So it is an incredibly constructive market for us to continue to put capital to work. Well, at the exact same time, we have seen an extremely robust bid come back to the market for high-quality derisked assets. And we’re starting to see that, as Bruce mentioned, in our private equity and real estate businesses. But quite frankly, we’re seeing it across the entire franchise. And our derisked and high-quality assets within renewable power within infrastructure, we expect to be very active on both the investment and the monetization side this year. So when it comes to your question specifically about credit, we are seeing that bifurcation as well. Within our high-quality businesses that we have effectuated the business plan, they are now stable.
They are growing. Their margins are expanding. We’re seeing the opportunity, as Bruce mentioned, to refinance those businesses at really attractive rates and put them in a great position to be monetized in the next 1 or 2 or 3 years. At the same time, we are looking to capitalize on some of the market dynamics where businesses are over-levered and we can buy great assets that simply have imperfect capital structures, and that’s also going to be a big theme for us for the next 2 or 3 quarters.
Brian Bedell: That’s great color. And maybe just one on the FRE margin and expense growth. I think we were looking for low double-digit expense growth this year in ’24 and an FRE margin that could expand to that — around that 58% level. Just was wondering if that’s still intact as you scale the businesses sequentially throughout the year?
Bahir Manios: Brian, it’s Bahir. Thanks for the question. Look, I’d say compared to the — let me just talk about results in general. Compared to the prior year. We obviously had a delay closing on the insurance asset management mandate that we got from American Equity Life. So that, in addition to the fact that our permanent capital vehicles, the trading prices on those came off during the quarter, which we see as a temporary issue. If you just factor those 2 impacts alone. So not saying that the share prices should be higher than last year, but let’s just assume that they were flat to last year and had AEL have closed earlier. You would have just seen and without us doing any fundraising this year with us doing much capital deployment, et cetera, those 2 impacts alone would have meant that our FRE per share would have gone up in the low double digits.
So then on expenses, they were up by, I believe, compared to the prior year and just the increase, the magnitude of that increase has come down quite significantly, which we seem to be something that should stay pretty consistent across the year. So as a result of — when — another point Connor mentioned on his remarks is the fundraising should be a lot more spread out this year. We see lots of areas to deploy capital. So just the impacts of all of that should mean that margins should improve quite a bit in future quarters. So still maintain that guidance that we to the market in the previous last year.
Operator: Our next question comes from the line of Nik Priebe with CIBC Capital Markets.
Nik Priebe: Okay. If I caught the comments on Castlelake earlier correctly, you’re writing a $350 million check to acquire the 51% GP interest. That, in turn, is expected to generate $40 million of FRE, that implies a transaction multiple of about 9x. That just strike me as a bit low. So is that $40 million figure quoted in the letter on a 100% basis rather than a BAM share? Or was there some other nuance in the way that, that transaction was priced? Just a bit of color on that would be helpful.
Connor Teskey: Thanks, Nik. And just — I believe you got that all absolutely right, but I want to clarify. So the $500 million will be invested from BAM, about $350 million of that is to acquire the FRE. BAM will also invest an additional $150 million. The incremental $150 million will be to acquire some of Castlelake’s current carry as well as fund our proportionate share of the GP stakes within the Castlelake business. Your $350 million for our 51% of the FRE compares to $40 million, which is, again, 51% of the FRE. So your directional multiple is correct. The one thing I would highlight is $40 million is what we expect to see over the next 12 months, so it is very much a forward-looking multiple as opposed to an LTM multiple. And that’s probably a little bit of a nuance in terms of why it looks a bit low to you.
Nik Priebe: Okay. That’s very helpful. And then are you also able to see what it costs to acquire the incremental 5% interest in Oaktree? And maybe what that represented as a multiple of FRE?
Connor Teskey: Yes, sure. So our investment to acquire or BAM’s investment in that incremental stake of Oaktree was about $275 million. It’s important to recognize that we have a formulaic calculation with Oaktree that was put in place at the time of our partnership 5 years ago and very similar to what you saw with us when we spun out the asset manager Brookfield Asset Management buys the FRE from Oaktree and be in by the historic carry and some of the balance sheet positions from Oaktree. So — our multiple on the $275 million that was invested in the FRE of Oaktree is based on the formula and the multiple in that formula is 13.5x.
Operator: Our next question comes from the line of Ken Worthington with JPMorgan.
Ken Worthington: The U.S. Department of Labor recently finalized best interest rules and I think those rules hit the National Register this past April. Do you have any sense of what portion of AEL’s business might be impacted by the new rules? And do you see them as sort of a risk or opportunity to the $15 billion to $20 billion of annual sales that you’re sort of projecting in insurance.
Connor Teskey: So maybe I’ll just start and the Bahir or others if you want to weigh in. I think our enthusiasm and growth about the potential sales of within our insurance platform are really driven by 2 things. First and foremost, we think we have a best-in-class platform that has only been enhanced by the acquisition of AEL and therefore, they should grow along with the broader market, if not increase some modest market share increases going forward. And then the second thing to highlight is just the demographic support that we are seeing for the annuities business that AEL and our broader wealth solutions provides. And the stat that we always really focus on is maybe just a fun fact for everyone on the call, this year will be the highest year ever in the United States for people turning 65.
That record will be broken every year for the next 7 years, and the total number of people above 65 is going to double between now and 2040. Those are the meaningful dynamics that drive the growth in our insurance business going forward. And that’s why we have so much confidence in terms of some of the changes that have been made we really don’t see them disrupting that trend, but perhaps Bahir, I’ll let you provide a comment.
Bahir Manios: Thanks, Connor. Look, I agree with all of that. I would just say that larger-scale companies such as ourselves, will be just better equipped to handle these new regulations.
Operator: Thank you. I would now like to hand the conference back over to Jason Fooks for closing remarks.
Jason Fooks: Okay. Great. Thanks. If anyone should have any additional questions on today’s announcement, please feel free to contact me directly. Otherwise, thank you all for joining us.
Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect.
