Author Topic: BAM - Brookfield Asset Management  (Read 392055 times)

gokou3

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Re: BAM - Brookfield Asset Management
« Reply #1030 on: July 01, 2019, 10:36:56 AM »
Genesee & Wyoming Inc. to be Acquired by Brookfield Infrastructure and GIC in $8.4 Billion Transaction
https://web.tmxmoney.com/article.php?newsid=6266614095800997&qm_symbol=BIP.UN

The $8.4B deal consists of $6.4B of shares plus assumption of $2B of debt.  In addition, per 8-K there is an acquisition debt financing of $3.15B.  BIP is putting down $500M of equity and the rest comes from its institutional partner.  So Brookfield is going to control a $8.4B EV company with only a $500M (<6%!) sliver of its "own" money in typical PE fashion?


John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1031 on: July 01, 2019, 12:31:53 PM »
Thank you for posting this, gokou,

Primary sources from the mouths of the horses :

Brookfield Infrastructure Partners Press Release : Genesee & Wyoming Inc. to be Acquired by Brookfield Infrastructure and GIC in $8.4 Billion Transaction [July 1st 2019].
GIC Press Release : GIC and Brookfield Infrastructure to acquire Genesee & Wyoming [July 1st 2019].

By reading the press releases, there seems to be minor contradictions among them [, or I may have misread them].

- - - o 0 o - - -

I haven't studied anything in depth, but the price for G&W is USD 112 per share - G&W 2018 earnings per share is USD 4.03. Alone that looks weird to me, when we talk about a BAM sub. Perhaps the idea is to break it up for a profit by offering it in parts to the major railways?

- - - o 0 o - - -

I haven't heard at all about GIC before, nor did I know it was Brookfield client. - I'm an avid collector of identities of Brookfield clients, because they are those that make the wheels at Brookfield spinning.
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gokou3

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Re: BAM - Brookfield Asset Management
« Reply #1032 on: July 01, 2019, 02:35:05 PM »
GIC is one of Singapore's two Sovereign Wealth Funds -- the other is Temasek.  Each of them is among the top 10 SWF in the world.  Pretty amazing for a city-state.

https://www.swfinstitute.org/fund-rankings/sovereign-wealth-fund/

I am hoping someone could explain the rationale for the GWR deal as well since it is not obvious from the typical valuation metrics like P/E.

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1033 on: July 01, 2019, 04:44:39 PM »
Thanks again for your post, gokou,

I actually looked at GIC shortly before my last post. Let me just say, that I'm not - in any way - impressed by the long term return generated by GIC.

In short, GIC seems in need of (a) helper(s) - This transaction makes me think - on initial basis - "uhmm-hoo" [like those strange noises from Mr. Buffett's mouth, when Mr. Munger asked Mr. Buffett : "Do you really want to buy this?", looking out over the trading area of Solomon Brothers].

I may be totally wrong here.
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Spekulatius

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Re: BAM - Brookfield Asset Management
« Reply #1034 on: July 01, 2019, 05:28:30 PM »
Thanks again for your post, gokou,

I actually looked at GIC shortly before my last post. Let me just say, that I'm not - in any way - impressed by the long term return generated by GIC.

In short, GIC seems in need of (a) helper(s) - This transaction makes me think - on initial basis - "uhmm-hoo" [like those strange noises from Mr. Buffett's mouth, when Mr. Munger asked Mr. Buffett : "Do you really want to buy this?", looking out over the trading area of Solomon Brothers].

I may be totally wrong here.

It’s pretty expansive at 15x EBITDA and 3.3% cash flow yield. Oh the allure of cheap money. They must be seeing something in it though, perhaps a platform for more acquisitions in this space.
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CorpRaider

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Re: BAM - Brookfield Asset Management
« Reply #1035 on: July 02, 2019, 09:24:05 AM »
Damn.  Railroads earn ~40% GMs and 30% OMs and 20%+ ROEs?!?!?

John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1036 on: July 03, 2019, 05:45:27 AM »
To me, an excellent Twitter thread by Kyler [CoBF member khturbo] on the Genesee & Wyoming transaction.

Head - BAM wins, Tail - BAM does not loose [ref. what Spekulatius has said several times].
”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 #1037 on: July 04, 2019, 05:46:37 PM »
Macquarie, Brookfield waste no time with $1b rail deal
https://www.afr.com/street-talk/macquarie-brookfield-waste-no-time-with-1b-rail-deal-20190704-p52403

Quote
It is understood the two parties have agreed a deal that would see MIRA take the 51.1 per cent stake and it is likely to be signed in coming days.

The deal is expected to be conditional on Brookfield acquiring GWA's parent company, US-listed Genesee & Wyoming, as planned, and is likely to be worth about $1 billion.

...

When MIRA bought into GWA in late 2016, the deal valued the unit at $2 billion on an enterprise value basis and was priced off adjusted EBITDA worth $180 million on a run-rate basis.


chrispy

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John Hjorth

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Re: BAM - Brookfield Asset Management
« Reply #1039 on: July 12, 2019, 01:46:29 AM »
Thank you for the elaboration, Kyler,

Perhaps I was reading the sentence of yours a bit out of the overall context. I agree with you about BAM's overall operational fields now appear to be complete.

We have had discussions earlier in this topic about where opportunities for growth most likely will be, and I recall infrastructure being the guess by some fellow board members - a guess on which I personally concur. To me it appears evident, that BIP can't handle such growth by itself - if it's material - going forward. Some of that demand for capital then - if it becomes actual - has to be met by the parent.

Yes true on the infrastructure side. It does seem like they could put a lot of capital to work there, and I would be pretty excited if they did.

And @Vince, there's a sources and uses of cash page in the Q4 supplemental showing the parent cash flow situation. The $2.5bb I used was just a round number. It was $2.4bb last year off the top of my head so it should grow to $2.5bb+ this year and with OAK the run rate would be probably closer to $2.8bb by the end of the year.

BIP Press Release [July 11th 2019] : Brookfield Infrastructure announces $750,034,900 equity offering.

I speculate similar capital transactions will appear in the future as BIP continues at its growth trajectory.

Edit :

Please also see all the historical financing transactions and capital transactions described in BIP 2018 Annual Report, p. 57 - 69.
« Last Edit: July 12, 2019, 02:24:28 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