bruce: we are the backbone behind global business. when they need capital, we fund

it. francine: it is one of the world's largest investment companies. brookfield owns hydroelectric plants, cell phone towers, wind farms, ports and even city skylines. bruce flatt has been at the helm for more than two decades, overseeing more than $900 billion in assets. the chief executive is considered a visionary investor with the golden touch but for him it is all about patience and finding the right investments. bruce: what you might think of as risky, to us is not risky because we have been in these businesses for a long time. francine: in this episode of "leaders with lacqua," i speak with bruce flatt about the secrets of his success, the outlook for real estate, and his own future. bruce flatt, thank you so much for coming on "leaders." bruce: how are you? francine: i'm great because of -- i am speaking to you. brookfield has gone from strength to strength.

if i was a martian meeting you for the first time, how do you describe your company? bruce: we invest in, buy and own the backbone of global economy. when the water gets delivered to your house, the roads you drive on, the pipeline that brings different things to your community, the telecom towers that transmit your phone, the data center, the real estate that you live in. it is what we own, and build. so it is really what drives the economy, and you do not often see our name. you know, it is just because we are behind the scenes but it is big with a trillion dollars of assets almost. we are behind a lot of the things of the global economy. francine: being low-key, you think it gives you strength? bruce: we try to be quite into -- be quiet and do our thing and sometimes it helps and sometimes it doesn't. i'd say on balance it has been good for us. francine: you have been in charge for 22 years. bruce: it seems like a long time when you say it that way. francine: over two decades. what was the most interesting,

you have grown the business by so much, what was the most difficult question about how to grow it? bruce: the amazing thing about this business is you learning every day. and the world is changing all the time, but if i went back 22 years or 32 years, what we invested in then and now are very different. data centers did not exist then. telecom towers were owned by the phone companies. these are things, the business evolves and the backbone evolves with the economy, so it is a really interesting business to be in because you are always learning. francine: but it is difficult because you do not want to be -- to be kodak. invest in something that goes nowhere. bruce: we are always trying to understand where is the future going, and how do we invest with that? and often it is listening to your counterparties, your clients, your partners, and hearing what they are saying. and what they want to do and we

are going with them. and that's really -- we're the backbone behind global business, and when they need capital, we fund it. francine: i think your northstar as it were is 3d's, right? bruce: look, i'd say over time, we are always trying to figure out, what are the things, what are the themes that will drive the world? and today the digitalization of everything, the decarbonization of everything, and the de- globalization of everything, are three mega trend themes that are going to be very dominant in investing for the next, not the next two or three years, the next 20-30 years. francine: geopolitics has taken a turn for the worse. how do you keep that trajectory in saying, look, we will

digitize, interest rates are all over the place. how do you stay the course as it were? bruce: francine, what we try to do is find good countries, go there and stay there. invest in in these things, and whether -- governments come and go, interest rates go up or down a little bit, aren't really relevant to these themes in the long-term. you need to make sure you have liquidity. you can fund yourself. and you run good businesses. and that is more important than those general trends, we are investing for 10, 20, 30, 40, 50 years. francine: is digitalization the hardest because of ai, because we do not know where we will end up? bruce: i would say digitalization was happening because of cloud computing, and the super tech companies getting into cloud computing. and that was a whole thing going on. the amount of things that go to your ipad every day, -- francine: crazy. bruce: it is amazing what has happened in the past 20 years

but now with a.i., it is just, it -- has almost exponentially taking it up. so, that is just another tailwind behind this whole sector. it was very strong before that. and, for the last 5, 7, 10 years we have been pushing into it, but the a.i., what is going on with a.i. is even more dramatic. the digitalization of everything is being driven by data centers. and just the connectivity of everything. but, remember, everyone in the world has in some way committed to, let's have less carbon. and it's just transitioning a economy, it is not good or bad or green or black, let's transition to have less carbon. we're funding that, and leaders in that today are the technology companies. so a lot of this is being driven by the technology companies to go green. so we are one of the largest builders of solar and wind and

now batteries to be able to get carbon out of the system. whereas years ago we would sell power to the great, today -- to the grid, today our power is mostly sold to global corporates. francine: you have to take a bet on what kind of technology, or do you have to take a bet on the infrastructure that supports it? bruce: we were doing wind 15, 18, 20 years ago and solar 10 years ago but very small but only when the cross curves made -- the cost curves made solar and wind at the point w -- where, they are the most economic thing, way to generate electricity. and at the point of that, you know if the most economic way to do it, and they have less carbon, they are going to win. and that is why we are decarbonizing today because in most countries, this is the lowest cost energy. francine: but geopolitics must get in the way. politicians have to be reelected.

they are pro or against climate change. how do you waiver -- not waiver? bruce: remember, to make an important point, in most countries the lowest cost energy today for electricity is solar and wind. you do not need subsidies. and, when you did need subsidies, politics mattered. today you don't. francine: de-globalization. this is bringing on on shoring. bruce: all it is is, i think in covid, i would say it has always been happening, and in covid, people learned we should have production capacity located in many things, located where you use them. so, increasingly, for example batteries. for cars, for example. they are being used in america. and therefore, there are battery plants getting built in america, and there is an enormous need for capital to fund battery plants, an enormous need for

manufacturing capacity in various locations around the world and it is natural that everyone does not want to have all of their manufacturing capacity in one country or place. let's diversify. so, that is just a big theme, which means, it is just a lot of capital. francine: you make it sound very easy but actually this has gotten you more than $900 billion in assets under management. bruce: you know, it is not easy, but if you have operating people and you keep repeatable, do repeatable things around the world, it gets simpler. it is not easy but it is simpler. i guess that is why we are in business, right? we have been doing this a long time. and everything is not the same, but it's, there are a lot of things that rhyme and therefore, you can learn and continue to grow over time. francine: coming up, bruce flatt on plans to invest in the financial backbone of the global economy. bruce: we think that is the next, the next phase of infrastructure investing.

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francine: infrastructure has been a bright spot for targeting -- for brookfield. the company is gathering chase targeting buyouts in the middle east and brookfield plans to invest in financial infrastructure. such as payment systems. i continue the conversation with bruce flatt. did you know in 2002, $900 billion under asset management or one trillion? bruce: we are trying to make money for our clients and we've done that for a long time and the reason that we are at the scale that we are is because we have been thoughtful with their money and we have earned them a good return. and we have not taken a lot of risk. if you could do that over a long

period of time, you can compound their wealth, investment wealth. to very large slums of money and that is what is important for these sovereign, institutional pension investors, because they have very long durations and they need the type of assets to earnings and the returns. -- to earn them returns. francine: you have also gone to credit. how much are you expecting that to grow? bruce: what's happened with regulations and the banking system as they have just, it is pushed out credit off the balance sheets of the banks. and the right place where that is being funded from is institutional investors. and, therefore, investors like ourselves are continuing to grow our businesses where we are funding these type of products. but it is not, our, our business is not in competition with the banks, it is in partnership with banks. as a result of that, i'd say it is facilitating the growth of the global financial markets. as opposed to something often people talk about, we are at the

wrong time in the cycle. this is going to be growing and happening for a long time. francine: so, how big do you expect? bruce: it is going to be big, because, remember, this is where most of the capital is is in the world is in sovereign institutional funds and pensions. today they are $300 million and -- $300 billion and 1.5 trillion dollars. these are large slums of money. it will continue to grow for a long time. francine: when you look at regions, is it mainly gcc countries? bruce: we invest for people in the long term, try to earn them good returns by taking minor -- moderate risk and if we can do that, it is all around the world. for you, what you have in your portfolio is taking moderate. risk and earn a good return francine: what is moderate risk? you can make it sound easy, but actually this is a know how. you're also quite acquisitive.

bruce: look, i would say in the businesses that we are in we had -- we have more information than most people about what we do. therefore, what you might think of as risky, to us it is not risky because we have been in these businesses for a long period of time. we know what's getting shipped across the ocean in our containers. we know what is getting booked into the ports in different countries. we know what's traveling on the roads, we know how many people are going into a shopping mall. we know all of those things, and it just informs us. we have, i would say, better information to base our decisions than most people. and, um, but we are, always, we -- we are trying to lower risks by doing that. of course, you can invest, investing is tough.

it is not easy, and therefore, you are always taking some risk. francine: how do you choose what companies you buy? bruce: thoughtful analysis of what is in the business. proper pricing. when things are up a lot, just wait. and most people invest at the wrong time because they get excited about what the markets are telling them about business. and therefore, that is usually when we are not investing. and just wait for the time when it will be a little better to invest. francine: i think you have spoken in the past about a possible big acquisition that would be transformational for brookfield. bruce: i would say we are always looking for additions to the business. in 2018, we brought oak tree into our fold, and we have a partnership with the management there. that's been transformative to our credit business. and we're always looking for things like that to continue to build the business. and just grow over time. but if not, we just keep

plugging away every day. francine: it's more partnerships than outright acquisitions like ultara. this is a different carbon fund. bruce: our transition business. we started, we split off from our main infrastructure business 4.5, four or five years ago, we raised a large first time fund. we just did the first close of our second fund for $10 billion, and then we started an emerging markets business. that is just a split off. all we are trying to do is we informed ourself about transition. we built a team over a long time. now our, some people said to us, can you solve emerging markets as opposed to just about -- just developed markets?

we did not feel like we could put the two in the same fund. some of our clients will come along with us. francine: is that a template for a possible future kind of spinoffs? bruce: in our private equity business we have a buyout sponsor business. but we are also doing, we're just in the midst of creating strategy for the middle east, which will be a separate pool of money. we're creating a strategy for financial infrastructure. because we think that is the next, the next phase of infrastructure investing is in the financial -- of the global economy. and a lot of the world has, been pushing towards financial infrastructure and it is not appropriate for infrastructure fund. so we are creating a new pool of money to do that. so, there's a fine line between having too many things and making sure your clients who want to be invested with you and that type of area have a pool to do it with us.

francine: when you look at infrastructure, there is consolidation -- i guess the name for the last six months. does that make your job easier or tougher? bruce: look, we were one of the pioneers of infrastructure. francine: the original. bruce: we were the original because we were in industrial businesses ourselves, and how we got into the infrastructure business is we decided we did like the up and down of many of the industrial businesses we had, mining businesses. but we really liked the backbone infrastructure in these businesses. 20 years ago we started doing it for institutional clients. at that time, we would list -- nobody would invest with us. so, it is quite, it is great, that this has become mainstream today. the good news, i would say, we are still a leader in it.

we have very large funds, in fact, the largest in the world. and, therefore, we just continue to try to differentiate our investment strategies, and with size, scale, operating people, and the ability to grow in the place as we are. i think we are, to others get-- do others getting stronger help us? probably not but it does not really bother us, and i think there is a place for us to to continue to grow the business. francine: coming up, why bruce flatt has faith in the future of commercial real estate. bruce: there is opportunity coming. and, if you know what you're doing, you can pick the right assets. there is a great opportunity here. ♪

francine: from the united states or europe, fledgling office -- plunging office valuations are spooking investors, raising fears about brookfield contagion. as one of the biggest owners of commercial real estate, brookfield is at the central of the global industry shakeup. for the chief executive bruce flatt, who made his name and real estate, sees opportunities where others see risks. we continue the conversation. commercial real estate. so, a lot of people say -- this is not the right time. we are going to see a shake out

in commercial real estate, there opportunities that you see. -- what are the opportunities that you see. bruce: look, the next, the next story is that interest rates are coming down, fundamentals are pretty good in a lot of commercial real estate. of course, there is a tail of some investors that had properties that for this environment the fundamentals either do not support it or the financing they have can't be supported, and therefore, those have to get dealt with. so that is a tail that is getting dealt with within the financial system. fundamentals are actually getting better. interest rates are coming down, which means the values are going to improve, but that tail, there is opportunity coming. and if you know what you are doing, you can pick the right assets. there is a great opportunity here. we have done this for a long time. and we have seen these cycles before. real estate's cyclical. and you can make a lot of money when you pick the inflection point of markets. and i remember in the early

1990's, i remember it in the early 2000's, i remember in 2009, 2010, 2012, there are points when there's an inflection point, and we are at one of those inflection points. francine: so you are buying. bruce: we just bought -- we foreclosed on some loans for multifamily u.s. recently. -- in the u.s. recently. we are very excited about that and we continue to look at a bunch of things. francine: do you see anything in europe? bruce: absolutely. you know, the biggest, most liquid markets are in the united states. that doesn't mean, therefore, because they are the most liquid you find the most opportunities. but europe, there is less capital, and therefore, there will be opportunities here as well. francine: is there a big difference between the ones that will get better and the ones that actually, you should

forget? bruce: i would just say it depends on the types of real estate. quality wins always. it always has. it always will. francine: what do you spend most of your time thinking about? bruce: personally i spend my time, sometimes helping our teams with business. sometimes, a third with clients, helping them understand what we are doing, where we are going. and a third is just internal people running the organization, i'll call it. and, with that, we spend an enormous amount of time building our people, transitioning our people within all of our businesses. and it is just, it is not something that happens once. it's happening all the time. and our whole goal is, the culture of our places, bring -- of our place is, bring

people up that are very young, give them opportunities that they will never get anywhere else. grow them throughout the organization. make sure they are entrepreneurial, hard-working -- and want to win. and if you have that, you have a great culture in a company, and that is sort of where we spend all of, a huge amount of our time. trying to build within the organization. francine: bring them up to test them or just to make them more? -- to make them learn? bruce: look, bring them up to take on roles. and eventually, eventually i will become an executive chairman. and i will still be around for somebody else -- francine: will you retire? bruce: i will become an executive chairman at some point in time. and what that means is i am here to help mentor young people, help with business development, look after clients that can be helpful to you overall -- the overall organization, but at some point in time, this is a hard business. we are in 30 countries. we have lots of people. it is better to have younger

people grow the business. i took over in my early 30's. and i am probably slower today than i was then. not that i've slowed down but i'm slower today. and at some point in time it is the right thing to give the people those roles, so we are continually evolving the organization. francine: are you going anywhere anytime soon? bruce: no. francine: bruce, is this the biggest mistake for politicians and chief executives, is, is staying on for too long, or is it, is leadership in 2024 different to what it was in the early 2000's? bruce: some organizations fit one way, some fit another. i am not suggesting our culture is what works for everybody else. but we have a culture where our elders stay around for long periods of time to help. and our young people get

opportunities which they would not otherwise get if the elders stayed in place in a full-time role. and that is what we do. maybe it does not work for everyone and that's ok. francine: bruce flatt, thank you so much for joining us today. ♪ can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh when i was your age, we never had anything like this. what? wifi?hhhhhh wifi that works all over the house, even the basement. the basement. so i can finally throw that party... and invite shannon barnes. dream do come true. xfinity gives you reliable wifi with wall-to-wall coverage on all your devices, even when everyone is online. maybe we'll even get married one day. i wonder what i will be doing? probably still living here with mom and dad. fast reliable speeds right where you need them. that's wall-to-wall wifi on the xfinity 10g network.

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