Brookfield considers acquiring secondaries firm as part of strategic growth plans

Secondaries is one of four verticals the Canadian asset management giant could look at for an acquisition.

Brookfield Asset Management, which ranked 32nd in this year’s SI 50 ranking of the biggest secondaries fundraisers, may consider acquiring a secondaries firm to bolster its offering and tap into widening interest in the strategy among investors.

The Toronto-headquartered manager identified secondaries as one of four verticals it could target when looking at an acquisition, according to materials from its investor day presentation in New York last week. The other verticals are technology, healthcare and consumer brands.

Brookfield could use its balance sheet to acquire an asset manager to bring “complementary capabilities” to its existing platform, the materials noted.

An acquisition of similar strategic importance to Brookfield’s 2019 purchase of Oaktree Capital Management would have to meet specific rules, chief executive Bruce Flatt said at the investor day.

“Number one, it better be additive to the businesses we do, and not duplicative with what we actually do today. It should hopefully add geographical or operational capabilities that we don’t have today. And hopefully it adds access to clients that will be additive to what we have today.”

An acquisition should have one or all of the above features, he added.

Brookfield has already made a secondaries acquisition, with German asset manager DWS agreeing to “transfer” its secondaries unit to Brookfield in February. The firm has built up capabilities in real estate and infrastructure secondaries with external hires and internal appointments, as Secondaries Investor reported previously.

The listed manager expects to offer multiple secondaries products, Brookfield president Connor Teskey said on a full-year earnings call in February.

Recent buyers of secondaries firms include CVC Capital Partners, Ares Management, TPG and Franklin Templeton.

Last week, Secondaries Investor reported that Brazil’s Patria was preparing to launch a secondaries strategy by the end of the year.