Brookfield Place in Toronto. The asset manager plans to merge Brookfield Business Partners LP and Brookfield Business Corp. to create a corporation called BBU Inc.Mark Blinch/Reuters
The private equity arm of Brookfield Asset Management Ltd. BAM-T is planning to streamline its corporate structure by combining two publicly traded entities into a single corporation.
The plan, which needs shareholder and regulatory approvals, would merge Brookfield Business Partners LP BBU-UN-T and Brookfield Business Corp. BBUC-T, both of which trade on stock exchanges, to create a corporation called BBU Inc.
Brookfield currently offers investors a choice to buy shares in a listed affiliate or a corporation to gain exposure to its private equity business, with each listed on the Toronto Stock Exchange and New York Stock Exchange.
Even though both entities give investors exposure to the same private equity business, which manages US$75-billion of assets under BBU, the BBUC shares were trading at a roughly 25-per-cent premium to the LP units at the close of trading on Wednesday.
The two share prices converged on Thursday, with BBU shares rising 12.5 per cent to $44.40 and BBUC shares down 8.6 per cent to $45.83 at the TSX close.
Brookfield is known for having a complex corporate structure that mixes private funds with listed entities tied to its asset manager, which is majority-owned by parent company Brookfield Corp.
The US$1-trillion asset manager has been pushing to have its shares represented more often in major stock indexes, as the increasing popularity of passively traded index funds drives larger flows of money to companies that make those lists. Brookfield Asset Management moved its headquarters from Toronto to New York at the end of 2024, in part to make it easier to qualify for some U.S. indexes.
The plan to simplify Brookfield Business Partners is the company’s latest move to tap into that trend.
“The conversion into a single corporate entity is designed to broaden our investor base, increase index demand and make it easier to invest in our shares which we expect will drive long-term value for all our shareholders,” Anuj Ranjan, chief executive officer of Brookfield Business Partners, said in a Thursday statement.
The newly formed BBU Inc. will pay an annual dividend of 25 US cents a share, unchanged from what investors in both entities currently receive.
Brookfield has created independent committees to review the transaction and hired Origin Merchant Partners as a financial adviser. Stikeman Elliott LLP and Torys LLP are providing legal advice.