Author Topic: BAM - Brookfield Asset Management  (Read 335934 times)

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1040 on: July 20, 2019, 12:07:24 AM »
Reuters [February 8th 2019] : Brookfield in talks with India's Reliance Industries to buy tower, fibre assets: report.

BIP Press Release [July 19th 2019] : Brookfield Infrastructure Acknowledges a Stock Exchange Filing by Reliance.

That BIP Press Release reads a bit awkward. Reliance Industries Limited Stock Exchange Filing [July 19th 2019].

It seems like the potential telecom tower assets deal with Reliance Industries mentioned by Reuters in February 2019 is on the move. I think that is great.

Edit:

I found this tweet by Teemac, but don't know the source.
« Last Edit: July 20, 2019, 03:30:17 AM by John Hjorth »
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peterHK

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Re: BAM - Brookfield Asset Management
« Reply #1041 on: July 20, 2019, 07:36:42 AM »
Reuters [February 8th 2019] : Brookfield in talks with India's Reliance Industries to buy tower, fibre assets: report.

BIP Press Release [July 19th 2019] : Brookfield Infrastructure Acknowledges a Stock Exchange Filing by Reliance.

That BIP Press Release reads a bit awkward. Reliance Industries Limited Stock Exchange Filing [July 19th 2019].

It seems like the potential telecom tower assets deal with Reliance Industries mentioned by Reuters in February 2019 is on the move. I think that is great.

Edit:

I found this tweet by Teemac, but don't know the source.

Source is BMO Equity Research.

Looks like a good deal. AMT has I think outlined the thesis for India towers fairly well.

ValueMaven

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Re: BAM - Brookfield Asset Management
« Reply #1042 on: July 20, 2019, 08:33:06 AM »
is anyone else amazed by the speed, and volume with with these guys are doing deals?

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1043 on: July 20, 2019, 08:34:16 AM »
Thanks for info on source, peter.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

gokou3

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Re: BAM - Brookfield Asset Management
« Reply #1044 on: July 20, 2019, 10:17:00 AM »
This article provides further color:

https://www.financialexpress.com/industry/tower-assets-ril-closes-rs-25215-crore-deal-with-brookfield/1650549/

Quote
"Brookfield and other investors are bringing in over Rs 25,000 crore and they will own 100% of the Tower Infrastructure Trust. The enterprise value will be a combination of this plus the debt which will go up to Rs30,000 crore. So, the enterprise value will be around Rs55,000 crore,” he said.

Quote
In the June quarter, Reliance Jio reported a stable set of numbers on Friday. During the three months of April-June 2019, the company’s net profit rose 6% year-on-year to Rs 891 crore.

While Jio’s revenues increased 5.2% to Rs 11,679 crore quarter-on-quarter, the operating margins came in as a positive surprise, which expanded a good 110 basis points to 40.1% versus 39% in the previous quarter. The Ebitda (earnings before interest, tax, depreciation and amortisation) was up over 8% on sequentially to Rs 4,686 crore.


Am I reading this correctly, that this deal is executed at an EV of Rs55,000 crore for a company with Rs 4,686 crore of QUARTERLY earnings?  This would be a EV / EBITDA < 3.0.

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1045 on: July 21, 2019, 02:26:10 AM »
Is anyone else amazed by the speed, and volume with which these guys are doing deals?

Not really amazed, ValueMaven,

-more like satisfied. [ : - ) ] But yes, BAM & subs seem to have had great business momentum the last few years. They are now harvesting the fruits of developing a business model during the last 15 years or so, that appears to work. They have invested heavily in building the contact & client network, regional offices etc., which is the real asset here, and the economic value of that is not booked on the balance sheet anywhere. The number of clients is now 600+ and growing, not so long ago is was about 450 [both numbers mentioned by Mr. Flatt somewhere].

I still occasionally go back to tiddman's post from January 2018 to reread it - it's just excellent :

I've had large positions in both Berkshire and Brookfield for about 15 years.  One of the things I like about having both investments is that they are in many ways completely different, and yet each company is widely diversified and based on cash flow returns. 

Berkshire is almost entirely in the US, has long term holdings, organic growth, makes little use of debt or financing, and Buffett at the helm.  Brookfield is very international in multiple countries, is more transactional, makes heavy use of debt and financing, and the management team is about 10-15 people who are all considerably younger than Buffett and Munger.

I really don't think that Berkshire would have any interest in acquiring Brookfield or any of its subsidiaries, and it's interesting to me that even though both of them have broad reach, they almost never encounter one another or partner on any investments.  They just have totally different approaches. I think that Buffett and the Berkshire execs would be put off by Brookfield's use of debt and financing, and while Brookfield in some ways models its business after Berkshire, it could not do what it does without debt financing.  The secret to Brookfield's success is access to third party capital, but Berkshire has always generated its own capital via insurance companies.

I think both companies have a bright future but over the next 20 years I think that Brookfield probably has more opportunities for growth and a broader reach.  BAM has a market cap of only $43B, all of the Brookfield subs combined add up to around $70B.  Berkshire is nearly 10x as large with a market cap of $500B and its returns are still driven primarily by one person.  Brookfield is driven by a team of younger execs who each have their own opportunities for growth.  In fact I think Berkshire could learn something from Brookfield's culture and management style.
« Last Edit: July 21, 2019, 04:02:17 AM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

ValueMaven

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Re: BAM - Brookfield Asset Management
« Reply #1046 on: July 21, 2019, 07:19:09 AM »
'This cash flow is now over $2 billion annually and growing. This amount, based on our estimates, should be over $5 billion in 2023 and with no specific use for the capital, it may be returned to shareholders.'

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1047 on: July 21, 2019, 08:59:12 AM »
'This cash flow is now over $2 billion annually and growing. This amount, based on our estimates, should be over $5 billion in 2023 and with no specific use for the capital, it may be returned to shareholders.'

Oh-noo, please no more "spread-sheet-talk" in this topic. We have been exactly there before, where I asked for somebody shedding some light on the assumptions, to which question I got the reply "Mr. Flatt's assumptions are absolutely reasonable" [or something like that] [I couldn't find them anywhere, so I asked, and after the "absolutely reasonable"-answer just : silence].
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

ValueMaven

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Re: BAM - Brookfield Asset Management
« Reply #1048 on: July 21, 2019, 09:05:53 AM »
When forum did you ask this? 

gokou3

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Re: BAM - Brookfield Asset Management
« Reply #1049 on: July 21, 2019, 10:13:28 AM »
'This cash flow is now over $2 billion annually and growing. This amount, based on our estimates, should be over $5 billion in 2023 and with no specific use for the capital, it may be returned to shareholders.'

Oh-noo, please no more "spread-sheet-talk" in this topic. We have been exactly there before, where I asked for somebody shedding some light on the assumptions, to which question I got the reply "Mr. Flatt's assumptions are absolutely reasonable" [or something like that] [I couldn't find them anywhere, so I asked, and after the "absolutely reasonable"-answer just : silence].
The $5 billion cash flow number is stated in last September's Investor Day BAM presentation page 111, linked below.  See the rest of the file for derivation of this number.  Just putting out the info, I do not necessarily agree with the assumptions.

http://www.2018-brookfield-ir-day.com/