Brookfield Asset Management (BAM) Continues to Compund Wealth at a steady pace.
Brookfield Assets per share Excluding Corporate Level Debt and Preferred Shares increased to $25. At a recent price of $39 this implies $14 value for Asset Management Franchise. This is a significant discount to the intrinsic value which has $1.5B annualized Fee Revenue and $1B aanualized Target Carried Interest and has significant growth potential.
BAM Fee Bearing AUM has increased from $77B in 2013 to $126B in 2017 which is a 13% CAGR. In the mean time Fee Related Earnings have increased from $300M in 2013 to $896M in 2017 which is a 31% CAGR. With Brookfield expected to raise flagship funds in RealEstate and PrivateEquity in 2018 and new Infrastructure Fund in 2019 it is very much feasible to grow the Fee Bearing AUM to $200B over the next 5 years. This would imply Fee Related Earnings could be in range of $1.5B to $2.0B range annualized depending on margin improvement potential. There will also be valued ascribed to Carry from 2022 onward as past funds mature.
Consistent growth in Net Invested Capital from $25 per share in 2017 to $40 per share in 2022 is feasible as BIP, BPY, BEP, BBU continue to grow the business through organic investments, new acquisitions and capital recycling.
Acquisition of GGP by BPY if closes at a reasonable valuation there is more upside potential.
See 4Q2017 BAM Results in detail.
Estimated BAM Fair Value by 2018 end is $50 per share with buy under price recommended at $39.
Estimated BAM Fair Value by 2022 end is $75+ per share.
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