Brookfield and Castlelake Complete Strategic Partnership Transaction

Rhea-AI Summary

Brookfield Asset Management (NYSE: BAM, TSX: BAM) has completed a $1.5 billion strategic partnership with Castlelake L.P., a global alternative investment manager. The deal includes Brookfield acquiring a 51% stake in Castlelake's fee-related earnings and Brookfield Wealth Solutions committing to invest in Castlelake's strategies and funds. Castlelake, founded in 2005, specializes in asset-based private credit, including aviation and specialty finance. The firm manages approximately $24 billion in assets for over 200 institutional investors and has deployed $39 billion of capital across more than 1,300 transactions globally. Castlelake will maintain its independence, current governance, and leadership structure, with Rory O'Neill as Executive Chair and Evan Carruthers as CEO and CIO.

Positive

• Brookfield acquires 51% stake in Castlelake's fee-related earnings
• $1.5 billion strategic partnership with Brookfield Asset Management
• Brookfield Wealth Solutions commits to invest in Castlelake's funds and strategies
• Castlelake manages approximately $24 billion in assets
• Castlelake retains majority ownership of its performance-related earnings

Negative

• None.

Financial Analyst

This strategic partnership marks a significant shift in Brookfield's asset management landscape. The $1.5 billion deal, including a 51% stake acquisition in Castlelake's fee-related earnings, positions Brookfield to capitalize on the growing asset-based investment market. For investors, this move diversifies Brookfield's portfolio and potentially enhances its revenue streams.

Castlelake's $24 billion in assets under management and track record of $39 billion capital deployment across 1,300+ transactions provide Brookfield with immediate scale in specialized asset-based investments. This could lead to improved financial performance and increased shareholder value for Brookfield in the medium to long term.

Market Research Analyst

The partnership between Brookfield and Castlelake is a strategic move that could reshape the alternative investment landscape. By combining Brookfield's global reach with Castlelake's expertise in asset-based investments, particularly in aviation and specialty finance, the deal creates a formidable player in these niche markets.

Investors should note the potential for synergies and cross-selling opportunities between the two firms' client bases. With over 200 diverse institutional investors already in Castlelake's portfolio, this partnership could lead to increased market share and enhanced product offerings, potentially driving growth for both entities in the competitive asset management sector.

Legal Expert

The structure of this deal is noteworthy from a legal perspective. Brookfield's 51% stake acquisition in Castlelake's fee-related earnings, while leaving the performance-related earnings largely untouched, indicates a carefully crafted agreement that aligns interests while maintaining Castlelake's operational independence.

This arrangement could provide Brookfield with steady income streams while incentivizing Castlelake's management to continue driving performance. Investors should be aware that such structures can sometimes lead to conflicts of interest or governance challenges, though the retention of Castlelake's current leadership and governance structure mitigates some of these risks.

Brookfield Asset Management acquires 51% interest in Castlelake and Brookfield Wealth Solutions commits to invest in the firm's funds and strategies, total capital amounting to $1.5B

NEW YORK and MINNEAPOLIS, Sept. 17, 2024 /PRNewswire/ -- Brookfield Asset Management (NYSE: BAM, TSX: BAM) ("Brookfield") and Castlelake L.P. ("Castlelake"), a global alternative investment manager specializing in asset-based private credit including aviation and specialty finance, today announced the closing of a $1.5 billion strategic partnership in which Brookfield has acquired a 51% stake in Castlelake's fee-related earnings and Brookfield Wealth Solutions has committed to invest into Castlelake's investment strategies and private funds.

In a joint statement, co-founders of Castlelake, Rory O'Neill and Evan Carruthers said, "We're thrilled to begin realizing our partnership with Brookfield and the incremental value that it will bring to our firm, clients and employees. Castlelake and Brookfield are aligned in approach and values and complement each other in expertise and experience. We believe that being a part of Brookfield will help accelerate Castlelake's innovation and scale our platform while preserving the expertise and focused approach that has made our firm unique for so many years."

Craig Noble, CEO of Brookfield Credit said, "We're pleased to formally begin our strategic partnership with Castlelake and bring its asset-based investment capabilities into the Brookfield ecosystem. We look forward to working with Castlelake to meet the growing demand for compelling, asset-based opportunities and to supporting the firm's continued growth."

Castlelake was founded in 2005 by O'Neill and Carruthers and is one of the longest-tenured investment firms in the market that specializes in asset-based investments. Its experience entails 19 years of execution and $39 billion of capital deployment across more than 1,300 transactions globally. The firm manages approximately $24 billion of assets on behalf of more than 200 diverse institutional investors.

Castlelake will continue to operate its business independently, retaining its current governance and leadership structure, including O'Neill as Executive Chair and Carruthers as Chief Executive Officer and Chief Investment Officer. It will retain majority ownership of its performance-related earnings.

About Brookfield Asset Management
Brookfield Asset Management Ltd. (NYSE: BAM, TSX: BAM) is a leading global alternative asset manager with approximately $1 trillion of assets under management across renewable power and transition, infrastructure, private equity, real estate, and credit. We invest client capital for the long-term with a focus on real assets and essential service businesses that form the backbone of the global economy. We offer a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. We draw on Brookfield's heritage as an owner and operator to invest for value and generate strong returns for our clients, across economic cycles.

For more information, please visit our website at https://bam.brookfield.com.

About Brookfield Credit
Brookfield Credit manages approximately $305 billion of assets globally, focused on a broad range of private credit investment strategies, including infrastructure and renewable credit, real estate, asset backed, and corporate credit. Return profiles span investment grade, sub-investment grade, and opportunistic. The business combines Brookfield's substantial credit history with strategic partners, including Oaktree Capital Management, Castlelake, LCM Partners, 17Capital, and Primary Wave Music. As one of the world's largest and most experienced credit managers globally, Brookfield Credit delivers flexible, specialized capital solutions to borrowers, and attractive risk-adjusted returns to our clients.

About Castlelake
Castlelake, L.P. is a global alternative investment manager focused on asset-based investments in the private specialty finance, real assets and aviation markets. Founded in 2005, Castlelake manages approximately $24 billion of assets on behalf of a diversified global investor base. The Castlelake team comprises more than 220 experienced professionals, including 80 investment professionals, across seven offices in North America, Europe and Asia. For more information, please visit www.castlelake.com.

Brookfield Contact Information:
Communications & Media:	Investor Relations:
Rachel Wood	Jason Fooks
Tel: (212) 618-3490	Tel: (212) 417-2442
Email: rachel.wood@brookfield.com	Email: jason.fooks@brookfield.com
Castlelake Media Relations:
Molly Blemker
Tel: (612) 851-3083
Email: molly.blemker@castlelake.com
Josh Clarkson/Remy Marin, Prosek Partners for Castlelake
Tel: (212) 279-3115
Email: jclarkson@prosek.com / rmarin@prosek.com / media.relations@castlelake.com

 

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SOURCE Castlelake

FAQ

What is the value of Brookfield's strategic partnership with Castlelake (BAM)?

Brookfield's strategic partnership with Castlelake is valued at $1.5 billion, which includes acquiring a 51% stake in Castlelake's fee-related earnings and commitments to invest in Castlelake's funds and strategies.

How much of Castlelake did Brookfield Asset Management (BAM) acquire?

Brookfield Asset Management (BAM) acquired a 51% stake in Castlelake's fee-related earnings as part of their strategic partnership.

What is the total assets under management for Castlelake after the Brookfield (BAM) deal?

After the Brookfield (BAM) deal, Castlelake continues to manage approximately $24 billion of assets on behalf of more than 200 diverse institutional investors.

Will Castlelake's leadership change following the Brookfield (BAM) partnership?

No, Castlelake will continue to operate independently, retaining its current governance and leadership structure, with Rory O'Neill as Executive Chair and Evan Carruthers as CEO and CIO.