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Brookfield Asset Management eyes slumping Canadian oilpatch for investment

TORONTO • Brookfield Asset Management Inc. is interested in Canada’s oil sector after participating in a US$2.1 billion transaction in Australia last month to take advantage of battered oil prices, the firm’s chief executive Bruce Flatt said Wednesday.

“Oil and gas, clearly, especially oil in Alberta, is a sector which is under more stress than it has been in a long time,” he said following the company’s annual meeting in Toronto.

“We don’t have a lot of oil exposure today. Most of the stuff we have in Alberta is natural gas related…. Our view today is that it’s a good time to be starting into the oil business.”

When asked how much Brookfield might spend, he pointed to last month’s purchase of the Australian oil producing assets of U.S. energy group Apache Corp. alongside Macquarie Capital.

“Our deal in Australia was a US$2 billion transaction. It could be larger than that… We generally don’t do too many small transactions,” Flatt said.

In a letter to shareholders Wednesday, Flatt referred to the Apache deal as Brookfield’s “first significant oil investment since the change in oil valuations.”

After the meeting he said “there could be others,” and added that Brookfield could be interested in oil production or a “mid-stream” business, which traditionally includes transportation and storage.

Brookfield, an asset manager with about $200 billion under management, has other energy investments in the province of Alberta. Last year, Brookfield portfolio company Ember Resources Inc. bought coalbed methane assets in southern and central Alberta from Encana Corp. for around $605 million.

Brookfield plans to raise about $20 billion for new private funds by the end of 2015, executives said, and they expect to be active investors in countries where capital is scarce, such as Brazil.

Flatt said he also expects to be more active in Europe.

“Our business, it’s about where the opportunities are… on a relative basis, and Europe you can generally buy with a much lower currency today than what you could’ve years ago,” he said. “And there are still a lot of investors shying away from Europe so that gives us the opportunity.”

He said Brookfield has an advantage in these circumstances because there are only about 10 other large investors who can compete for deals.

Even “formidable players” with a lot of capital, such as Canada’s largest pension management organizations, “don’t have the [comparable] scale of the operation or the people around the world,” he said.

“Our transactions can be much larger than most institutional investors on their own… We have the operating edge with our [nearly] 30,000 people.”