The combined entity would have approximately $475 billion of assets under management, Brookfield said in a statement announcing the tie-up. The move inevitably prompted comparisons with Blackstone, which at $472 billion is one of the world’s largest alternatives managers.
Listed firms typically use slightly different metrics in presenting AUM and other measures of size and profitability, based on their specific models and business lines. Brookfield calculates total AUM on a gross asset value basis, meaning some of its $350 billion of AUM will include the debt of companies it controls, according an filing with the Securities and Exchange Commission. It is not clear what proportion of this is debt.
Brookfield is somewhat unusual in this regard; many of its listed peers do not include debt when calculating AUM. Blackstone, for instance, would have around $731 billion of AUM if it reported on a gross asset value basis, according to a source familiar with the firm.
Blackstone to declined to comment for this article.
Carlyle Group’s $216 billion of AUM does not include portfolio company debt either, though it does count debt provided from its own credit strategies.
“Assets under management refers to the total value of assets that we manage, on a gross asset value basis, including assets for which we earn management fees and those for which we do not,” Brookfield said in a 40F document for the year ended 31 December, 2017.
“This reflects the consolidated asset values of our consolidated subsidiaries, as well as the gross asset value of asset that we classify as equity accounted investments but operate on behalf of our partners. This measure provides users with insight into the scale of our business.”
It is worth noting that Brookfield operates different business model to other PE firms. The manager has $225 billion of balance sheet capital, including debt, which includes four listed partnerships: Brookfield Property Partners, Brookfield Infra Partners, Brookfield Renewable Partners and Brookfield Business Partners.
Blackstone’s business model derives revenue primarily from third-party assets under management and it is not a capital or balance-sheet intensive business.
There are some similarities between how Blackstone and Brookfield calculate AUM: both firms calculate fee-earning, or fee-bearing, capital using net asset value, which excludes debt. Blackstone had $342.5 billion of fee-earning assets under management as of 31 December, including $80 billion of private equity. Brookfield has $140 billion.