Hey, Bruce. Nice to see you again. >> I have to try to replace Howard Marks. Howard is indeed a uh hard act to follow, right? But uh I know you'll try. Um here's where I'd like to begin. Bruce, it occurred to me yesterday, or perhaps it reoccurred to me because it's something I've known for a long time, that you've been the CEO of Brookfield for 23 years. Here's something to think about. That's not just longer than Harvey Schwarz at Carile, Mark Rowan at Apollo, Joe Bay and Scott Nutell at KKR, John Wrinkle Reed at TPG, or Mike Arrigetti of Aries. It's more than all of them combined. >> That just obviously means I'm old. >> Well, my intention, of course, is not to make you feel old, but that does make you one of the longest tenur CEOs in what we now call alternatives or private assets, the businesses that Brookfield is in. So may maybe we can start with a bit of reflection on that expanse of time. What about this industry and some people here have been along for the whole ride which is incredible but what about this industry has changed the most since you became CEO in 2002? >> Everything. No look I would say the following. Um the business uh at that time uh was nent. It was mostly real estate focused. It was private equity had started uh raising money and um what didn't exist was infrastructure and and and largecale private equity and all the other businesses that we're in today and and obviously private credit and um I think the it was it there was never a breakthrough. Um, but every single year for 25 years, every single year for 25 years, cuz it's been longer since from before when I was CEO of course, every single year for 25 years, more investors understood the fundamentals of why you should invest in private assets and leave aside whether it's private equity, alternatives, uh, uh, etc., infrastructure, real estate. Um, private assets uh take away the confusion of the stock markets and ensure that you don't get distracted on a day-to-day basis by volatility that means virtually nothing to your investment. Uh, you get paid for some form of illquidity, so you earn a higher return. And you can the businesses that you buy or that somebody buys for you can act in ways that are only fundamental decisions. Companies in the stock market often have to make decisions which are not fundamental investment decisions. They have to play to the market. And in private markets, um, those three things increasingly every single year became evident to investors around the world. And and it was obvious those three things made sense. But it just takes time for it to it takes time for people to especially institutional investors to understand that, get their committees comfortable with it, get their board comfortable with it, make allocations to it. and and over that period of time some there were ups and downs in the market and and what happened is private assets performed unbelievably well and now we can look back infrastructure is maybe the best example. There is no better asset class that's performed um broadly infrastructure, renewables, etc. than than infrastructure and it's gone through cycles. It's gone through um major crises and it's performed and that that I think that's that's what happened. Um they got into it, they got comfortable and it's performed. And if and that's really all you need in investment management. um you need performance and and what's we can probably talk about this later but what's happened is we're not even in the early we're not even started yet because institutions are still low allocations to what they should have like on average they're probably 151 5% some are 50 but on average they're 15 and it should be 30 40 50 in many of these institutions um and and retail wealth and individuals are zero quote unquote zero. We >> we will be getting to some of that. Um Brookfield itself has undergone something of a transformation over that period of time too, not just in terms of what it invests, which you touched on a moment ago, but structurally as well. What would you what in your mind again you're the guy who's been at the controls for that long. What do you think of as the biggest and most significant changes that this firm has undergone? the uh look we started as just doing these things ourself and the asset management business >> quietly I should add with not without a lot of right >> but the asset management business we created was merely the way we looked at it it was merely we wanted to do the things we did but expand the uh geography of doing it and do it in larger ways and one can either own 100% of something themselves or they can own 5 or 10% of something and have a lot of friends and that's That's what the asset management business facilitated with our capital and um of course now looking back 25 years later it created an incredible business in itself as NASA management business but but when we started it was merely just to to diversify and globalize and bring capital into the business without taking undue risks and have partners and uh and and I think maybe the most important thing that we have that differentiates us from some others is that we think that way still about our business investments. These are investments that we make with part of our capital and that we have partners with us and that's different than raise some money and invest it for other people and uh and that that I think pervades what we have and maybe I'm going to turn the question around. Maybe the most important thing that we have is still that culture >> within the organization to um to ensure that we um that we that we create that we keep that ethos. >> I could I suppose ask you about your own transformation, but the truth of the matter is that u you haven't at least physically changed that much. I went back and looked at some photographs from Bruce in the early 2000s and apart from maybe an ever so slight change in hair color, you look identical today to you can check trust me on this or check it yourself. Um, so I I'll phrase the question differently. What are the most important lessons that you as the CEO have learned over that almost quarter century? I think I knew before I always was a value type investor and I think I knew before it was really important to compound wealth over long periods of time. But I I think in the last 35 years, I'd say the most important thing that has been continuously emphasized to me and is more ingrained in me today than it was 35 years ago is that long-term wealth creation is about earning reasonable returns over very long periods of time. find good businesses, good people, good investments, keep them, and just keep compounding. And uh and I think that's more important today. And I'd say that's probably the thing that's ingrained. It's very very hard. And I I think what it is is if you're outside of a company looking in, you see it, you see a stock. If you're inside of a company looking out, you own the business. You don't really care what the stock does. And uh and I think that's probably the biggest that that that's that's something that's really important for people to understand when they're making investments because you just own a fractional portion of a business. It's useful to have you here and uh extract, if you will, a global view. You recently described what Brookfield does as one, identifying big global trends that are going to affect the economies and the industries in which you operate. two, package them into products that can attract capital and three, deploy that capital quickly and at scale. So for the benefit of those who might not have either heard that or understand where you see these opportunities, what are the biggest most important global trends that you're investing behind today? >> I kind of like the way you said that. We maybe you should do that for me next time. The uh those are good way to describe what we do. Um I I there are there are a few trends that are happening in the world today um that are almost unlike anything that's occurred in the investment world um ever. That sounds that sounds like a dramatic statement, >> but uh the amount of money that's going into the power sector to uh both make it cleaner, but but just sheer building power is so big and and and I'm Connor and the team will talk about the renewables business afterwards, but but we're talking fives and tens of trillions and and this is like unlike anything. And we were flat power usage for a long long time and now it's going to double in most countries of the world and that is a dramatic thing that's going on. It's going to affect everyone and everything that's going on in the world. on on top that was happening and on top of that that assumed cloud adoption was going to be was going to be increasing and now with artificial intelligence stacked on top of that the amount of money being put into I'll call it the end output is compute capacity um wherever you're investing along the compendium uh again is is 5 tens of trill billions and uh this is being funded by governments, it's being funded by hyperscalers, it's being funded by um uh sponsors. Um but there's never there's never been an investment trend like we like these are 50 these data center AI factories that we're building are 50 billion a piece and and like an office building in New York City, they're large. We used to think they were large and they're a billion or two. Not to shrug at a billion or two, but but these are this is the scale of what's going on is it's it's unprecedented. The good news is it's being funded by governments. It's being backed >> by governments and the largest most successful companies on the planet, the technology titans. And that's really important when you're dealing with these sums of money. I'm going to come back to that in a moment. Um, but in the interim, this is a huge opportunity. I think Brookfield has sized it at in the order of 7 trillion. I'm speaking of AI alone, not the power buildout. Uh, and I can understand why it excites you on any number of levels. It excites and maybe at the same time scares all of us. There's so much there for a firm like yours, whether it's building AI factories or the compute infrastructure or the power supplies and the transmission and all of the other stuff that comes along with it. Is there anywhere, you know, in that you described it as a continuum, you know, you that excites you most you you think is the best single best investment opportunity for a company like this? the um I I'd say the advantage uh we have is our we've been doing this a long time. We've been building power plants a long time. We've built data centers a long time. We've been developing real estate a long time. And the combination of those three things is really what this is. And fortuitously we ended up at the intersection of what really matters today. What what is the most difficult thing is this is the first innings of a very long 15 20 year buildout and um nobody has done this before. Nobody. And like we've we have all the pieces but nobody has produced compute capacity for in the scale that we're going to soon uh do it. And we're best we're as we're as well suited as almost anyone in the world to do it because of our access to all those skills and capital. But but we're in the early stages of it and execution is so so important because we're dealing with the global best and countries and this is really serious and uh so the biggest worry biggest excitement and the biggest worry is execution like everyone can uh say they're going to get into this and it's just not easy. Um so we have all we have everything that you can do it but um the execution of these things is really really important. >> So my boss my ultimate boss Mike Bloomberg is fond of of saying to people when they're they're just about to go and do a big job. I'll paraphrase. Don't screw it up. Um how do you not screw it up? You know, look, I the good news is we have 3,000 people that build power plants for us. We have a huge data center businesses. Uh we've been raising capital in this way for a long period of time. We have the relationships with with all the hyperscalers and many of the governments. Um it's just knitting all that stuff together. And uh I would just say we are going to make small mistakes and we're always trying to make we're not trying to make small mistakes. Uh we'd like to make none, but we allow small mistakes as you go along. And what we can't do is ever commit ourselves to do something that's um that's uh could damage oursel in the long term for short-term profit or success. And probably the one thing there are are many others and many of the things we do you'll see press releases out of because they're interested in short-term success. what we're interested in is making a lot of money over the long term, not making a little amount of money in the short term. And uh and I think that's probably the single difference. So, we're being very careful and methodical because our relationships with the global best are really, really important and we need to get it right when we deal with them. You're absolutely right of course that no one has ever tried to build computing power at this scale and uh so broadly geographically ever before. However, we have seen something similarish. We were both around in the 1990s for the telecom boom and the level of enthusiasm and this concentration of hot stocks as some of you here may recall not to mention the hockey stick charts from people like George Gilder at the time were similar to what we're going through today with AI but you and I were both also around goes without saying because he was the CEO in 2002 um in the early 2000s right and the subsequent bust of the telecom boom. There's so much money chasing this opportunity, deals backed, as you pointed out, by checks in the hundreds of millions of dollars seemingly every week. Could this too not prove to be an overbuild, not not a flawed thesis, but an overbuild that ends in tears for the people who financed it? Um so the amount of need is so large and the execution of getting it done is so hard. There is a moat around the ability to develop. Many of the things are press releases. They will not get developed. the um it's it's not easy to get these sites up and running, get them connected to fiber, get the power, um put in chips and and make compute capacity. So the first point I make is this is not that easy to do and therefore there will be um lots built but not as much as you think. Secondly, that um I'll call it the global crossing era was building fiber around the world. >> The single difference is really important to make. They were building fiber with no contracts and they were building it on the hope that they were going to get customers to fill the transmission lines because the hope the it was there was an endless amount of success coming. The difference today is this is being led by seven technology 7 8 10 technology companies that on average have a $1.5 trillion market cap. This is being led by credits as large as comp as countries. In fact, the second component of it is countries. So it's being led by countries. our sovereign sovereign AI strategy and technology tightens it for us it is all contracted therefore we there is no there's always risk but but the risk you just mentioned is not going to happen now are there people out there that will make mistakes of course >> there will where there's a gold rush coming there are always people that don't know how to execute will get into it and will make mistakes and blow their feet off. And there are people that will take counterparties or contracts which won't work out to be what they thought and they'll get caught in Warren Buffett's saying as the tide goes out. So there we're not going this way all the way. It's always like this. That's the new backbone of a global economy. And as you know 50% of the things that we have today didn't exist as an investable asset class 20 years ago. That's an amazing statement in itself. And this this continue will continue to transform because it changes every day. A very different kind of trend in private assets is what we might call retailization. The growing flow of retail capital into alternatives. Some of that is thanks to regulatory change. Some of that is thanks in no small part to good marketing. Um Brookfield for sure was an early leader in the retailization trend because it raised permanent capital right in the form of publicly traded equity vehicles when so far as I can recall nothing like it existed. >> We have three we have three here today. >> So given that experience and the knowledge you've acquired as a result how do you see that retailization trend playing out in the private asset industry? So, so uh I think the next 20 years will be just like the last 20 in institutional accounts. Every single year for the next 20 years more in retail money more more just more more uh individual investors will understand the benefits of private assets and they will start to allocate private m part of their money into private assets. I'm quite confident that if they do it with people that are good, uh, they'll have success and the next year, three years later, they'll allocate more. And 20 years from now, we'll look back and institutional or private individual accounts will have 30% of their assets in private markets. Um, some will be 80, some will be 50, some will be 20, some may be zero. Um but uh I think on balance it'll be it'll be 25% and it should be more but I it just takes time but but at 20 trillion dollars we can't properly the industry can't properly manage that amount of capital anyway. Therefore, um what it does is just there's we still have a backdrop of uh sovereign institutional accounts allocating to privates. Uh insurance increasingly is allocating to privates and retail wealth is the next um level just because it makes sense. I go back to the three things I said at the start. It just makes sense and it's going to happen and all we have to do why they can't do it today is they they're not packaged to be able to fit into the structures of retail wealth and we just need to take the exact things that we do for institutional clients package them so that they can get fed into >> 401ks retail wealth channels etc. and we've been doing it now with high netw worth wealth and and and increasingly we just need to to move further down. One of the uh I guess you could call it obvious risks in private assets broadly speaking is relative to the public markets a lack of liquidity and that's an issue in private equity today. Most PE managers and I suppose you folks are going to hear a little bit more about this. I gather Brookfield is a notable exception. Most PE managers are having a rather tough time selling portfolio companies and they're resorting to all kinds of financial engineering as a result. Howard, who I'm sad is not with us because this would have been a whole lot of fun. As you probably know, Bruce has never been a fan of financial engineering, the subscription lines and the continuation vehicles that are so prevalent in private equity today, as he likes to say, you can't eat irr. Um, are you similarly concerned about this amount of financial engineering and what kind of an impact is it going to have on PE longer term? So, so I I think just to let table table set the table is if somebody can't uh sell an investment, leave aside bad businesses and I'm not talking about those people that had growth investments or tech investments and they made a mistake. Forget those. I'm talking about good businesses. If you have a good business and you don't sell it and you're not returning capital, I know institutional account X wanted some money back. They expected some money back, but it's still compounding away probably at 14%. Or 15 or 17 or 12 or 11 or nine. So, it's still going up in value. Remember, all they're doing is trying to invest. So, I don't we shouldn't get so excited that people aren't selling things. the value is still in those businesses and they're still getting better and they're still enhancing value every single day. So, I'm not I I don't get too stressed about that. >> Second point is yes, institutional accounts want money back because they that's their model. They need money back to fund other commitments. And those that are have business models like ours that have access to many sources of capital, have relationships more broadly are big, are going to win because we can do things that most others cannot and we don't have to resort to all the things you talked about. I I but on balance I don't think there's that there's not bad things going on in the industry. there's just there just haven't people haven't returned capital and eventually the IPO markets will come back and and for those that invest in good businesses the money will start to flow again and it's happening already for those that invest in bad businesses the record's going to be terrible and they're going to be out of business and they're I'm sure I don't know how >> it's just a Darwinian outcome >> yeah there's how many private equity firms are in the US 7,000 lots >> 10 10,000 there'll be >> more private equity firms than banks now >> there should be 4,000 less Uh, I don't know there like like the fact is everyone thought this was simple. Let's start a private equity fund. I'm going to leave XYZ firm and I'm going to start my own. It's not easy. This is hard work. And uh and and and I would just say there's it always goes through periods of time when money is free. Everyone thinks they're a genius and they're going to go and invest and start a private equity firm. But what happens in in tougher times is things consolidate. And that's every single industry. And that's just what's going on in private markets today. >> I said it was a shame that Howard isn't with us. And it's a shame for other reasons, too, because Howard knows so much about credit. But now that you and Howard have been in business together for six plus years, you know a few things about credit, too. Um, in fact, the last time that the three of us sat on stage together was the day that you announced the Oak Tree acquisition in March of 2019. >> Um, feels like a lifetime ago, of course, because it was before the pandemic. As we all know, credit in particular, private credit has exploded since that acquisition. Uh the, you know, I remember very distinctly when we had that conversation in 2019, you and Howard both said categorically that this was not about either Brookfield getting a good deal or Oak Tree trying to maximize uh you know, its return to its own partners, to its shareholders. But boy, $5 billion for 61% of Oak Tree sure looks like a bargain in retrospect for Brookfield shareholders. Last year it cost Black Rockck $30 billion to buy HPS. Blue Owl has a market cap of 26 billion today. Aries is worth 54 billion. I'm just curious if you were buying 61% of Oak Tree today, knowing what a business it has become, what do you figure it would cost? >> So let's talk about the credit business. I uh >> the uh the partnership that we struck uh with Oak Tree um has been got us into a whole bunch of things that we could have never done ourselves. We were we were probably also the first purchaser quote unquote of a investment management business >> big credit platform. >> Yeah. Like no uh there was none had been done and we came up with a pretty unique model to do it. um that's why they came on the team to do it. They've still been partners with us and benefited from that. Remember, we didn't take the partner partners out. What we took was the public out which it traded poorly in the market at the time and probably as a as their business. >> Well, returns were, you know, yields were so low, it was hard. >> It probably would trade that way today, but they've been all the shareholders that have been in the business have been enormously benefited with us >> uh along the way. What what it did for us though is it um it widened our aperture in credit in a very significant way and now we're one of the few in the world that can offer many many products through our different platforms and it taught us I I think we learned a lot on what we can do and what we shouldn't do with buying other managers and we've added on like we bought Castle Lake um >> asset back finance lender recently and um partnered with their team as well. And and I think we've learned to figure out how to do that. And uh but but there's no doubt the industry continues to grow and um and be successful.