Brookfield Asset Management has unveiled sweeping changes to an unusual ownership structure that for decades has given a secretive group of self-styled partners the right to wield huge influence over the $500bn investment firm.
The move follows a Financial Times report this year that detailed how Brookfield’s jigsaw-like structure had made it difficult to identify the investors behind deals struck with counterparties including the family of Jared Kushner, President Donald Trump’s son-in-law and adviser.
The reforms strip Partners Limited, Brookfield’s governing “partnership”, of wide-ranging rights to control the NYSE-listed company.
The move represents one of the biggest changes to Brookfield’s governance since the group parted ways with members of the Bronfman liquor dynasty in the 1990s, setting out on a path to become one of the world’s biggest alternative asset managers, with interests stretching from Manhattan real estate to Australian railways and French mobile phone masts.
Under the old structure, the Partners shareholders — not all of whom were identified in Brookfield’s annual securities filings — controlled a special class of shares that, along with their other interests, enabled them to appoint nine of BAM’s 16 directors and overrule motions supported by outside investors.
Those special shares will now be placed in a trust controlled by Bruce Flatt, Brookfield’s chief executive, and six other company officials, all of whom have been named. If a “fundamental disagreement” should break out among this inner circle, a designated back-up set of directors — which includes former British civil servant Sir Gus O’Donnell — would temporarily take over the group’s powers.
Mr Flatt and his predecessor Jack Cockwell will each control a third of the trust, with the remainder split evenly among five senior colleagues.
Even as it announced the changes, Brookfield pointed to the virtues of its unusual ownership arrangements, which executives have likened to Goldman Sachs’ former partnership.
“This partnership . . . has been and continues to be instrumental in ensuring a stability of ownership that fosters a culture of strong governance and mutual respect, a commitment to collective excellence and achievement, and a focus on long-term value creation for all stakeholders,” Brookfield said.
But speaking to the FT earlier this year, Mr Flatt sought to play down the partnership’s day-to-day influence over the group, insisting that Brookfield was run by an independent board.
“That partnership does nothing,” he said in January. “We never have meetings, we don’t vote on anything, there is nothing to do. But it has those rights, and they’re very important.”