Alexander Blostein: Great. That’s helpful. Thanks. And my follow-up is around the fundraising targets you’ve laid out for 2024. So as we sort of think about the $90 billion to $100 billion of fundraising you expect to see this year, as the business becomes more diversified, the sources of that have obviously expanded. So you have insurance, you have traditional style, kind of LP, GP funds, you got wealth. So, help us maybe frame, what’s the fee bearing capital associated with that $90 billion to $100 billion. And then ultimately, what’s kind of the blended fee rate you guys expect to come in. And I understand it’s not going to all come in on day one, so it’s not all going to hit in 2024, but help us maybe think about how this fundraising dynamic translate into actual management fees. Thanks.
Bahir Manios: Hey Alex, it’s Bahir again. There’s probably a lot of details. As you can imagine, we’ve got, as I noted in my remarks, we’ve got 50 strategies that we’re going to be out fundraising on. And that’s just on the, what we call the complementary strategy side of things, in addition to the four flagships. So, with respect to fundraising, the way for 2024, the $90 billion to $100 billion target that we’ve set out for ourselves, you should expect a third of that to come from the flagships that we’re still fundraising for. And as you know, we earn fees on committed capital there. A third will come from the complementary strategies; you could say half of those will come from equity related strategies. So, financial infrastructure, Middle Eastern private equity, catalytic transition, secondaries, et cetera, and half of those will be from credit funds.
So we’ll be out in the market next year with our real estate finance fund. Our royalties business is growing, our consumer finance business, LCM is also growing. Number of strategies in Oaktree, 17Capital, et cetera, lots of great things happening there. So, broadly speaking, maybe half of that will be based on invested capital versus committed capital, and it generally takes us three years or so to invest that capital. And so again, third comes from flagships, third from complementary strategies about 15% or so, 20% comes from insurance inflows that Connor touched on. We’ll get paid on those right away, as soon as we get them. And then there’s your normal course co-investments that we do, perpetual strategies, semi liquid, et cetera, so, lots of things.
And I’d say from a fee perspective, the average fees that we’ve had over the last couple of years, which is over 100 basis points will be consistent. We expect that to be consistent heading into 2024.
Operator: Thank you. Our next question will come from the line of Mike Brown with KBW.
Mike Brown: Hi, great. Thanks for taking my questions. Just wanted to start on the insurance side of the business. Can you maybe just expand on the timing for the AEL close? I think the hope was a year-end close, but I understand regulatory approvals take time, but what’s maybe the updated view on that and anything you can maybe expand on as to what has caused it to not yet close. And then just in addition to the scaling of the insurance business at Brookfield Corp., do you think you have the right asset mix and scale to continue to service the insurance balance sheets, like for example, do you expect to need to kind of continue to scale the ABF business? And as you do so, does that actually set you up well to win some more third-party insurance AUM over time?
Connor Teskey: Mike, thanks for the question. In terms of the AEL closing process, I would say it’s very normal course for a transaction of this type. In November, we received overwhelming support from the AEL shareholders. We continue to work through the regulatory process and I would say we continue to target closing shortly. Nothing really to report and certainly nothing out of the ordinary in how that process is progressing. In terms of how our platform is set up to service that insurance balance sheet and third-party insurance clients, we feel that we are extremely well-positioned today and will only go from strength to strength in that regard. Really, our process of being well-positioned to service insurance started in 2019 with our partnership with Oaktree and giving ourselves access to one of the largest and broadest credit franchises in the world, obviously, with credit being a key asset class to service insurance, when you are able to pair credit with the long duration, inflation linked assets that we have across real estate and infrastructure and renewables, we really feel that we have a product suite that is relatively unmatched in terms of servicing those clients.
All that being said, there’s room to run. And as we think about some of those tactical M&A opportunities, one that is top of mind, are other credit type initiatives that that may be well suited to service insurance clients. So your question is spot on. We think we’re well-positioned today, but can go from strength to strength in the future.
Mike Brown: Okay. Great. Thanks for all that color. Maybe a question for Bahir, in 2023, the consolidated margin came in around 54%. As we look out to 2024, you’ve got a lot of moving pieces that are falling into place and certainly some large fundraising numbers that will kind of come through throughout the year. Is it possible that the margin gets back to the 56 level — 56% level? I think it wasn’t kind of the prior year period. And what is kind of the run rate margin expansion potential that we should think about when we look beyond 2024?
Bahir Manios: Hey Mike, certainly. So, look, when we’re reporting and usually refer to our margins, we do it on sort of a proportionate basis. So taking all the Brookfield related activities and taking Oaktree at its share, et cetera, and to come up with a net to BAM proportionate sort of margin of 56% for the year. So that’s down 200 basis points from the prior year. And our target starting in 2024 is to get back to certainly prior year levels and even higher for the years beyond. Lots of execution ahead of us. But that is at least a target that we’ve set out for ourselves internally as an organization.
Operator: Thank you. Our next question will come from the line of Craig Siegenthaler with Bank of America.
Craig Siegenthaler: Hey, good morning, everyone. My first one is another one on AEL. There’s quite a few alt managers with partnerships with annuity underwriters now, and they’re all looking to grow. So it looks like competition is intensifying. At the same time, interest rates are now falling, which do indicate that annuity sales may also go down. So I know the ROE and NIM doesn’t exactly matter for BAM. It’s more of a BN issue. But higher competition could impact your retail channel flow. So my question really is what are your thoughts on the competitive landscape today?
Connor Teskey: Good morning, Craig. Thanks for the question. There would be two answers to that question. One, the nice thing about the AEL transaction is we have a playbook that we just executed on through American National, and we knew exactly what we did there in order to drive growth and increase profitability in that business. And we see a lot of the same attributes and opportunities upon closing AEL. And yes, the market backdrop will influence that. But we think a lot of the near-term performance and growth is going to be within our control. And while interest rates and competition may have an impact, the second point is, upon closing this transaction, we have very meaningful scale in the United States, and that will be a key differentiator and a competitive advantage that positions us well, even in a differing interest rate environment that may be more competitive.
We think our scale will continue to provide a competitive advantage and a bit of a moat that will allow us to continue to drive that, that call it $12 billion to $15 billion of growth annually.
Craig Siegenthaler: Thanks. My fault is on real estate fund five. So the last two vintages were $15 billion. You already raised $8 billion through January, so more than halfway to the prior sizes. I wanted your perspective on kind of recent conversations with LPs, feedback from the Road Shows. Do you think you’re going to be able to hit the $15 billion level by your final close, which I think you said will be later this year? So we’re penciling in and around 4Q 2024 for the final close of real estate fund five.
Connor Teskey: Yes, like very little concern. We’re thrilled with the traction that the fund has been getting, and really, it’s important to recognize what our flagship fund offers. This is a fund, an opportunistic real estate fund that has delivered 18% net IRRs across four vintages to-date, and is, for lack of a better term, perfectly suited for the current market environment. So I would say the traction is very strong. A first close at more than 50% of the fund target is a very, very strong indication. And a point we would highlight is that’s very much in line with the previous funds as well, in terms of their first close. And perhaps the thing that gets us really excited is the re-up rates we’re seeing from our clients are particularly strong in real estate, and that’s really a function of our franchise and something that gives us confidence in hitting that target fundraise this year.
Operator: Thank you. Our next question will come from the line of Nik Priebe with CIBC Capital Markets.
