Brookfield Private Equity Arm Falls in Regular Trading Debut

  • Management targeted $25-a-piece price for the new units
  • Official spin out price derived from five-day weighted average

The private equity arm of Brookfield Asset Management Inc. fell as much as 27 percent in its first regular trading session, after being officially being spun out as a special dividend to the parent company’s shareholders Monday.

Units of Brookfield Business Partners closed at $21.47 apiece in New York, below management’s $25-a-unit target. It also trades in Toronto.

The private equity arm traded as high as $31.02 a unit in so-called gray market trading before its official listing, according to data compiled by Bloomberg. Volume in the past week totaled just over 36,000, less than the 40,000 units that changed hands in the first hour of trading Monday, the data show. In total, 263,289 of its units were traded Monday.

Management has said it expected the 20 million limited partner units that were spun out to be valued at about 50 cents a Brookfield Asset Management share, or $25 a share, according to regulatory filings. The official spin out price will be derived from a five-day weighted average between June 20 and 24, the company said.

Brookfield, Canada’s largest alternative asset manager, will continue to hold 78 percent of the subsidiary, its fourth publicly-traded subsidiary alongside Brookfield Infrastructure Partners, Brookfield Property Partners, and Brookfield Renewable Partners. The unit will own and operate its business services and industrial operations for its private equity group, the company said.

Brookfield recently raised $4 billion for its latest private equity fund, which was part of a broader $25 billion in fundraising at the Toronto-based firm over the past 12 months.

“The spin-off of Brookfield Business Partners completes the fourth pillar of our strategy to consolidate Brookfield’s major business units and furthers our asset management strategy, providing investors with direct access to many businesses within our private equity group,” said Bruce Flatt, Brookfield Asset Management chief executive officer, in a statement.

Brookfield has said the goal is to grow the private equity unit to the size of the other subsidiaries. It’s currently the smallest with about $8.1 billion in assets under management. The largest subsidiary, Brookfield Property Partners, had about $65 billion in assets under management at the end of the first quarter.

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