Podcast Summary: Bloomberg Talks

Episode: Brookfield Asset Management CEO Bruce Flatt Talks More Data Center Capacity Needed
Date: February 26, 2025
Host: Francie (Bloomberg)
Guest: Bruce Flatt (CEO, Brookfield Asset Management)

Overview

In this episode, Bruce Flatt, CEO of Brookfield Asset Management, discusses long-term investment theses amid global turbulence, the accelerated demand for data center and compute capacity, the evolving landscape of private credit, and the ongoing transformative trends of decarbonization, digitalization, and de-globalization. Flatt brings an optimistic yet practical perspective on capital deployment, the rise of AI, and key global opportunities, emphasizing Brookfield’s role as the backbone of the economy.

Key Discussion Points and Insights

1. Brookfield’s Investment Philosophy & Global Trends

Timestamps: 01:00 – 03:58

• Staying Focused on Long-Term Trends:
  Flatt stresses that market fluctuations haven’t changed Brookfield’s core thesis: "We’re still going to digitalize the world... We’re still going to deglobalize... and we still are going to transition to renewables. Maybe not because of renewables, but because we just need more power." (Bruce Flatt, 01:12)
• Impact of Policy and Borders:
  Brookfield invests "in great businesses or assets, own the backbone of the global economy... we don’t trade over borders." U.S. policy shifts have "pretty small" impact due to their localized business model. (Bruce Flatt, 02:20)
• Regional Opportunities:
  The U.S. remains the primary destination for capital in the next 18 months due to market size and opportunity. Europe offers value with lower multiples, while the Middle East continues to be attractive but is limited by scale compared to the U.S. (Bruce Flatt, 03:07, 04:00)

2. Explosion in Data Center & Compute Capacity

Timestamps: 04:49 – 07:23

• Unprecedented Growth:
  Following the "ChatGPT moment," the world now requires "trillions and trillions" invested in data centers to meet the computational demands of AI.

  “A 1000 megawatt, 1 gigawatt data center site... is $50 billion. These are almost unprecedented investments ever seen in, in the last... in hundreds of years.” (Bruce Flatt, 05:46)

• Underestimating AI’s Pace of Adoption:
  While hype exists, Flatt predicts, “In the next 10 years, we will look back and be extremely surprised at the progress that have been made... productivity advances are going to be very significant.” (Bruce Flatt, 06:22)
• Reshoring Supported by AI:
  Increased productivity could make U.S.-based manufacturing competitive again, leading to reshoring of capacity previously offshored.

3. Technological Progress and the Evolving Backbone

Timestamps: 07:23 – 08:28

• Service to AI Ecosystem, Not Competition:
  Advances like Deep Sea (interpreted as an AI breakthrough) reinforce the need for foundational infrastructure.

  “We’re providing the green power, we’re providing the data center, we’re providing the compute capacity. We’re funding all of that.” (Bruce Flatt, 07:49)

• Cost Reduction & Use Cases:
  Lower costs via technological progress will unlock new applications, necessitating even more infrastructure.

4. Europe, De-Globalization & Localized Investment

Timestamps: 08:28 – 09:25

• Expansive European Build-Out:
  "We have the largest builder of data centers in Europe... just announced a big deal in France for $20 billion." (Bruce Flatt, 08:44)
• Europe’s Upside:
  Reduced capital and positivity can mean better opportunities for discerning investors.

5. Private Credit’s Expansion

Timestamps: 10:25 – 13:26

• Bank Disintermediation:
  As capital moves off bank balance sheets, private credit grows.

  “This business is going to get bigger... because this is just capital being pushed off of banks' balance sheets.” (Bruce Flatt, 10:30)

• Brookfield’s Strengths:
  Top sectors: real estate, infrastructure, and direct corporate lending. Recent move: acquisition of asset-backed lender Castlelake.
• Potential Scale:
  "We're $300 billion today. I think it can be much, much larger... It can double, it can triple, it can quadruple over the longer term." (Bruce Flatt, 11:47, 11:56)
• Industry Structure:
  Prediction of consolidation with very large players like Brookfield and niche specialists, while mid-sized firms struggle to raise capital.

6. M&A and the Oaktree Relationship

Timestamps: 13:26 – 15:17

• M&A Mindset:
  Always seeking “complementary things” for client benefit but not willing to compromise on investment skills.
• Partner-Manager Model:
  Oaktree operates as an autonomous unit within Brookfield; culture is respected and entrepreneurial spirit maintained.

  “Entrepreneurialism in alternative managers is really important, and therefore we've had this partner manager model, and it’s worked so far.” (Bruce Flatt, 14:54)

7. The 3 Ds: Decarbonization, Digitalization, Deglobalization

Timestamps: 15:17 – 16:56

• Energy Transition:
  The fervor for net-zero has tempered but demand for reliable, green power continues, largely because it's cheaper.
• Accelerated Digitalization:
  AI is pushing digital infrastructure investment to "way different levels."
• Deglobalization & Reshoring:
  AI and tariffs are enabling a return of manufacturing to developed markets.

8. Evolving Real Assets & Investment Returns

Timestamps: 16:56 – End

• Evolving Asset Landscape:
  Half of Brookfield’s current assets "didn't exist as an asset class" 10-15 years ago. If investors don't evolve, they're "left in the dust." (Bruce Flatt, 17:05)
• AI’s Financial Impact:
  Early AI application in service/industrial sectors is generating "cash on cash investment returns" of 50–100%.

  “If it all works out, we're in an investment-led era for the next 20 years... and if that occurs, we're going to have a very strong economy.” (Bruce Flatt, 18:18)

Notable Quotes & Memorable Moments

• On Long-Term Investment Focus:

  “We don’t get too wrapped up in the day to day effects of what’s going on on rates or economy or different things like that.” (Bruce Flatt, 01:40)

• On AI and Data Centers:

  “The final step of all of that is providing compute capacity.” (Bruce Flatt, 05:37) “These are almost unprecedented investments ever seen in hundreds of years.” (Bruce Flatt, 06:08)

• On the Role of Private Credit:

  “We're here for our clients, we're here just to service them. And if they can earn an extra hundred basis points over what they'd get somewhere else, this is a very exciting place…” (Bruce Flatt, 11:31)

• On Adaptability:

  “If you don’t evolve your thinking as to what’s going on in the world and try to see forward… you get left in the dust.” (Bruce Flatt, 17:37)

• On Future Productivity:

  “We’re talking 50 to 100% cash on cash investment returns... which may mean if it all works out that we’re in an investment-led era for the next 20 years.” (Bruce Flatt, 18:18)

Timestamps for Important Segments

• Long-term investment strategy & trends: 01:12–03:58
• Regional outlook (US, Europe, Middle East): 03:07–04:49
• Data center and AI infrastructure boom: 04:49–07:23
• Europe and deglobalization: 08:28–09:25
• Private credit expansion & industry outlook: 10:25–13:26
• Brookfield’s acquisition philosophy & Oaktree: 13:26–15:17
• Decarbonization, digitalization, deglobalization ("3 Ds"): 15:17–16:56
• Evolving asset classes & future returns: 16:56–19:33

Tone & Style

• Flatt’s tone remains methodical, pragmatic, and quietly optimistic, emphasizing adaptability, disciplined growth, and the necessity of evolving alongside global megatrends.
• The conversation maintains a forward-looking outlook, while referencing Brookfield’s immense scale, risk discipline, and focus on foundational infrastructure.

This episode is a must-listen for anyone interested in infrastructure investing, private credit, the impact of AI on the real economy, and the nuanced strategies behind mega-asset managers like Brookfield.