Private assets giant Brookfield expects alternative investments to replace public markets in 25 years

Business Times

5 hours ago

[SINGAPORE] Bruce Flatt, the billionaire chief executive officer of Toronto-based Brookfield, is understandably bullish on the prospects of alternative investments.
The Canadian investment giant has, after all, amassed more than US$1 trillion in assets under management (AUM), and is one of the world's largest managers of alternative assets, also commonly known as private markets.
Flatt foresees that, in 25 years, more retail investors would be channelling their funds to private assets, and the asset class would then no longer be billed as 'alternative'.
The 59-year-old, who was in Singapore recently, told The Business Times: 'Fifty per cent of most individuals' retail accounts will have private investments in them. And this is a wholesale change of retirement savings accounts around the world ... so owning private businesses should be called 'mainstream' over the next 25 years.'
When that happens, fixed income and equities would become known as alternative assets, he said.
Recalling when he first pitched private markets to institutional investors 25 years ago, he said he had described the asset class as nascent. It has since then become mainstream for deep-pocketed investors such as GIC and Temasek Holdings.
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Private markets are growing in popularity, as more countries are allowing retail investors to dabble in the asset class, potentially unlocking additional billions worth of funds. Singapore's central bank is assessing feedback to its proposal, made in late March, to broaden retail investors' access to private markets.
Institutional investors such as pension funds, insurance companies and sovereign wealth funds have also entered the fray, allocating more capital to private markets, which have been shown to outperform public-market assets in the long term.
More funds flowing into private markets, coupled with the trend of falling initial public offerings on world exchanges, have led to bullish growth forecasts for alternative assets. One of the most bullish is from Bain; it predicts private markets growing at more than twice the rate of public markets, with AUM hitting as high as US$65 trillion in 2032.
Singapore expansion
Even then, the size of private markets pales in comparison with that of public ones. Data provider Ocorian noted that the total AUM in global public markets stood at US$230 trillion in 2024, compared to the US$12.7 trillion in private assets.
Flatt is confident that Brookfield will capture a sizeable chunk of the business out of Singapore.
Its office in the city-state is 'a (regional) hub servicing clients and looking after institutional, retail and individual investors – it's a very important city for us', he said, adding that Brookfield sources about a third of its capital for its overall business out of the Asia-Pacific.
Flatt said about half the team works on Singapore deals, and the rest are focused on the Asia-Pacific, where Brookfield's AUM is US$146 billion, about 13.5 per cent of its total. The company does not break down AUM by countries.
Singapore's AUM is small, but the Brookfield team working on it has shot up from four in 2014, when its office first opened in the Republic, to more than 40 today.
To accommodate further expansion, Brookfield is moving to a bigger office in CapitaGreen, a 40-storey Grade-A office tower in the central business district, this month. Together with its subsidiary Oaktree Capital Management, Brookfield will occupy a floor.
The extra space will enable the firm and Oaktree to grow to more than 100 staff in the next three to five years.
Despite having been in Singapore for more than 10 years, Brookfield sealed its first transaction in the country only last month. It bought three industrial properties from Mapletree Industrial Trust for S$535.3 million, paying a 2.6 per cent premium over their combined independent valuation.
Why did Brookfield take so long? Flatt said that as a value investor, Brookfield assesses the current investment environment to be 'much more agreeable' than in 2014, when a lot of capital was chasing assets in the market. In addition, 'it always takes us a long time to get people in place and to be comfortable investing' from when Brookfield first built a hub in Singapore.
Eyeing more deals in Singapore
With a decade-long presence and the Mapletree transaction, he is confident of a higher number of transactions in the next 10 to 20 years.
'We're a lot more experienced, we have our relationships here, we know all the businesses and companies, institutions, and therefore the future of the business should be much more substantial because of that.'
Referring to Brookfield's key focus on real estate, infrastructure, renewable energy, industrial, private equity and private credit, the billionaire chief said 'all the above are open for business' when the firm scours for deals in Singapore.
Flatt started his career in Brascan, Brookfield's predecessor, at age 25 back in 1990, and worked his way up to the C-suite in 2002. Since then, he has been credited with expanding Brookfield's presence to more than 30 countries. And with the 2019 acquisition of a majority stake in Oaktree, he also helped propel Brookfield into the ranks of the world's top alternative-asset managers.
His value-driven investment thesis, long tenure as CEO, ownership of Brookfield and frugal habits – he takes the subway to work – have led to some observers describing him as Canada's Warren Buffett.
Together with a group of partners, he owns 20 per cent of Brookfield. His net worth was US$6.2 billion as at Jun 8, going by Forbes' estimates.
That is tied closely to Brookfield's share price, which has jumped 108 per cent in the past five years, in a trajectory that has been largely in line with the company's income growth.
In its first quarter ended Mar 31, Brookfield's distributable earnings before gains on asset sales rose 30 per cent year on year to US$1.3 billion, as momentum across its core business remained strong. The first-quarter report follows a record-breaking year in 2024, when distributable earnings rose 15 per cent to hit US$4.9 billion.
Brookfield said it uses distributable earnings before realisation because the metric shows income available to be distributed to common shareholders or to be re-invested into the business.