- 1 week ago
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00:00What a way to kick things off with this announcement that you're handing, at least for the asset management business, the reins, over to Connor Teske.
00:07I 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.
00:15Why do this and why now?
00:16So our business is about running great businesses.
00:20What we do is we buy into companies, we help management teams, we build them.
00:24And therefore, we're very determined ourselves about making sure we have the best succession, the best run business on the planet.
00:33So we've been at this for 15, 20 years.
00:36We've been out with Connor for the last four, very methodically, and all the other team across the board.
00:42And it's just the natural time.
00:43And it's really great to have young, new energy in the business.
00:47And I can be the chair and help them out as the chairman of the parent or CEO of the parent company.
00:52I was going to say, how do you see your role evolving with this?
00:55Kind of the same thing I do today.
00:57I help with strategy.
00:58I help the team when they need me to do something.
01:01I help with clients.
01:03And that's what I've done for the last 5, 10 years.
01:06And that's what I'll be doing in the future.
01:08So does this mean the timeline speeds up for Connor to take some other of your roles for Brookfield Corp CEO?
01:14You know, so far, right now, enough, Brookfield Asset Management is enough.
01:19And we've got a big insurance business.
01:20We're building a big investment business out in Brookfield Corp.
01:22So we've got lots going on up top.
01:24And frankly, giving up one job is helpful to make sure that we can focus on other things.
01:30I'd love to get your philosophy on talent more broadly.
01:33Because clearly, it's something that's near and dear to you as a leader of this industry leader.
01:38There is this moment right now we've heard from other financial services companies like Goldman that growth is going to be slowing in talent hiring because of things like AI.
01:46Do you see the same thing ahead?
01:48You know, I don't know.
01:49Maybe we're different because we're backbone real asset investors.
01:53And we've never had a better time.
01:55We keep raising more money.
01:57We keep deploying it.
01:57We're in good returns.
01:59Things are great.
02:00And the business is accelerating.
02:02So and even our credit, it's asset-backed finance credit.
02:06It's not what you see in the news today.
02:08And therefore, our business keeps growing.
02:10We keep adding people.
02:11We keep adding countries.
02:12We keep adding clients.
02:14It's pretty good.
02:15But we're always focused.
02:17Talent, people, especially in a business like ours, but especially in every business, people's everything.
02:23And it's really, really important to focus on it.
02:26It's the easiest thing to forget about.
02:28And one should never forget about your people.
02:30So at the same time, you mentioned it, just the real asset business that you have and this really big bet on AI infrastructure that's been evolving at Brookfield.
02:40Everything from mega deals with the hyperscalers to creating your own cloud company.
02:44There's a lot of really interesting work you're doing.
02:46If I could borrow a phrase and kind of bastardize it from Alphabet Sundar Pichai, what is the risk right now?
02:52Is it under or over investing?
02:53So if you're in the real asset space in the private markets, it's very difficult to entitle land.
03:02It's very difficult to get power.
03:04It's very difficult to build because you can't get people to build.
03:07And therefore, the investment is tough to do.
03:11And that's why the returns in it are excellent because people need skills to be able to do it.
03:18Now, what most people focus on is the public markets.
03:21There's a few securities which everyone wants to own and therefore multiples go higher.
03:28But in the private markets, it's very different.
03:31And there is an underinvestment in what's going on in private markets because everyone's looking for additional AI cloud capacity.
03:41And it's very tough to build.
03:42Easy sites have been built or committed.
03:46The hard sites, now the hard work starts.
03:47And in particular, we need power.
03:49And as you know, we have a huge power business.
03:52And that's the bottleneck in artificial intelligence for the next 10 years.
03:56I definitely want to talk with that because you've been doing some really interesting stuff there.
03:59But I do wonder just on the public market side of things.
04:02Again, the fear is less about the infrastructure.
04:04It's more these hyperscalers are spending so much.
04:07Maybe they don't have the revenue to back it up.
04:09And maybe that trickles down into infrastructure.
04:12Do you see any red flags or do you think public markets are misplaced when you see some of those nerves around this?
04:17Well, first, when we build out infrastructure, we're generally leasing them for 10, 20, 30 years to governments or large-scale technology companies.
04:32And we just have long-term contracts.
04:34This is just a leasing business.
04:35But we're building things for them that are super critical and only we and a few others can build them.
04:40So we're providing that backbone infrastructure.
04:43And they need more of this.
04:45And they need it at scale.
04:47And they need it in the United States today.
04:49But it's now going global in all countries in the world for various reasons.
04:54We don't have time to get into all of them here.
04:56But for various reasons, it's accelerating all over the world.
04:59Just to answer that question, it sounds like the risk is indeed underinvesting, that maybe we're not doing enough.
05:05We are not doing enough in the private markets because it's tough to do.
05:13And that's where we are and that's where we focus on.
05:15Because really, we could do way more with the amount of money we have.
05:19But it's the technical capabilities to bring on power, data centers, artificial intelligence infrastructure.
05:27And everything that's around it, that's where the bottlenecks are.
05:30Well, first of all, on the power side of things, I know in 2023, you did a deal with Westinghouse, a nuclear energy company,
05:36which, by the way, incredible foresight to see just the immense need that we would need for that.
05:42And then late last year, we also learned that the U.S. government is doing a partnership, too.
05:46How has that partnership evolved?
05:47How much has the U.S. government, for example, been involved so far since that was announced?
05:52So we had a discussion with the U.S. government to ensure that we could bring power on America.
05:59And we couldn't do it ourselves.
06:01We can't build all nuclear plants in the country.
06:03We're not big enough for that.
06:04We needed their help.
06:06And the Department of Commerce and the president saw fit that they would help support us to build out the industry.
06:14And we need to build the whole supply chain out because you can't just build one plant.
06:17We're going to build now 8, 10 plants for them.
06:20And we're going to build 8, 10 more plants for others.
06:23And it's going to build a whole supply chain out in America for nuclear.
06:28And this is very, very important because it's bringing on power.
06:33It's bringing baseload power.
06:35It's bringing on power that's much needed in America.
06:38And we're going to double the grid in the next 20 years.
06:43And this is super critical because it's baseload capacity.
06:46And it's very, very important to the United States.
06:48A lot of your infrastructure is really important to the United States.
06:51Have you had talks with the U.S. government in other aspects about striking war partnerships?
06:54You know, look, I would say they're very commercial in what they do, where it makes sense and where business entrepreneurs can put money to work.
07:04They're very supportive.
07:05And they were very good with us.
07:08And we're going to build out.
07:09We're going to recreate an industry and create an enormous number of jobs in America because of what they did.
07:14Have you felt any more friction because of your Canadian roots or your cross-border type of business?
07:22There had been this fear, and we saw it very present at Davos, that it's a more insular United States and maybe foreign powers.
07:28And Mark Carney's speech, who I know you know very well, talked about the need of the middling nations to come together.
07:32Do you feel that flow through the business at all?
07:34So 60% of our assets are in the United States.
07:37We're headquartered in the U.S.
07:39We have a huge business here.
07:41This is super, super.
07:42United States is super, super critical to us, as is every country.
07:45Remember, what we do is we build local infrastructure in countries, and we sell goods and services to individuals or companies.
07:53That's it.
07:54We don't move over the borders.
07:55We just build out and sell in the country.
07:57So we pick countries very wisely.
08:00We go to them, and we build out in those countries.
08:03So we're friends with every country in the world, and we try to be great citizens.
08:09We try to do well for the country.
08:12We 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 in the country.
08:21And what we're doing is, as you noted, super important for the backbone of the global economy.
08:27That's all we do.
08:28We 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.
08:35I heard from someone that this administration, someone said this recently to me, is just, like, much more willing to pick up the phone.
08:40It's much more willing to listen.
08:41Is it just much easier to get things done in this country right now?
08:44Yes.
08:45Yes.
08:46Department of Commerce, like our transaction was done with Department of Energy and specifically Department of Commerce, Howard Ludnick.
08:52And they were very transactional, and they focused on the right things, and we got a transaction done.
09:01Late last year, you announced that you were going to be buying the rest of Oaktree, a company that you had also long had a partnership with beginning in 2019.
09:10How is that combination going to evolve as you work through it?
09:13Does the Oaktree brand get blended into Brookfield?
09:17Does it remain its own entity?
09:18How are you thinking about this?
09:19So we have two – I'm going to say this as – we have two amazing brands.
09:26Brookfield's an incredible brand, but Oaktree's an amazing brand as well, and we plan on keeping both.
09:30Behind 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.
09:39But the two brands are unbelievably valuable in our opinion, and they're going to stay in – for opportunistic credit investing, which today is super important or more important this week than it was last week.
09:52The Oaktree brand is an incredible franchise, and we're going to keep that, and it's really important to us.
09:58Just on that note, because you mentioned this at the start of the conversation, that there does seem to be a little bit of nerviness around credit markets.
10:04I know in your 2026 outlook, you and the team had written, credit markets are rewarding those with underwriting standards focused on asset quality.
10:11I would say that kind of implies that maybe there are others who aren't focused on quality.
10:16Is there a real divergence going on?
10:17I don't comment on any other group's business, but what I would say is our business is focused on asset-backed finance, opportunistic credit, and lending to things we understand, lending to the real economy.
10:33And therefore, we have very little exposure to the types of things that are going on today, and that may be fortuitous.
10:40I'd say in our opportunistic business, it creates a big opportunity, because then when things sell off, often they go way too far, and therefore, opportunity comes about.
10:51So are you calling up your team saying, hey, look at what happened this week, there might be something there?
10:54Yes, yes, we're very focused.
10:57I was going to say, because you're not that exposed to software, would this be an opportunity maybe to get in there a little bit more?
11:03We're very underexposed to software.
11:06We're a real asset business, but in our private equity, our opportunistic strategies for credit, look at industries when they sell off and when there is value to be had.
11:20And I suspect somewhere in this cycle of software, there's going to be some amazing value to be made.
11:27There feels to be like a lot of reckonings happening in this market.
11:29You've outlined a lot of changes, be it deglobalization, otherwise, some of what you're doing in infrastructure.
11:35Is this a moment of a market reset?
11:38Look, I think the world, the thing I'd start off by saying is, everyone gets excited about day-to-day changes in the markets.
11:45They listen to your show and then go and buy or sell.
11:49But 20 years from now, we will look back, and the valuations will be ridiculously low for great companies and businesses.
11:58And 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.
12:10And that's been our story for a long, long period of time, and that's what it's going to continue to be.
12:15And that's what it's going to be.
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