Brookfield Asset Management‘s entry into the secondaries buyside could grow to become a business worth as much as $50 billion, its chief executive has said.
Speaking at the firm’s investor day last month, Bruce Flatt said the rising level of alternatives as a percentage of institutional clients’ portfolios meant portfolio management has become increasingly important.
“The business of investment management for alternatives is evolving very significantly,” Flatt said, adding that institutional investors’ allocations to alternatives was roughly 5 percent 20 years ago.
“Today, it’s 25 percent and it’s going to 60 percent,” he said. “What they need now is sometimes they want to reshuffle their portfolio. These are long-term commitments they’ve made. As a result of that, a whole business has emerged of secondaries and trading the LP commitments that are in funds. We think this can be very significant.”
Secondaries is a “meaningful extension” for Brookfield, Flatt added.
“We think this could be a $25 billion to $50 billion business for us, and we’ve started up with a number of people doing this within our organisation.”
The Toronto-headquartered asset management giant became the latest firm to enter the secondaries market with the hire of two Partners Group executives over the summer, as Secondaries Investor reported. Fabian Neuenschwander and Marcus Day joined the firm in August to support senior leaders at the firm and to help build out its real estate secondaries unit.
It had been exploring adding secondaries to its platform in August 2019, sister publication Buyouts reported last year.