Brookfield Asset Management CEO Bruce Flatt Talks Succession, AI and Strategy

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One of the giants of deal making is Brookfield.

And it's CEO, Bruce Flatt, is an industry titan in his very own right. This morning, the company announced that Flat will be stepping down from his post leading the company's one trillion dollar asset management business. He of course, we'll stay on as the chair and as well as CEO of the parent company. I'm pleased to say that Bruce Flatt joins us now for the big picture, an elevated look at the strategies and trends shaping corporate action. Bruce,

Bett, thank you for having me as your first customer.

I was going to say, there's no one else we'd want to kick things off with, and what a way to kick things off with this announcement that you're handing out, least for the asset management business. The reins over to Connor Tasky. I have to say, in a lot of your industry, not only are there issues with succession plannings, rarely do they lay out such a clear path.

Why do this and why now?

So Our business is about running great businesses. What we do is we buy into companies, we help management teams, we build them. And therefore we were very determined ourselves about making sure we have the best succession, the best run business on the planet.

So we've been.

At this for fifteen twenty years. We've been at with Connor for the last four very methodically and all the other team across the board, and it's just the natural time. And it's really great to have young, new energy in the business and I can be the chair and help them out as the chairman of the parent.

CEO of the parent com You got to say, how do you see your role evolving with this kind of the.

Same thing I do today.

I help with strategy, I help the team when they need me to do something. I help with clients, and that's what I've done for the last five ten years and that's what I'll be doing in the future.

So does this mean the timeline speeds up for Connor to take some other of your roles for Brookfield Corpse?

You know so far right now enough Brookfield has the management's enough and we've got a big insurance business. We're building a big investment business out in Brookfield Corps.

So we've got lots.

Going on up top, and frankly, giving up one job is helpful to make sure that we can focus on other things.

I'd love to get your philosophy on talent more broadly, because clearly it's something that's near and dear to you as a leader of this industry.

Leader.

There is this moment right now. We've heard from other financial services companies like Gooman that growth is going to be slowing and talent hiring because of things like AI.

Do you see the same thing ahead?

You know?

I don't know.

Maybe we're different because we're backbone real asset investors and we've never had a better time. We keep raising more money, we keep deploying it. We're any good returns. Things are great, and the business is accelerating. So and even our credit it's asset back finance credit. It's not what you see in the news today. And therefore our business keeps growing. We keep adding people, we keep adding countries, we keep adding clients.

It's pretty good. But we're always focused.

Talent people, especially in a business like ours, but especially in every business. People's everything, and it's really really important to focus on it. It's the easiest thing to forget about, and one should never forget about your people.

So at the same time you mentioned it, just the real asset business that you have in this really big bet on AI infrastructure that's been involving at Brookfield, everything from mega deals with the hyperscalers to creating your own cloud company. There's a lot of really interesting work you're doing. If I could borrow a phrase and kind of bastardize it from alphabet sound or PATRII what.

Is the risk right now? Is it under or overinvesting?

So if you're in the real asset space, in the private markets, it's very difficult to entitle land, it's very difficult to get power, it's very difficult to build because you can't get you can't get people to build, and therefore the investment is tough to do. And that's why there's the returns in it are excellent because people need skills to be able.

To do it.

Now, what most.

People focus on as the public markets, there's a few securities which everyone wants to own and therefore multiples go higher. But in the private markets it's very different and there is an underinvestment in what's going on in private markets because everyone's looking for additional AI cloud capacity and it's very tough to build.

Easy sites have been built or committed. The hard sites.

Now the hard work starts, and in particular, we need power, and as you know, we have a huge power business, and that's the bottleneck in artificial intelligence for the next ten years.

I definitely want to talk with that because you've been doing some really interesting stuff there. But I do wonder just on the public market side of things, Again, the fear is less about the infrastructure. It's more these hyperscalers are spending so much and maybe they don't have the revenue to back it up, and maybe that.

Trickles down into infrastructure.

Do you see any red flags or do you think public markets are misplaced when you see some of those.

Nerves firm first are when we build out infrastructure, we're generally leasing them for twenty five, ten, twenty thirty years to governments or large scale technology companies, and we just have long term contracts.

This is just a leasing business. But we're building things for them.

That are super critical and only we and a few others can build them. So we're providing that backbone infrastructure and they need more of this, and they need it at scale, and they need it in the United States today, but it's now going global in all countries in the world for various reasons. We don't have time to get into all of them here, but for various reasons, it's accelerating all over the world.

So I say, just to answer that question, it sounds like the risk is indeed underinvesting that maybe we're not doing enough.

We are not doing enough in the private markets because it's tough to do, and that's where we are, and that's where we focus on because it's like, really, it's not we could do way more with the amount of money we have.

It's the technical capabilities to.

Bring on power, data centers, artificial intelligence, infrastructure, and everything that's around it.

That's where the bottlenecks are.

Well, first of all, on the power side of things. I know in twenty twenty three you did a deal with Westinghouse, a nuclear energy company, which, by the way, incredible foresight to see just the immense need that we would need what it need for that. And then late last year we also learned that the US government is doing a partnership too. How has that partnership evolved how much has the US government, for example, been involved so far since that was announced.

So we had a discussion with the US government to ensure that we could bring power on America. And we couldn't do it ourselves. We can't build all nuclear plants in the country. We're not big enough for that. We needed their help, and the Department of Commerce and the Presidents saw fit that they would help us, support us to build out the industry. And we need to build a whole supply chainnel because you can't just build one plant.

A lot of your infrastructure is really important to the United States. Have you had talks with the US government and other aspects about striking more partnerships.

Jo. Look, I would say they're very commercial in they're what they do where it makes sense and where business entrepreneurs can put money to work. They're very supportive and they were very good with us, and we're going to build out. We're going to recreate an industry and create enormous number of jobs in America because of what they did.

Have you felt any more friction because of your Canadian rooms or your cross border.

Type of business.

There had been this fear and we saw it very President Davos that it's a more insular United States and maybe foreign powers and Mark Carney speech R I know, you know very well talked about the need of the middling nations to come together.

Do you feel that flow through.

Yes.

So sixty percent of ourssets are in the United States. We're headquartered in the US. We have a huge business here. This is super super United States, super super critical to US.

As is every country.

Remember what we do is we build local infrastructure in countries and we sell goods and services to individuals or companies.

That's it.

We don't move over the borders. We just build out and sell in the country. So we pick countries very wisely. We go to them and we build out in those countries. So we're friends with every country in the world, and we try to be great citizens. We try to do well for the country. We always try to be on the side of doing the right thing for the country, never get cross thread with any and build out infrastructure

That's all we do.

We either lend to or we put equity into the backbone of the global economy, and that's what these countries need, including the United States.

I heard from someone that this administration, someone said this recently to me, is just like much more willing to pick up the phone.

It's much more willing to listen.

Is it just much easier to get things done in this country right now?

Yes? Yes.

Department of Commerce, like our transaction was done with Department of Energy and specifically Department of Commerce Howard Lutnik, and they were very they were very transactional and did they focused on the right things and we got a transaction done.

Late last year, you announced that you were going to be buying the rest of oak Trea, a company that you had also long had a partnership with beginning in twenty nineteen. How is that combination going to evolve as you work through it. Does the oak Tree brand get blended into Brookfield, does it remain its own entity?

How are you thinking about this?

So we have two I'm going to say this as we have two amazing brands. But Feels an incredible brand, but oak Tree is an amazing brand as well, and we plan on keeping both behind the scenes. Some of the things that we do will be we'll join them together, and we'll do things to get cost synergies and benefits and all those kind of things. But the two brands are unbelievably valuable in our opinion, and they're going to stay.

This week than it was last week.

The oak Tree brand is an incredible franchise and we're going to keep that and it's really important to us.

Just on that note, because you mentioned this at the start of the conversation that there does seem to be a little bit of nervness around credit markets.

I know in your twenty twenty six outlook and the.

Team had written credit markets are rewarding those with underwriting standards focused on asset quality. Say that kind of implies that maybe there are others who aren't focused on quality.

Is there a real divergence.

Yeah.

I don't comment on any other person, any other group's business, But what I would say is our business focused on asset back finance, opportunistic credit, and lending to things we understand, lending to the real economy, and therefore we have very little exposure to the types of things that are going

So are you calling up your team saying, hey, look at what happened this week. There might be something.

Yes, Yes, we're very focused.

I was gonna say, because you're not that exposed to software, would this be an opportunity maybe to get in there a little bit more.

It's we're very under exposed to software. We're a real asset business. But in our in our our private equity, our opportunistic strategies for credit. Look at industries when they sell off and when there is value to be had, and I suspect somewhere in this cycle of software there's going to be some amazing value to be made.

There feels to be like a lot of reckonings happening in this market. You've outlined a lot of changes, be it deglobalization otherwise some of what you're doing in infrastructure.

Is this a moment of a market reset? Look?

I think the world twenty The thing I start off by saying is everyone gets excited about day to day changes in the markets. They listen to your show and then go or go and buy or sell. But twenty years from now, we will look back and the valuations will be ridiculously low for great companies and businesses. And that's what people should really be focused on, focused on the long term, focus on buying great companies and businesses, stick with them, don't sell, and just stay the course.