Brookfield Asset Management Inc. said it plans to publicly list one-fourth of its asset-management business in a transaction that would value the new entity at US$80 billion. 

The firm expects to publicly distribute 25 per cent of the asset manager to its shareholders before year-end, Chief Executive Officer Bruce Flatt said in a letter to shareholders as the firm issued first-quarter earnings. The special distribution of shares will be around US$20 billion, or US$12 per share, he said. 

The spinoff will separate the company that manages assets on behalf of investors across its portfolio of real estate, infrastructure, credit, private equity and renewables from Brookfield’s own investment capital of US$75 billion. The move makes Brookfield “asset-light,” a model preferred by investors.

“Having a new security or ‘currency’ that is well understood and appreciated by the public markets will maximize optionality for us as we continue to scale and diversify our asset-management platform,” Flatt said in the letter. Brookfield will own 75 per cent of the new entity. 

Highlights of the plan: 

• The new entity will pay out approximately 90 per cent of its annual earnings in dividends.
• It will trade on the New York and Toronto stock exchanges.
• Brookfield will set its annual dividend at a lower level.

The shares fell 3.3 per cent to US$45.59 at 9:49 a.m. in New York trading.

The impact of higher inflation on Brookfield’s expenses is mitigated by rising margins, “which means that inflation has a positive impact for owners of real assets and real return businesses,” Flatt said.  

The Toronto-based firm has a history of building businesses and then listing them. Last year, it spun off Brookfield Asset Management Reinsurance Partners Ltd. through a special dividend to shareholders. It did the same thing with its private equity unit, Brookfield Business Partners, and its renewable-energy operations, Brookfield Renewable Partners, among others.

Here are Brookfield’s earnings results:

• The company reported funds from operations of 96 cents a share, beating the 85 cents estimated by analysts in a Bloomberg survey
• Fee-bearing capital came in at US$379 billion
• Total assets under management reached US$725 billion