Brookfield pick of Sachin Shah for CIO signals firm’s big growth plans

Sachin Shah, head of Brookfield Asset Management’s renewable power group, changed jobs recently, taking on the newly created position of chief investment officer.

Brookfield made the announcement this week as part of changes in the renewable group’s leadership. Details about Shah’s new CIO role were not provided. A brief description on the firm’s website said he will be involved in all investment platforms, including infrastructure, private credit, private equity, real estate and renewables.

In addition, Shah will oversee Brookfield’s “growth into new lines of business,” the website says.

This second set of duties may be key to Brookfield’s creation of the CIO position. The context for this is found in a September investor day report by CEO Bruce Flatt, who outlined some ambitious goals for the $550 billion investor as it emerges from the market downcycle.

For starters, Brookfield intends to go deeper into the insurance field, perhaps by buying a large insurer. This would put the firm in the company of peers like Apollo Global Management and KKR, both of which did deals this year to acquire interests in insurers for strategic reasons.

Going forward, Brookfield could build its own insurance unit, Flatt said, to a projected long-term value of $100 billion to $200 billion.

Buyouts’ sister title Secondaries Investor in July reported Brookfield had launched a real estate secondaries strategy, recruiting Partners Group executives to help with the effort. Flatt added color to this initiative in his report, pointing to the attractive opportunities in fund stakes trading.

Flatt said the size of a Brookfield secondaries funds platform could over time be $25 billion to $50 billion.

Brookfield also sees a long-term opportunity of $50 billion to $100 billion in impact funds. This activity will involve Mark Carney, the former Bank of England and Bank of Canada governor, who was recently hired to run ESG and impact investing. The firm sees another $50 billion to $100 billion opportunity in technology funds, with a focus on acquiring software and software-like services that resemble utilities.

Flatt hinted at an interest in the insurance sector when reporting on Q2 2020 financial results. He noted major activity would not have been practical in the past because insurance is mostly about “putting credit to work” and Brookfield’s credit franchise was historically “not that big.”

Everything changed, however, when Brookfield in 2019 acquired a 62 percent stake in credit investment giant Oaktree Capital. The deal “opens up other opportunities for us,” Flatt said, including insurance as the tie-up with Oaktree provides for “the requisite skills.”

Taken together, Brookfield’s push into impact funds, insurance, secondaries funds and tech funds has potential long-term value of as much as $450 billion. It appears it will be Shah’s job to steer development in the four growth areas in the months and years ahead.

Shah joined Brookfield in 2002 and rose to become the renewable group’s chief executive in 2016. He was replaced in that role by Connor Teskey, according to this week’s announcement. Teskey, who is also Brookfield’s head of Europe, came onboard in 2012 as a PE team member and later moved over to the renewable side.

Shah will continue to be responsible for Brookfield’s private renewable funds. He and Carney will also be the group’s vice chairs.

Brookfield is one the world’s largest investors in renewables. Its global portfolio consists of hydroelectric, solar, wind and storage facilities totaling more than 19,000 megawatts of installed capacity and an 18,000-megawatt development pipeline. Recent deals include this year’s completed privatization of TerraForm Power, the former solar and wind affiliate of SunEdison.

Renewable power is an important focus of Brookfield’s fourth infrastructure fund, wrapped up this year at $20 billion.

Toronto’s Brookfield declined to provide a comment on this story.

Action item: Learn more about Brookfield Asset Management’s renewable power group here.