Brookfield, the Canadian powerhouse in asset management, has risen to the forefront as the unparalleled leader in investment acquisitions on a global scale, surpassing even the most influential private equity firms. With over $50B in announced purchases since the start of the year, Brookfield's deal tally is three times that of firms like Apollo Global Management, EQT AB and Silver Lake Management. Brookfield's recent $4.3B offer for American Equity Investment Life Holding Co. and its previous high-profile takeovers of Triton International Ltd. and Australian utility company Origin Energy Ltd. solidify its position as a prominent player. As other private equity firms face challenges in completing buyouts due to unstable financing markets and lofty price demands, Brookfield's strategy focuses on conservative, value-based assets available at reasonable prices. The group has found success in its disciplined investment approach, where liquidity scarcity pushes for operational improvements and growth generation rather than relying solely on financing or revenue growth. In their quest for continued growth and expansion, the company is actively pursuing additional take-privates and exploring the sale of select assets. Their ultimate goal is to elevate their fee-bearing assets under management to a staggering $1 trillion by leveraging their recent influx of $100B in fresh capital.
"A lot of the easy-money, lever-the-target deals are no longer possible...Brookfield are more active because they are looking at rather conservative, value-based assets that are still available at decent prices."
Oliver Scharping, Bantleon
Private Funding Pulse Check
Project Admission, a live entertainment solutions platform, has recently raised $3.2M in their Seed funding round, with the participation of the Raptor Group, a family office based in Boston, MA
Gary Lauder's Family Office, Lauder Partners LLC, has invested in a $30M Series A funding round in NVision Imaging Technologies, a Germany-based developer of MRI polarizers and hyper-polarized imaging agents
In a recent Series B round, Simon Equity Partners participated in an investment totaling $20M in Anzu.io, an intrinsic in-game ad solution for mobile, PC, console and the metaverse
Creadev Family Office has joined a $25M Series C investment round in Everytable, a Los Angeles, CA-based social enterprise that aims to make nutritious meals affordable
Rising Interest Rates Open Doors to New Investment Opportunities, Challenging the TINA Mentality
In the midst of an extended period of low interest rates, investors have long embraced the idea that equities are the only viable option, commonly referred to as TINA (There Is No Alternative). However, with interest rates starting to rise, a new perspective is emerging. Investors are now considering alternative investment opportunities more seriously, leading to the birth of TARA (There Are Reasonable Alternatives). The chart below depicts how corporate credit, T-Bills and three-month cash yields stack up against S&P 500 earnings yields since 1990. Surprisingly, these alternatives now offer competitive returns when compared to the U.S. stock benchmark, and their current yields surpass their historical averages, presenting a much more attractive option than at the beginning of 2022. With stocks currently yielding around 4.5 percent, they no longer appear to be the optimal choice for investors seeking high returns that can counter inflation, especially considering their higher risk profile compared to these alternative investments.
"The tightening cycle has brought about a regime shift that we believe is likely to continue to benefit fixed-income investors for the foreseeable future. The era of low levels of interest rates and borrowing terms favoring shareholders over lenders seems behind us. The subsequent recapturing of economics and negotiating leverage by creditors is just beginning. The shift in this dynamic, combined with wide spreads and higher yields, has dramatically improved the value proposition of credit investments."
Guggenheim Research
New Data Reveals Shocking Impact: 4.1M Hectares of Primary Rainforest Lost in 2022
Despite global commitments to halt the loss of tropical forests, the world experienced a concerning setback in 2022, with a 10% increase in the loss of primary rainforest compared to the previous year. The destruction of primary rainforests presents a grave danger to these irreplaceable ecosystems, which play a critical role in absorbing carbon and are under threat from deforestation, agricultural encroachment, and shifting weather patterns due to climate change. Recent data from the University of Maryland reveals that approximately 4.1 million hectares (10 million acres) of primary rainforest were lost in 2022 alone. This forest loss emitted a staggering 2.7 billion tons of CO2, equivalent to the annual fossil fuel emissions of India. Rainforests provide a wide range of ecosystem services, including water regulation, soil fertility, and pollination, which are essential for various industries such as agriculture, forestry, and tourism. The loss of primary rainforest can disrupt these services, leading to decreased productivity, increased resource scarcity, and reduced economic output in affected regions. The disappointing statistics raise concerns about the efficacy of the 145 nations' voluntary commitments made at COP26 in Glasgow to put an end to deforestation by 2030.
"The 2022 numbers are particularly disheartening...Following the bold commitments in Glasgow... We had hoped by now to see a signal that we were turning the corner on forest loss..."
Francis Seymour, WRI
Former Journalists Launch Venture Capital Firm Targeting Early Investments in Tech Startups
A group of high-profile former journalists is set to launch a venture capital firm called Outside the Box Investments, focusing on early-stage investments in tech startups, according to its founder Katherine Tarbox. The recent collapse of FTX and other corruption scandals involving startups have shed light on the lenient standards used by some investors during early-stage fundraising. Tarbox believes that journalists have an advantage in venture capital funding due to their ability to ask different and more insightful questions upfront. With a $50M raise in progress, Outside the Box Investments aims to support AI-enabled software companies and software firms that cater to specific industries like agriculture and gaming. The advisory board, consisting of esteemed individuals such as Adi Ignatius, Bethany McLean, Antoine Grant, and Roy de Souza, brings extensive experience, having collectively made over 150 early investments in companies like Reddit, Stripe and Airbnb. Drawing on their extensive experience in journalism, the advisors at Outside the Box Investments will equip portfolio companies with the essential tools and expertise needed to enhance their branding, expand their network and refine their media strategies. The firm plans to finalize its initial investments during the summer.
"We want to be an active partner, not just write a check and go away..."
Goldman Sachs is expected to have Tom Montag joining their board
Montag currently serves as the CEO of Rubicon Carbon
He previously had a 22-year stretch as a Goldman Sachs partner and spent 13 years as the COO and President of Global Banking and Markets for Bank of America
He shares a close bond with Goldman CEO David Solomon, who has faced recent scrutiny following a $3B setback resulting from an unsuccessful venture in consumer banking (Reuters)
Written by:
Andrew Popp | Sr. Research Associate
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