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Bruce Flatt says Brookfield is ready for recession

Finance
TSX:BAM
23 March 2020 11:46 (EDT)
Brookfield Asset Management Inc - CEO, Bruce Flatt

Source: Bloomberg

Brookfield Asset Management Inc (TSX:BAM.A) has released a statement to shareholders in the wake of the COVID-19 crisis.

Company CEO, Bruce Flatt, began by saying that Brookfield has been expecting a severe market disruption for some time.

As luck would have it, all the company’s expected purchases and acquisitions over the past five months have fallen through. At the time, this was considered detrimental to the company’s growth.

However, this has left the company over-financed, with C$17.3 billion in undrawn credit still available.

Brookfield is one of Canada’s leading asset management companies, working in real estate, renewable power, infrastructure, and private equity sectors.

The company was quick to point out that many of its assets around the world are critical to national infrastructure. As a result, the company expects many of these facilities to remain open, despite ongoing lockdowns around the world.

That said, Bruce conceded that traffic at Brookfield’s malls and ports is likely to drop as more people self-isolate.

Bruce believes that the current crisis, while dire, is not a significant threat to Brookfield, in comparison to previous challenges.

“Most importantly, we are staying calm and ensuring our people are safe. For us, compared to the direct hit we took on 9/11, this uncertainty and volatility feels manageable.

“In 2008, with the banking system failing, real asset owners didn’t know if many lenders would exist in the future. Today, the banking system is in far better shape. It never feels very good to have this degree of chaos, but this will pass,” he said.

In response to the market turndown, the company is continuing to repurchase its shares at the new reduced price. Brookfield is also purchasing listed stocks and traded debt at similarly discounted prices.

Bruce closed out his address by reassuring investors. He stated that the short-term losses seen in the last few months are not indicative of his company’s future performance.

In fact, he pointed out that asset-rich companies like Brookfield, who are able to pay their debts, will continue to thrive, despite the current market conditions.

Brookfield Asset Management Inc (BAM.A) is down 2.59 per cent, with shares trading for $54.49 at 9:55am EST.

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