Alexander Blostein: Great. Thanks. And the follow-up is on core, both real estate but also broadly, you guys have been very successful raising in super core infra. Historically, core real estate has been a nice contributor as well. So as you think about the opportunity set, and again, kind of the pitch on core to clients in light of higher interest rates. How does that proposition sort of change, right, because in many ways, core has been viewed as a fixed income replacement tool, with higher interest rates, obviously, is more yield sort of available in liquid credit markets. So to what extent is that present a hurdle to core as a franchise and both real estate and infra? And as you think about monetizing some of those opportunities, we’ve seen a number of your peers have a fee related performance, kind of revenue component to core product, is that something that we should be thinking about at some point of time for Brookfield as well, either in real estate or infra?
Thanks.
Connor Teskey: Sure. So perhaps I’ll start with the first part of that question just around the core strategies. The current environment and in particular, I would say, not necessarily the rise of interest rates, because that can be readily priced in into new acquisitions to ensure that we’re still delivering very attractive risk adjusted returns, but simply the volatility around interest rates, that may cause some short-term ebbs and flows in interest in core products. But I would say those short-term ebbs and flows are being dramatically overwhelmed by take, for example, in infrastructure, the huge amount of capital that is looking to enhance their exposure to the highly de-risk, highly regulated, highly contracted, high quality infrastructure assets base.
So while there have been some uncertainty around interest rates, we expect that product, particularly on the infrastructure side to continue to grow very, very rapidly, we’re continuing to see strong inflows into that fund. And on the real estate side, it’s more or less the same story. Our core products are spread around the world across different regions, we have some that target institutions, we have some that target the private wealth channel, but even across those our real estate product that targeted the private wealth channel did have net inflows in Q4. So we are continuing to see demand and just being selective and reacting to what different clients are looking for. And they continue to show consistent demand for this type of product.
In terms of the comments about a performance type fee, we continue to be very thoughtful and prudent around how we structure these products recognizing that it often is a different type of investor base, one focused on a much longer return horizon or retail investors. And therefore, we are seeing what is happening in the market and taking that into account, but I wouldn’t suggest that we intend to adjust any of our performance fee structures in the near-term.
Alexander Blostein: Great. Thanks so much for taking both questions.
Operator: Thank you. And our next question comes from the line of Geoff Kwan with RBC Capital Markets.
Geoff Kwan: Hi, good morning. So on the fundraising side, you and a number of your larger peers have talked about the improving fundraising environment in your Q4 comments. I know it’s hard to generalize just for the broader industry, but and you’ve consistently talked about of not having fundraising issues yourself, but just wondering what you might attribute to the change in tone overall, around an improved fundraising environment?
Connor Teskey: Certainly, without being too redundant, we do really focus on two major things. One is, there is continues to be an increasing allocation towards alternatives. Alternative and real assets with their, cash generative downside protected attributes, but also their ability to provide attractive equity upside, they probably look increasingly more attractive after periods of public market volatility, particularly the ones we’ve seen over the last 3 or 4 years. So there does continue to be significant inflows into the alternative and real asset sectors, but then perhaps more particular to ourselves, we do feel that we are very fortunate to have leading global franchises in the sub segment of real assets that are seeing the greatest capital inflows.
And in particular, that’s the three of infrastructure, transition and credit. Those asset classes and those products perform exceptionally well in volatile markets. And I think more robust outlooks around those segments are probably what is buoying the sector more broadly.
Geoff Kwan: Okay. That’s helpful. And just my second question, which is in light of the Brookfield Reinsurance acquisition announcement this morning of Argo, and with what higher rates that we have got right now, are you finding more opportunities to kind of scale up that reinsurance business and therefore help grow the FRE at them?
Bruce Flatt: Jeff, thanks for the question. And it probably creates an opportunity to highlight something that’s really important here. That acquisition was done by Brookfield Corporation. So, Brookfield Asset Management, this entity really has nothing to do with that transaction or the invested capital related to it. However, we do expect to be the beneficiary over the long-term, because we would expect to get more asset management products and asset management revenues from managing the capital within BAM reinsurance over time. So, we did not do that deal. We did not make that investment. But we do expect to be the beneficiary as that business scales up, as we grow our insurance solutions business and generate asset management fees from that.
Operator: Thank you. And our next question comes from the line of Ken Worthington with JPMorgan.
Ken Worthington: Hi. Good morning and thank you for taking the questions. First, real estate, it looks like there were inflows of about $11 billion this quarter driving a big step up in fee bearing capital. Based on your comments in the call, it doesn’t seem like it was a ginormous final close for BSREP IV. So, where are the assets being raised, or where were they raised this quarter. And then on real estate, there was also a $4.22 billion increase to fee bearing capital in a bucket called other, what is that? And are the fees commensurate with sort of the average of the asset class?
Bahir Manios: Hi Ken, it’s Bahir. Thanks for your question. Predominantly, most of that relates to Brookfield Corporation capital, that we are now managing. And now given the spin off, happened Brookfield Asset Management, which in the past hadn’t charged fees on those funds, will be charging fees on a go forward basis on those strategies. So, from a fee-bearing capital perspective, it made it into the numbers. The transaction closed in December. The income pickup was very, very minor, so you didn’t see that in the earnings, but that will be a contributor to our results on a go forward basis.
Ken Worthington: Okay. Great. Thank you. And then maybe for Bruce, the more richly valued BAM stock price would seem to afford more opportunities to acquire more investment capabilities. And BAM did announce the acquisition of DWS’ secondaries business last week. In terms of Brookfield’s capital management priorities, where do you put M&A in for 2023? And how do you see the opportunities in an environment for private markets M&A this year? Thanks.
Bruce Flatt: Look, I would say the following. First is that we €“ this company BAM is in a very, very good spot. It has €“ we have exceptional businesses, they are growing fast. And we have really good assets. To be able to do M&A, it means that you are selling something of what we own today and buying something of something else, because we have a small amount of cash. And of course, we can do transactions like we just did, which take modest amounts of cash. But if it’s anything larger, means you are selling part of your business to buy something else. So, it needs to hit a very high test. And Connor stated a few parts earlier, which is they need to be additive to the overall franchise, they have to be best-in-class, they have to be scalable and they have to be something that we don’t do today or can build ourselves.
And if one of those comes along, we would be thrilled to be able to add it to the franchise. But we don’t have any expectations of something happening in 2023.
Ken Worthington: Great. Thank you.
Operator: Thank you. And our next question comes from the line of Mike Brown with KBW.
Mike Brown: I guess just following up on the acquisition question there. So, you did acquire the DWS’ secondaries business last week? What are your aspirations for the growth of that secondaries €“ of your secondaries business? And how would you characterize the strategy and your thoughts on really gaining more scale in that business?
Connor Teskey: Certainly, so we are excited about the secondary space more broadly, and have been adding secondaries capabilities across previously, real estate and infrastructure. And now we have added it to private equity. And the fundamentals for the space are very attractive, because all you need to do is look at the historic inflows into alternatives, 5 years, 7 years, 10 years back, and that is proving to be what is the secondaries market today on a laggard basis. And given the strong growth we have seen over the last decade, we see a large and growing market for secondaries that we now feel that we are well positioned to take advantage of. In terms of what we intend to do in leveraging those capabilities. This is where I would say Brookfield’s access to capital, and its ability to think of unique and flexible transaction structures to benefit its counterparties can be very additive.
And given our deep knowledge of a lot of the segments where the secondaries opportunities sit, we often actually have knowledge of the underlying assets or underlying capability, or €“ sorry, underlying assets or underlying companies that are subject to these traits. So, we do think this is a space that we are well positioned to take advantage of, and we can be a leader in. But in terms of the types of different products and solutions, we would expect to be able to offer all of them, but primarily focused on GP solutions to start.
