with Bank of America.

So our question is on corporate direct lending, both [ IG ] and [ non-IG ]. From your prepared commentary, it sounds like you're less constructive on the investment opportunity today, versus some of what your peers are saying due to intensifying competition. However, when you take a step back, it looks like aggregate LTVs are still pretty low, and the spread to public are still pretty rich. And with the cash yields declining now at Fed rate cuts, the relative attractiveness to retail insurers institutions should still be there. So my question is, what am I missing here besides the gaining share of private credit versus [ BSL and high yield ]?

So Craig, great question. And maybe just to put some context around this, let's come at it from a few different ways.

On a more general basis, we believe private credit for various reasons has become, and will continue to be a very important component of global finance, and it's going to continue to grow beside bank credit and other liquid sources. And that growth is very robust, and it's not short term in nature. It's going to be enduring for the long term.

In terms of today within the market, where are we seeing the most attractive returns on a risk-adjusted basis? Obviously, every investment is specific. But broad-based, we're seeing tremendous -- we're seeing a very strong premium in particular, in credit related to real assets, infrastructure and real estate credit and certain components of the asset-backed finance market.

I think the comments that you are referring to is there have been a significant amount of capital poured into the direct and corporate lending market. And in some places, we are seeing spreads very compressed. And in other places, we're seeing a little bit of covenant degradation due to the competition to secure some of those lending mandates.

Obviously, that is specific on a case-by-case basis. But in general, what we are trying to do is avoid the most commoditized components of the market and really focus to where we're getting that attractive spread premium, and where we can preserve our covenant positions the way we have in the past. But I appreciate the question because what we would not want you to interpret is that we think private credit is slowing down. It is a very large and growing and enduring part of the financial system going forward.

Thanks, Connor. I have a follow-up on the credit business, and I think you covered a little bit earlier, but I was bouncing around between two calls. But management fees in the credit business went up a lot faster than average fee-bearing AUM. And I know Castlelake went in there. So maybe that had some lumpiness in there. But we still have the fee rate up 10% on the average fee-bearing AUM base. So were there any lumpy items in the revenue side that we should back out?

And also, I don't think you hit this part, but were there any lumpy items in the expense side of the credit business? Because sometimes a lumpy revenue item might correlate with an expense item. So we just want to make sure we get the P&L run rate correct as we walk into 4Q here.

Sure. And it's pretty simple. Thank you again for the question. The outsized growth that we had in credit this quarter, I think the way to think about it is I think that business was up almost 15%. About half of that is just run rate organic growth, the continued momentum we're seeing in that business. And half of that was the full quarter of an acquisition that was made within our Castlelake business. So some of it was M&A related, and some of it was organic growth. Maybe you can think about that as roughly half and half.

And then on the fee rate component within Castlelake, which is a business -- a partner manager of ours that's performing very well. They did have some outsized transaction fees in this quarter. The blended broader fee rate is trending up, but it was somewhat enhanced this quarter by onetime transaction fees.

Our next question comes from the line of Kenneth Worthington with JPMorgan.

Great. Maybe for Hadley. You're operating at 58% operating margins right now. You highlighted on the call that Oaktree margins are depressed, but getting better. Core margins are rising, but that acquisitions are operating at lower margins. How do we put these pieces together, particularly since we've got some of the transactions just closed, or closing?

And you mentioned sort of the transaction fees sort of helps in the current quarter. So how do we think about the right level, and then the trajectory once everything gets closed?

Thanks for the question. First, I'd say that we are very disciplined when it comes to our cost. And we expect our margins to continue to improve over time as we presented at Investor Day. And that's on the backs of our growth initiatives that will play out and the operating leverage that's built into our business, as well as we execute on ways to drive additional efficiencies, including the integration of Oaktree. And in this regard, we are on track and actually ahead of our margin improvement plan that we've laid out.

It's also worth pointing out that the consolidated margin increase that we're seeing today is a blend of a few offsetting dynamics. The first being, we acquired a greater share of our partner managers and these businesses, while highly accretive to our earnings do have lower margins, and do mildly dilute our overall margin level.

Second is Oaktree's margins are temporarily lower as we point out. As they've been returning more capital and haven't yet called capital for some of its deployment. That's a typical cycle for that business, and it will naturally reverse given the countercyclicality to the overall business.

And the last point I'd make is that the margins across our core businesses continue to expand, which is more than offsetting the first two items I just mentioned. So while we focus on continuously improving our margins and are delivering in that regard, we run our business with a focus to grow FRE over the long term, and we don't manage the business to a specific absolute margin level, which obviously can be impacted by the mix.

Our next question comes from the line of Dan Fannon with Jefferies.

So lots of momentum in fundraising, but I wanted to talk about private equity, in particular, it sounds like your outlook is quite optimistic around raising a larger fund. That seems different than what we've heard for that asset class from others. So just curious about what informs that optimism given the market backdrop?

Thanks, Dan. Our private equity business is a little bit unique, and it has been for 25 years. In that, it focuses on essential assets and services, and it -- and as a result, it produces very consistent results across the market cycle. And why that really plays out well today is, as mentioned, we've just launched BCP, the next [indiscernible] BCP in the quarter, and we do expect it to be our largest private equity fund ever.

We do feel that we are differentiated in the market because our focus on, one, high-quality assets that generate cash across the cycle, has allowed us to return significant amounts of capital out of this strategy in recent years. So we're not facing the DPI issue that has driven a lot of headline noise in the sector. And then secondly, We, I think, all recognize that the next generation of growth in value creation and private equity, given the more normalized interest rate environment is not going to come from financial leverage and financial engineering. It's going to come from operational improvement.

And given that over the 20-year history of our flagship private equity fund, we've delivered over 25% IRRs for 2 decades. With over half that value creation coming from operational improvement. We are seeing tremendous market demand for our approach to private equity that we think is -- it works across the cycle, but it's perfectly suited for where we're at in the current economic environment. So it's early days. We've just launched the fund, but we do expect it to be our largest fund to date.

[Operator Instructions] Our next question comes from the line of Jaeme Gloyn with National Bank.

Good job on the fundraising this quarter this year. One thing that was mentioned at the Investor Day was broadening, or deepening the client base -- the institutional client base. So I'm just curious on what the source of fundraising looked like from a breadth of client standpoint?

And in terms of broadening the fundraising base, I think we can answer this question quite specifically. The growth in our business over the last several years has really been driven by the scaling and increased penetration of large-scale institutions. And while we focus on other additional pockets of fundraising, it's important to remember that component, and that core foundation of our business continues to grow.

But what we have done internally within Brookfield and what we've been investing in for the last 12 to 24 months is dedicated fundraising teams that can target a much broader base of investors. This is small, or medium-sized institutions. This is a dedicated team focused on insurance institutions. This is a dedicated team focused on family offices. All of those initiatives, we would say, are still in the relatively early innings, and we're seeing tremendous growth across 3 verticals.

One, a greater number of clients within each of those groups. Two, a greater number of products amongst those clients that we're bringing on board. And three, simply larger checks from those clients that we have. So we would expect this momentum to continue, but it's really driven by having dedicated teams focusing on all the different subcomponents of the institutional market going forward.

And I'm currently showing no further questions at this time. I'd now like to turn the call back over to Jason Fooks for closing remarks.

Okay. Great. If you should have any additional questions on today's release, please feel free to contact me directly, and thank you, everyone, for joining us.

This concludes today's conference. Thank you for your participation. You may now disconnect.