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Brookfield Corporation Class A Limited Voting Shares (BN)
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Brookfield Asset Management Ltd. Class A Limited Voting Shares (BAM)
Q: Two questions (please take as many credits as needed):
Question 1:
BN has a 73% ownership interest in Brookfield Asset Management. BAM has a market cap of about $29B. How could one calculate the value of this 73% ownership of BAM based on market cap? I wasn't sure if the 73% was a figure of the total shares outstanding (and therefore value may be calculated as 0.73 x $29B) or whether the 73% interest was outside of the publicly listed shares (and therefore value would be calculated as much higher).
Question 2:
Based on the corporate restructuring announced, it says that "If approved, BAM will own 100 per cent of the asset management business, with Brookfield Corp.’s current 73 per cent interest held directly by owning approximately the same percentage of the publicly traded shares of BAM." Can you clarify what is changing here?
Question 1:
BN has a 73% ownership interest in Brookfield Asset Management. BAM has a market cap of about $29B. How could one calculate the value of this 73% ownership of BAM based on market cap? I wasn't sure if the 73% was a figure of the total shares outstanding (and therefore value may be calculated as 0.73 x $29B) or whether the 73% interest was outside of the publicly listed shares (and therefore value would be calculated as much higher).
Question 2:
Based on the corporate restructuring announced, it says that "If approved, BAM will own 100 per cent of the asset management business, with Brookfield Corp.’s current 73 per cent interest held directly by owning approximately the same percentage of the publicly traded shares of BAM." Can you clarify what is changing here?
5i Research Answer:
This is one reason BN/BAM have proposed a restructuring. BN holds its BAM shares right now in a different form than the public shares, but this will change under its proposal: #2; it is really just the shares that are changing. BN owns common shares of BAM; the listed shares are Class A shares. In the proposal, BN is simply exchanging its common shares for the same shares that are listed. Nothing really changes, except BN will now own the traded shares, and thus analysts/investors can directly see the value of its BAM holdings. This will 'essentially' be the same as before, but it will just be a cleaner, more direct ownership line. #1) Multiplying 73% by market cap of BAM will give the value to BN.