Brookfield Files for $525 Million Spinoff of Private Equity Arm

  • Company to issue 21 million units for expected $25 each
  • Each existing shareholder will recieve one unit for 50 shares

Brookfield Asset Management Inc., Canada’s biggest alternative asset manager, plans to pay a special dividend of about $525 million from the spin out of its private equity arm, according to a regulatory filing, more than originally planned.

Toronto-based Brookfield intends to issue 21 million limited partnership units in  Brookfield Business Partners LP for an expected value of $25 a piece, it said in a filing with U.S. regulators on Dec. 21.

Brookfield first said it planned to spin out its private equity arm in October. At the time, it estimated the value of distribution to its shareholders to be roughly $500 million.

One unit in the new subsidiary will be issued for every 50 Class A and Class B shares held in the parent company, subject to certain conditions, the documents filed with regulators said. The new units will trade under the ticker “BBU” in New York, and “BBU.UN” in Toronto.

Raised Dividend

Based on Brookfield Asset Management’s closing price in New York Tuesday of $30.36, each unit would amount to a dividend of roughly 60 cents for each of the parent’s existing shareholders. That is slightly higher than its original target in October of about 50 cents a share. 

Brookfield Business partners would be the fourth publicly-traded subsidiary under Brookfield Asset Management, in addition to Brookfield Infrastructure Partners, Brookfield Property Partners, and Brookfield Renewable Energy Partners.

The first date of trading is not contained in the regulatory filings and is subject to the spin out being approved by regulators. Brookfield said in October it was aiming to complete the spin off of Brookfield Business Partners by the first quarter of this year. 

Brookfield Business Partners had total assets of $7.7 billion as of Sept. 30. It reported a net income of $310 million and revenue of $4.7 billion in the nine-month period ended Sept. 30, the documents state.

After the spin out, Brookfield Asset Management will retain roughly a 70 percent equity interest in Brookfield Business Partners and intends to reduce its interest in the company over time through “mergers, treasury issuances or secondary sales,” the filings state.

In its original filings in October, Brookfield Asset Management said it intended to retain a 65 percent equity interest in the subsidiary.

The parent company will also receive management and administrative fees, and be entitled to “incentive distributions” under the structure of the spin out, the documents state. It will also provide the subsidiary with two, three-year revolving lines of credit valued at $500 million on a combined basis.

Andrew Willis, Brookfield’s spokesman, declined to comment.

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