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 have been in 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. francine: is that a good thing or a bad thing? bruce: you know, it's just because we are behind the scenes. but it is 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 try to be be quiet and do our thing, and sometimes it helps, and sometimes it doesn't. but i would say, on balance, it has been good for us. francine: you have been in

charge for 22 years at brookfield. bruce: 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 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'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 is a really interesting business to be in because you are 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 are 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 are saying.

and what they want to do. and we are going with them. and that's really -- we are the backbone behind global business. and when they need capital, we fund it. francine: and i think your northstar, as it were, is three d's, right? bruce: look, i would say over time, we are 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 would say, 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 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 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 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. so we are 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 will end up? bruce: look, i would 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 is amazing what has 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 five, seven, 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 transition the economy to have less carbon. so we are 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 are 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: 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 are the most economic 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 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, right? politicians have to be reelected. they are 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 would say it has 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 is 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 is 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 simpler. it's not easy, but it is simpler. and i guess that's 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's 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 are just trying to make money for clients in a thoughtful way. and we have done that for a long time.

and the reason we are at the scale we are is that we have been thoughtful with their money and we have earned them a good return and we have 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 is what is important for these sovereign investors. pension they have long durations and they need this type of asset to earn them returns over the long return. francine: you have also gone to credit. how much are you expecting that to grow? bruce: what has happened with regulations in the banking system is it has 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 business where we are funding these type of products. but it's not -- our business is not in competition with the banks. it is actually in partnership with the banks. as a result of that, i would say it is facilitating the growth of the global financial markets as opposed to something that often people talk about it, that we are 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? bruce: it's going to get big. remember, this is where most of the capital is in the world, in sovereign institutional funds and pensions. these funds used to be $20 billion and $30 billion.

today, they are $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 is going to continue to grow for a long period of time. francine: 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 is 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: bruce, what is moderate risk? you can make it sound easy but actually, this is a know-how. so do you look into -- you're also quite acquisitive. bruce: yeah. look, i would say 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 -- these businesses for a long period of time. we have the information -- 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 would say, better information to base our decisions than most people. but we are always -- you know, we're trying to take -- so we

are trying to lower the risks by doing that. of course investing is tough. it's not easy. and therefore, you are always taking some form of risk. francine: how do you choose what company to buy? bruce: you know, thoughtful analysis about 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 a 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: do you expect -- i think you have spoken in the past about a possible big acquisition that would be transformational for brookfield. bruce: you know, i would say we are always in the -- we are 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. 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, 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. so i would say 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 period of time. now some people said to us, can you solve emerging markets as opposed to just developed markets? we didn't feel it appropriate to

put the two in the same fund, so we are creating another fund to do that. and some of our clients will come along with us, and we are quite excited about it. francine: is that a template for possible future kind of spinoffs? bruce: we have -- in our private equity business, we have a buyout sponsor business. but we are 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 are creating a new pool of money to do that. and so 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 is -- 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 -- i'm going to say one of the pioneers of infrastructure -- francine: the original, you want to say. 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 are -- do others getting stronger help us? probably not. but it doesn't really bother us. and i think there is 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 a 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 are 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. of course, there are some -- there is 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 is 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 is opportunity coming. and if you know what you're doing, you can pick the right assets. there's a great opportunity here. and we have done this for a long period of 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 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 there's an inflection point, and we are at one of those inflection points today. francine: so you are 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 are 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 will be -- you know, the biggest, most liquid markets are in the united states. that doesn't mean -- therefore, because they are 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 will get better and the ones that actually you should forget? bruce: you know, i would 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, personally, i spend my time sometimes helping our teams with business. sometimes -- i would say a third of that, 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 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 would 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's 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 learn? bruce: look, 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: 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 are 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 i'm probably slower today than i was then. not that i have slowed down, but i am slower today. and at some point in time, it's the right thing just to bring -- to give the people those roles. so we are continually evolving our organization in that way. francine: but are you going anywhere anytime soon? bruce: no. francine: bruce, is this the biggest mistake, actually, for politicians and chief executives is staying on for too long? or is 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 would not otherwise get if the elders

stayed in place in a full-time role. and that's what we do. but maybe it does not work for everyone and that's ok. francine: bruce flatt, thank you so much for joining us today. ♪ it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! my name is teresa barber.y.

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