Mr Flatt said the deal was an example of the way funds management was becoming super-sized, both in the size of the deals and the size of the clients.

“What’s happening in the investment world, but also in the alternatives world, is that institutions are getting bigger, and what that means is they need to place larger sums of money. And to be able to do that they need large managers and they want multiple products with those people.”

While few institutions can match Brookfield for sheer size – last year it invested $US35 billion and it has raised a further $US50 billion to deploy – Australia is experiencing a taste of this trend thanks to the rapid growth of the local superannuation industry.

Debate about the implications of this expansion has grown following signals that the country’s largest super fund, AustralianSuper, will increasingly pursue direct ownership of companies.

AusSuper, which manages $145 billion, teamed with private equity firm BGH to compete with Brookfield for Healthscope.

Brookfield is closing in on the acquisition of Healthscope.  Nic Walker

But Mr Flatt said he did not expect Brookfield would face competition from super funds on the mega deals for which it has become famous, including last year’s $US14 billion acquisition of Johnson Controls’ car battery business, the $US11.4 billion purchase of a portfolio of office and residential properties in the US, and the $US4 billion acquisition of Westinghouse Electric Company.

“These institutions are amassing enormous sums of money and some of them can do some things on their own,” Mr Flatt said of the super funds.

“But even though they are large, they won’t put $US14 billion into one investment. So then they have to go and find others who are similarly minded and put a group together, and that’s not easy.”

Brookfield, which typically puts 30 per cent of its own cash into any deal, drew huge advantages from its global network, its deep experience in running businesses and the fact it can speak with one voice, Mr Flatt said.

“Sometimes [super funds] don’t want to take the perceived risk that we do with developing assets, but they can buy the assets that have been cleaned up. And for them the returns that they’re getting, with less risk, are very good compared to what they would get otherwise.”

But Mr Flatt said alternative assets would become an increasingly important part of the asset holdings of super funds, predicting “most institutions will have 50 per cent alternatives 25 years from now”.

“Many will do it with us, some will do it on their own, some we will assist to bridge them to be able to do it on their own. Many times we will be their partner, sometimes we are selling things to them and sometimes they are competing with us.

“But in general there’s a lot of opportunity out there.”

The amount of cash on Brookfield’s balance sheet rose more than 60 per cent to $US8.4 billion at the end of last year, and Mr Flatt repeated his warning that a recession was likely in the next few years, even if it was difficult to see a trigger at the moment.

“We see nothing in our businesses that makes us worry, although that in itself means one should worry.”

Mr Flatt said that 10 years into the global recovery, history pointed to a downturn at some stage.

“Ten years is actually quite long – maybe it’s 12 years, maybe it’s 13 years, maybe it’s 14 years [when a recession occurs]. But at some point you’ll have a downturn – I don’t think that will repeal itself in most economies around the world.”

But Mr Flatt was relatively sanguine about the prospect, stressing that Brookfield’s geographic spread across 30 countries meant it was always exposed to economies moving at different speeds, and a recession would create opportunities to deploy large amounts of capital.

“Our view is longer term and more contrarian in nature, so we tend to look past the short-term noise, and see where the longer term opportunity is,” he said.

He remained upbeat about Australia, where Brookfield’s expansion has taken it from real estate into all parts of the economy. It owns construction giant Multiplex, the Dalrymple Bay Coal Terminal, the Patrick Terminals port business and a large portfolio of property.

“We see nothing in our businesses that makes us worry, although that in itself means one should worry.”

Bruce Flatt, Brookfield Asset Management

The Australian business has also become the Canadian giant’s launch pad into Asia.

“Australia’s been very good to us. Every year almost we’ve increased our investment here,” Mr Flatt said.

Brookfield’s Asia Pacific head, Stewart Upson, said the company was excited about the prospect of winning shareholder approval and closing the Healthscope deal, pointing to the deep experience the company had in both building $9 billion worth of hospitals and operating these facilities through its various business units.

And in the same way Brookfield’s Australian arm would look to leverage the company’s other hospital operations around the world at Healthscope, Mr Upson was keen to build on the acquisition of data centre operator DCI late last year.

“The great thing about that is that in every country they are basically the same but even better, the customers are common.

“We hope that we can put a lot of money to work to help develop that sector in Australia.” 

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