Brookfield’s missing out on the private equity secondaries boom

Signage at the Brookfield Place Sydney office building, owned and home to the Asia-Pacific headquarters of Brookfields Asset Management Inc., in Sydney, Australia, on June 17, 2021. Photo by Lisa Maree Williams/Bloomberg

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Bruce Flatt was clear with his prediction: the secondary market for private equity, real estate and infrastructure was ready to take off, and it could become a US$50 billion business for his Brookfield Asset Management.

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Five years after the Brookfield chief executive’s forecast, the boom has come and Brookfield has largely missed out. It’s been on the sidelines as rivals rush to raise funds to buy chunks of portfolio companies from other buyout shops or offer their investors a way out.

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The firm had planned to debut a dedicated fund that would invest in companies owned by other private equity firms, according to people familiar with the matter. But that strategy never got off the ground — and Brookfield has no immediate plans to raise a dedicated private equity secondaries fund, the people said.

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The investment manager, which oversees more than US$1 trillion, had decided to break into private equity secondaries by taking over a business from Deutsche Bank AG’s asset management unit in 2023, acquiring DWS Group’s seven-person private equity secondaries team and its US$550 million fund.

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At the time, Brookfield aimed to continue DWS’s strategy of financing portfolio companies of other buyout shops as well as backing some continuation funds raised by other alternative asset managers, the people said, asking not to be identified discussing private details.

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Instead of raising a separate pool of capital to back secondary deals for private equity, the firm made some of these types of investments on its own balance sheet, the people said.

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Brookfield ultimately merged the DWS unit with another strategy rather than scaling it up on its own, said the people, who asked not to be identified because the details are private.

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Since the Federal Reserve ended a long stint of ultra-low interest rates in 2022, deals have slowed, choking off distributions to fund investors. Cash-hungry institutions such as pension plans and endowments have been turning to the secondary market to offload their stakes, sometimes at a steep discount. Meanwhile, fund managers are prolonging their ownership of some portfolio companies by transferring them from older funds to continuation vehicles.

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Transaction volume for secondaries hit US$102 billion for the first half of 2025, a 41 per cent jump year-over-year and the highest on record for any six-month period, according to an Evercore Inc. report.

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In 2020, Brookfield’s chief executive correctly predicted the swift growth of secondaries while speaking at a firm investor day. While the asset manager has largely missed out on that expansion, Flatt also cited insurance as a key avenue for growth — and profit for that unit has soared since then. In the first quarter, insurance profit drove a 30 per cent jump in distributable earnings for the parent firm, Brookfield Corp.