Jan 31, 2023
Brookfield Snaps Up DWS’s Secondaries Arm in Private Equity Push
(Bloomberg) -- Brookfield Asset Management Ltd. is taking over a secondaries business from Deutsche Bank AG’s asset-management unit as part of a broader push into a growing corner of private markets.
The arrangement, which confirms an earlier report by Bloomberg News, includes the transfer of DWS Group’s seven-person secondaries team and its $550 million fund to Brookfield, the world’s second-largest alternative investment firm. Terms weren’t disclosed. Secondaries desks typically buy and sell investors’ interests in private equity and other alternative funds.
“This is a great tool for us” to expand into a market where the firm sees “tremendous opportunity,” Anuj Ranjan, president of Brookfield’s private equity arm, said in an interview. Ranjan said the move is part of the firm’s strategy for expanding private equity offerings.
The fund’s investments include vehicles private equity firms structure to hold assets for longer while also giving their clients the option to cash out. DWS’s private equity secondaries team will join Toronto-based Brookfield’s London and New York offices, Ranjan said. DWS will remain an investor in the Private Equity Solutions I fund.
Brookfield got into the secondaries market two years ago through its real estate business with the launch of an $875 million fund, according to Pitchbook, followed by the infrastructure unit, which started a strategy last year. Brookfield Chief Executive Officer Bruce Flatt said in 2020 that secondaries could grow into a $50 billion business for the firm.
DWS has been pitching its secondaries business to interested parties as part of a plan to pull back from areas where it doesn’t have sufficient scale, Bloomberg reported in December.
The secondaries market, which also includes investors wanting to sell stakes in private equity funds, has grown in popularity over the past few years as a way for investors to get liquidity, with deal volumes standing at $53 billion in the first half of 2022. Earlier this month, Blackstone Inc. raised a record $22.2 billion for a secondaries fund.
The private equity secondaries unit will fall under Brookfield’s newly spun-out asset-management business, which targets $1 trillion in assets by 2027 from about $400 billion as of the end of September. Some of the asset growth may come through acquisitions, Flatt suggested at a conference in December.
Brookfield purchased a 61.2% stake in Oaktree Capital Group for roughly $4.7 billion in 2019.
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