bruce: we are the backbone behind global business. and when they need capital, we fund it. francine: it's one of the world's largest alternative

investment companies. brookfield owns hydroelectric plants, cell phone towers, power lines, wind farms, ports, and even city skylines. bruce flatt has been at the helm for more than two decades, overseeing more than $900 billion of assets under management. the veteran chief executive is considered a visionary investor with a golden touch. but for him, it's all about patience and finding the right investments. bruce: what you might think of as risky, to us, it's not risky, because we've been in this business, these businesses for a long period of time. francine: in this episode of "leaders with lacqua," i speak to bruce flatt about the secrets of his success, the outlook for commercial 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 i'm speaking to you. brookfield has gone from, like, strength to strength. if i was a martian meeting you for the first time, how would 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's what we own and build. so it's really what drives the economy, and you don't often see our name. because -- francine: is that a good or a bad thing? bruce: you know, it's just because we are behind the scenes. but it's big, with $1 trillion of assets almost. we are behind a lot of the things of the global economy. francine: so being low-key, do you think it gives you strength? bruce: we just try to be quiet and do our thing, and sometimes it helps, and sometimes it doesn't. but i'd say, on balance, it's been good for us. francine: so, you've been in charge for 22 years at brookfield. bruce: yes, it seems like a long time when you say it that way.

[laughter] francine: two decades, over two decades. what was the most interesting -- i mean, you've 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're learning every day. and the world's 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 didn't exist then. telecom towers were owned by all the phone companies. so these are things -- the business evolves and the backbone evolves, of the economy, so it's a really interesting business to be in, because you're always learning. francine: but it's a difficult business, because you don't want to be kodak, right? you don't want to invest in something that goes nowhere. bruce: yeah, look, we're always trying to understand where is the future going and how do we invest with that. and often, it's listening to your counterparties, your clients, your partners, and

hearing what they're saying. and what they want to do. and we're going with them. and that's really -- we're the backbone behind global business. and when they need capital, we fund it. francine: and i think your north star, as it were, is three d's, right? bruce: yeah, look, i'd say over time, we're always trying to figure out, what are the things, what are the themes that are going to drive the world? and today, the digitalization of everything, the decarbonization of everything, and the deglobalization of everything are three, i'd say, mega trend themes that are going to be very dominant in investing for the next -- not the next 2 or 3 years, the next 20 to 30 years. francine: geopolitics is, i guess, taking a turn for the worse. how do you, again, keep that trajectory in saying, look, we will digitize?

interest rates are all so over the place, so how do you stay the course, as it were? bruce: you know, francine, what we try to do is find good countries, go there, and stay there. invest in these things. and whether governments come or go, or interest rates go up a little bit 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's more important than those general trends. so we're investing for 10, 20, 30, 40, 50 years. francine: so out of the three d's, is digitalization the hardest because of ai, because we don't really know where we'll end up? bruce: look, i'd say digitalization was happening because of cloud computing and the super tech companies getting into cloud computing. and that was the whole thing going on. the amount of things that go to your ipad every day today, and your phone -- francine: it's crazy. bruce: it's amazing what's

happened in the past 20 years. but now, with ai, it's just -- it's almost exponentially taken it up. and so, that's 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 ai, what's going on with ai 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 the economy. it's not good or bad or green or black, it's just, let's just transition the economy to have less carbon. so we're funding that. and the 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're one of the largest

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

they're pro-climate change, against climate change. how do you not waver? bruce: remember, just to make an important point -- in most countries, the lowest cost energy today for electricity is solar or wind. you don't need subsidies. and when you did need subsidies, politics mattered. today, you don't. francine: deglobalization. so this is, what, bringing back onshoring? bruce: all it is is -- i think in covid -- i'd say it's always been happening, and, in covid, people just 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're being used in america, and, therefore, there are battery plants getting built in america. and there's an enormous need for capital to fund battery plants. there's enormous need for semiconductors. enormous need for manufacturing capacity in various locations

around the world. and it's just natural that everyone doesn't want to have all of their manufacturing capacity in one country or place. let's diversify. so that's just a big theme, which means it's just a lot of capital. francine: you make it sound very easy, but actually, this has gotten you, like, more than $900 billion in assets under management. bruce: you know, it's not easy. but if you have operating people and you keep repeatable -- do repeatable things around the world, it gets easier -- simpler. it's not easy, but it is simpler. and i guess that's why we're in business, right? it -- we have been doing this a long time. and everything's 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's the next

-- the next phase of infrastructure investing. ♪

francine: infrastructure has been a bright spot for brookfield. the company is gathering cash for a new fund targeting buyout opportunities in the middle east. and it plans to start a pool that invests in financial infrastructure, such as payment systems, as demand grows. i continue the conversation with bruce flatt. did you know in 2002 that you wanted to be at $900 billion asset under management? or $1 trillion? bruce: we're just trying to make money for our clients in a thoughtful way. and we've done that for a long period of time. and the reason why we are at the scale we are is because we've been thoughtful with their money, and we've earned them a good return, and we've not taken a lot of risk. and if you can do that over long periods of time, you can

compound their wealth, investment wealth to very large sums of money. and that's what's important for these sovereign institutional pension investors. because they have very long durations. they need these type of assets to earn them returns over the longer term. francine: you have also gotten into credit. how much are you expecting that to grow? bruce: what has happened with regulations in the banking system is they just -- it's pushed out credit off the balance sheets at 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're funding these type of products. but it's not -- our business is not in competition with the banks. it's actually in partnership with the banks. and as a result of that, i'd say it's facilitating the growth of the global financial markets as

opposed to something that often people talk about it, that we're in the wrong time in the cycle or whatever it is. this is going to be growing and happening for a long period of time. francine: so how big do you expect that to be? bruce: it's going to get big. because remember, this is where most of the capital is in the world, is in sovereign institutional funds, these -- and pensions. these funds used to be $20 billion and $30 billion. today, they're $300 billion, $500 billion, $1 trillion, $1.5 trillion. these are large, large sums of money. they need to put it to work, and therefore, it's going to continue to grow for a long period of time. francine: are you focused -- when you look at regions, is it mainly the gcc countries? bruce: we invest for people in the -- for the long term, try to earn them good returns by taking moderate risk. and if we can do that, it's all around the world. for you, what you want to do in your own portfolio is take moderate risk and earn a good return. francine: but, bruce, what's moderate risk? again, you make it sound easy, but actually, this is a know-how.

so do you look into -- you know, you're also quite acquisitive. bruce: yeah. look, i'd say we -- in the businesses that we are in, we have more information than most people about what we do. therefore, what you might think of as risky, to us, it's not risky, because we've been in this business for, these businesses for a long period of time. we have the information of every -- we know, we know what's getting shipped across the ocean in our containers. we know what's 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 that just informs us. so we have, i'd say, better information to base our decisions than most people. and -- but we're always -- you know, we're trying to take -- so we're trying to lower the risks by doing that. of course, investing,

investing's tough. it's not easy. and therefore, you're always taking some form of risk. francine: how do you choose what company to buy? bruce: you know, thoughtful analysis about what's 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 a business. and therefore, that's usually when we're not investing. and just wait for the time when it'll be a little better to invest. francine: do you expect -- i think you've spoken in the past about a possible big acquisition that would be transformational for brookfield. bruce: you know, i would say we're always in the -- we're always looking for additions to the business. in 2018, we brought oaktree 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.

and -- but if not, we just keep plugging away every day. francine: so this is more partnerships than outright acquisitions, like altera. i mean, this is a different kind of carbon fund. bruce: our transition business, we started -- we split off from our main infrastructure business 4.5, 4 or 5 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. so i'd say that's just a split off. this is just -- all we're trying to do is we informed ourself about transition, we built a team over a long period of time. now, our -- some people said to us, can you solve emerging markets as opposed to just developed markets? francine: right. bruce: we didn't feel it appropriate to put the two in bloomber' --

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

in that type of area, have a pool to be able to do it with us. francine: bruce, when you look at infrastructure, there's -- consolidation was really the, i guess, the name for the last six months. does that make your job easier or tougher? bruce: look, we were the maybe -- i'm going to say one of the pioneers of infrastructure -- francine: the original, you want to say. [laughter] bruce: well, going into institutional clients. we were the original, because we were in industrial businesses ourselves, and how we got into the infrastructure business is we decided we didn't like the up and down of many of the industrial businesses we had and mining businesses. but we really liked the backbone infrastructure that was in these businesses. and 20 years ago, we started doing it for institutional clients. at that time, nobody would listen to us, and nobody would invest with us. so it's quite -- it's great that this has become mainstream today.

the good news, i'd say we're 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 just to grow in the places we are. so i think we're -- do others getting stronger help us? probably not. but it doesn't really bother us. and i think there's a place for us to continue to grow in business. francine: coming up, why bruce flatt has faith in the future of commercial real estate. bruce: there's opportunity coming. and if you know what you're doing, you can pick the right assets. there's a great opportunity here. ♪

francine: from the united states to europe, plunging office valuations are spooking investors, raising fears about a broader contagion. as one of the world's biggest owners of commercial real estate, brookfield is at the center of the global industry shakeout. but the chief executive bruce flatt, who made his name in real estate, sees opportunities where others see risks. we continue the conversation. commercial real estate. so a lot of people say, well, this is not the right time. we're going to see a shakeout in commercial real estate. there are opportunities that you see?

bruce: i think, look, the next -- the next story is that interest rates are coming down. fundamentals are pretty good in a lot of commercial real estate. look, of course, there are some -- there's a tale of some investors that had properties that, for this environment, the fundamentals either don't support it, or the financing they have can't be supported, and therefore, those have to get dealt with. so that's a tale that's getting dealt with within the financial system. the fundamentals are actually getting better. interest rates are coming down, which means that values are going to improve. but that tale, there's opportunity coming. and if you know what you're doing, you can pick the right assets. there's a great opportunity here. and we've done this for a long period of time, and we've 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 it in the early 1990's. i remembered it in the early 2000's. i remembered it in 2009, 2010, 2011, 2012. there are points when -- when there's an inflection point, and we're at one of those inflection points today. francine: so you're buying? bruce: we are buying. our opportunistic fund, we just bought some -- we foreclosed on some loans for multifamily in the u.s. recently. we're very excited about that, and we continue to look at a bunch of things. francine: do you see anything in europe? bruce: absolutely. i think there'll be -- you know, the biggest, most liquid markets are in the united states. that doesn't mean, therefore -- -- that doesn't mean, therefore, because they're the most liquid,

you always find the most opportunities. but europe, there's less capital, and therefore, there will be opportunities here as well. francine: but how do you make a difference between the ones that, you know, will get better and the ones that actually you should forget? bruce: you know, i'd just say it depends on the types of real estate. you just need to -- quality wins, always. it always has. it always will. francine: what do you spend most of your time thinking about? bruce: you know, i, personally, i spend my time sometimes helping our teams with business. sometimes -- i'd say a third of that, a third with clients, helping them understand what we're doing, where we're 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 and transitioning our people within all of our businesses. and it's just a -- it's not something that happens once. it's happening all the time. and our whole goal is, our culture of our place is bring people up that are very young, give them opportunities that

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

it's better to have younger people grow the business. i took over at 30 -- in my early 30's. and -- and i'm 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's the right thing just to bring -- to give the people those roles. and so, we're continually evolving the organization in that way. francine: but are you going anywhere anytime soon? bruce: no. [laughter] francine: bruce, is this the biggest mistake, actually, for politicians and chief executives, is staying on for too long? or is it, you know, leadership in 2024 different to what it was in the early 2000's? bruce: you know, i think it all depends on the organization. some organizations fit one way, some fit another. i'm 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 wouldn't otherwise get if the elders stayed in place in a full-time role. and that's what we do. but maybe it doesn't work for everyone, and that's ok. francine: bruce flatt, thank you so much for joining us today. ♪