Brookfield Asset Management (TSX:BAM) is one of the world’s largest alternative investment management companies, with over US$725 billion of assets under management as of 2022. It invests in high-quality assets and businesses across a variety of sectors.
Investors who wish to generate gains by investing in the alternative asset sector can consider purchasing shares of Brookfield Asset Management. But is now the right time to purchase this stock? Let’s find out!
Brookfield to acquire Network International
According to reports earlier this month, Brookfield has become the frontrunner to acquire Network International. This is because CVC Capital Partners and its associates do not wish to engage in a bidding war with the Canada-based AMC.
Brookfield has valued the business at £2.1 billion and offered 400 pence for each share. As per experts, this prospective takeover is a result of the company’s increasing investments in the Middle East.
For example, in the previous year, Brookfield bought the payments arm of First Abu Dhabi Bank PJSC for US$1.15 billion. Transactions like these give the company serious leverage in times of competitor buyouts.
Strong earnings growth in Q1 2023
One thing long-term investors like to see in a company they’re considering for investment is a positive trajectory of earnings results. Brookfield reported just that on May 11, showing solid growth in its first-quarter (Q1) 2023 results.
The company’s revenue reached US$966 million, indicating 28% growth in comparison to Q1 2022. The company’s net income increased to US$516 million, while the profit margin reached 53%, showing an appreciation of 48% and 46%, respectively, over the past year.
Now, as per experts, in the next two years, the company’s revenue is estimated to grow by 20% per annum. This is significantly higher than the predicted Canadian Capital Markets growth rate of 1.4%, serving as positive news to prospective investors.
Brookfield to go ahead with another massive acquisition
There’s another big deal brewing for Brookfield investors are watching. The alternative asset manager and an EIG consortium are all set to go ahead with the US$10.2 billion agreement to buy Australia-based Origin Energy Ltd. Now, to adhere to the government’s energy policies, Brookfield plans to invest US$1.34 billion to replace Origin’s conventional power generation systems with green assets.
The company also plans to construct new renewable energy generation and storage facilities with a power capacity of up to 14 gigawatts. Furthermore, this move will keep Brookfield on track with its target of reaching net zero emissions by 2050.
Institutional investors are bullish on Brookfield
As of Q1 2023, institutional investors of Brookfield hold almost 59% of the company. Now, these firms have a lot of money and resources at their disposal to carry out research. Thus, their ownership in any organization carries a lot of weight.
As a majority of Brookfield shares are held by institutional investors, it indicates their positive attitude about the stock’s future potential. This is a key factor long-term investors will certainly like to see and one which I think doesn’t get enough attention.
