No. of Recommendations: 10
According to Marks, Oaktree clients, who generally require IRRs of ~7%, will be able to meet their objectives with credit instruments. If he's right, that has negative long-term implications for alt managers whose investments are dominated by other categories.Good point. Note that Marks himself says so far he has not had resounding support for his 'sea change' position. We will just have have to monitor what happens. They expect fee bearing capital to reach 1 trillion in five years which means they have to add on average 100 billion per year or 25 billion per quarter. Let's keep close watch on the progress.
Renewable Infra Private Real Credit
& transition Equity Estate
Gross IRR 13 16 28 23 22
Net IRR 9 13 22 19 16
Slide 30 of the BAM investor day slide deck shows above returns for the flag ship funds. Not sure over what time frame. No doubt higher cost of borrowing will lower these returns. Renewable is the least attractive, but there might be motivating factors other than maximizing returns for renewable investors.
I was also trying to track down where Brookfield records its Oaktree ownership since it's not on the BN balance sheet. Turns out it's on the BAM balance sheet line item (Investments = 7.364 billion). BAM increased ownership from 64% to 68% in 23 Q2 by paying 487 million.
So through BN ownership, you own 0.73*0.68 = 50% approximately of Oaktree.
Investments are predominantly comprised of our 18% limited partnership interest in BSREP III and a 68% interest in Oaktree. The increase from the prior period of $487 million was primarily a result of income earned from our investment in Oaktree during the period as well as the increase in our ownership interest from 64% to 68%.
