00:00Brookfield Asset Management raised a record $77 billion in the second quarter, bringing the year-to-date total to $98
00:06billion.
00:08The firm notched its highest yearly fundraising haul back in 2024 at $137 billion.
00:15Can they beat it?
00:16I spoke with Brookfield Asset Management CEO Conor Teske and asked him just that.
00:20Is he confident that they can beat that figure this year?
00:23Extremely confident.
00:24I think the line we used last quarter is we expect this year to be a record year and not
00:32by a little bit.
00:34Q2, the results, whether it's almost $100 billion raised year-to-date, record earnings, our earnings, fee-related earnings were
00:43up 20%.
00:44Our fee-bearing capital was up 19%.
00:47All of this just highlighting the momentum we continue to see in the business.
00:52We like to build and own the critical assets that make up the backbone of the global economy.
00:59It's perhaps the greatest build environment in history.
01:03And the capital needs and demands for the real assets we focus on, they're at levels today that we've never
01:12seen before.
01:12And we don't see that momentum slowing down.
01:14Where exactly is the demand and how bifurcated is it?
01:18I just see within here some of the fundraising seems to come from the insurance units acquisition of Just Group.
01:23You talk about the infrastructure build-out that you're pursuing.
01:27Is it even across the board, the demand that you're seeing, the cash that you're bringing in?
01:31Or is it maybe more skewed to the sort of infrastructure AI-type plays that you're pursuing?
01:36So let's take that in two parts.
01:39Where is the capital coming from?
01:41We're very fortunate that we've built a business that can raise capital from all the largest pools of money around
01:48the world
01:49and turn around and deploy that capital into the biggest investment themes.
01:55Where is the majority of the capital coming from today?
01:58It's still from institutional investors, but we are seeing very large and growing amounts of capital from insurance, from private
02:07wealth as well.
02:09But then where are we putting that money to work?
02:12Without a doubt, the biggest theme around the world that we are seeing today is the investment in energy and
02:17infrastructure.
02:18And while a lot of that is going into digital infrastructure, we are really seeing diversified demand across the entire
02:27industry.
02:29Okay, that's interesting because I wonder, and a lot of your peers are sort of pursuing the same project of
02:34this AI infrastructure build-out,
02:36whether it be the data centers or energy.
02:38How do you evaluate concentration risk?
02:40Is there a threshold where too many separate strategies start to ride one theme and that being the AI ecosystem?
02:49Maybe taking a step back, it's important to recognize that we were investing in clean energy and renewables 30 years
03:00ago before people called it renewables.
03:02We've been investing in real estate and energy supply and data centers for decades, long before people called it AI
03:12infrastructure.
03:12And while it is exciting because it is one of the largest and fastest growing themes around the world,
03:19it's important to recognize that the approach we take in investing and building AI infrastructure is no different to every
03:29other type of infrastructure we invest in.
03:32Investing in a physical toll road or pipeline or a processing facility is no different than investing in a digital
03:39toll road or pipeline or processing facility.
03:42And therefore, we're using the same discipline, investing in the best assets, in the best markets, with the best contracts,
03:50and the best corporate credit counterparties.
03:54The only thing that is different today is the supply-demand imbalance for AI infrastructure is so incredibly in favor
04:03due to the need from the largest sovereigns and the best corporates around the world for AI and compute capacity.
04:11Well, they want to spend, the hyperscalers alone, $750 billion.
04:15Connor, is that something you know this world well?
04:17Is that something they can even achieve just given the bottlenecks that you're laying out?
04:22They can achieve it.
04:24But the point you are highlighting is perhaps the right one in that the bottleneck here is not demand and
04:32it's not capital.
04:33The bottleneck is credible operators who can pull these very large projects out of the ground on time and on
04:44budget.
04:45And this is where we are really seeing the market increasingly favorable to not just those that have capital, but
04:53those that have capital and operating capabilities at scale.
04:57And these projects are so significant that they're often done in partnerships between very large businesses across different components of
05:08the value chain.
05:09We're seeing this around the world.
05:12We just partnered in South Korea with Naver and NVIDIA.
05:16We just partnered in Kentucky and Paducah with Nextera and the Department of Energy.
05:23We feel very fortunate that we're extremely well placed at the epicenter of some of these very large projects that
05:31have very attractive investment returns.
05:33On that Nextera one, just using that as an example, a really large deal, $100 billion.
05:37You mentioned both with them and with the government.
05:40Connor, is it no coincidence that that took place on federal land?
05:44And how much are you thinking about some of these localities pushing back, whether it be New York City, putting
05:50a memorandum, a New York as a state, rather, memorandum on data centers?
05:54Is that front of mind for you?
05:56Could that become a larger issue?
05:59The demand that we are seeing is overwhelming.
06:03It is not going to come from every location and every counterparty and every asset class around the world, but
06:11there is certainly more demand than there is supply.
06:15So are certain regions, I'm not here to question their motives, are certain regions going to self-select out of
06:23this build?
06:24They may choose to do that.
06:25Does that mean that the supply demand is not unfavorable of those that can produce and pull these projects out
06:33of the ground?
06:33Absolutely not.
06:34There is still a supply demand imbalance that it is very difficult to see it not being favorable of builders
06:45and investors into these projects through the end of this decade and beyond.
06:50In terms of finding credible operators, because it's a lot of money to be put to work, and I understand
06:54you're probably not steeped.
06:55In the day-to-day, but when it comes to energy, there has been questions around golden peaks in Europe.
07:01They borrow $1.6 billion, including $280 million, from Brookfield to build solar farms across Eastern Europe.
07:08Their cash reserves vanished down to something like $1 million.
07:12Conor, do you have any understanding of what exactly went wrong there?
07:17This is a normal course part of our business.
07:20This was part of our infrastructure lending strategy.
07:25We lent.
07:26We had great creditor protections in our loan.
07:30Unfortunately, the business plan didn't pay out for the previous owners of that business.
07:35So no different than we've done in other situations, we'll step in and bring our operating capabilities to bear,
07:43to finish those projects and deliver the value that they originally intended.
07:47And this is unlike what we're seeing when we buy new platforms around the world and we continue to invest
07:55in new projects.
07:56Our ability is not just the ability to bring capital, but by integrating those projects into our broader pipeline,
08:03we can drive operating improvement, we can drive efficiencies, we can accelerate growth and use that to enhance the value.
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