Brookfield jumps after earnings amid plans to spin off asset management unit

Shares of Brookfield Asset Management (BAM) were higher on Friday morning after the company yesterday had reported first quarter results and announced plans to spin off its asset management business into a separate public company. EARNINGS: For its first fiscal quarter, Brookfield reported funds from operations per share of 96c vs. $1.80 last year, with net income of $2.96B vs. $3.78B last year. Nick Goodman, Brookfield’s chief financial officer said Q1 results were “strong,” and “thanks to our extensive global holdings of inflation protected cash-generating assets, our results are accelerating in the current macro environment.” Goodman added that “Fundraising momentum remains strong, with fee-bearing capital standing at $379M at the end of the first quarter. We also expect material fund closes in the second quarter and balance of 2022.” SPINOFF OF ASSET MANAGEMENT UNIT: In conjunction with its Q1 earnings report on Thursday morning, Brookfield announce plans to spin off a 25% stake in its asset management unit by the end of the year. Goodman said that the spin will be done on a tax-free basis to both Canadian and U.S. shareholders. “Our asset management business is one of the leading alternative investment firms in the world, managing the capital of over 2,000 global institutional investors and a growing list of high net worth investors. We are excited about this next chapter of our growth,” Goodman stated. Post-transaction, Brookfield will own 75% of the asset manager. ANALYST COMMENTARY: Deutsche Bank analyst Brian Bedell lowered the firm’s price target on Brookfield Asset Management to $60 from $62 and keeps a Hold rating on the shares post the “good” Q1 results. At the current valuation, the analyst sees the shares as possessing much less upside versus the other alternative managers, he told investors in a research note. PRICE ACTION: Shares of Brookfield Asset Management were up about 3% on Friday morning to $46.85.

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