Question: The BAM deep-dive (2026-05-26-bam-deep-dive, section (a) asterisk 3 + bear-case final point) called the BAM-vs-BN carried-interest split "opaque versus comp-set peers (BX/KKR/APO are cleaner)" and flagged a plausible "opacity discount." Is the split actually undisclosed, and what is the carry-to-BAM percentage? (Open follow-up filed 2026-05-26; the most opaque-seeming item in BAM/BN disclosure.)

Verdict: Not opaque — the split is explicitly and precisely disclosed in the BAM 10-K, with exact percentages and dollar tables. Bound: BAM retains 0% of carried interest on mature (pre-2022) funds and 66.7% on new / current / open-ended funds; BN receives 100% of mature-fund carry and 33.3% of new-fund carry (via a Relationship Agreement dated 2022-11-08, special "Tracking Shares," and redeemable non-controlling interest). The deep-dive's "opacity vs peers" framing is wrong and should be corrected — Brookfield discloses this more granularly than most GPs. The substantive finding for the thesis: realized carry to BAM was $nil in FY2025, so BAM today is a near-pure fee-related-earnings (FRE) vehicle — the 22x forward multiple is being paid almost entirely for management fees, with BAM's 66.7% share of a fast-growing $1,636M accrued new-fund carry balance sitting as unrealized, building optionality that is not yet in the run-rate. This is more FRE-pure (lower carry-beta) than BX/KKR/APO — which both lowers downside earnings volatility and caps the windfall upside in boom realization years.

What we're asking

The deep-dive's section (a) listed three asterisks on the "pure-play asset manager" framing; the third was "carry economics are split between BAM and BN … the disclosure on this split is opaque versus comp-set peers." The bear case closed with "Carry economics opacity vs peers — … an opacity discount is plausible." This follow-up pulls the primary filings to (a) test whether the split is actually undisclosed, (b) bound the carry-to-BAM percentage, and (c) determine what it means for the durability of BAM's FRE-growth multiple.

What we found

The split is disclosed verbatim — exact percentages (BAM FY2025 10-K)

The FY2025 10-K (filed 2026-03-02) states the arrangement in plain terms in multiple places:

• "BN is entitled to receive 33.3% of the carried interest on new sponsored funds of BAM and will retain all of the carried interest earned on our existing mature funds."
• Relationship Agreement (dated 2022-11-08, among BN, BAM and the Asset Management Company): "carried interest generated by BAM is allocated to BN at 100% with respect to mature funds and at 33.3% with respect to current funds, new funds and open-ended funds, through the Company's non-controlling interest and preferred shares redeemable non-controlling interest."
• "Carried interest allocations generated by new funds are 66.7% attributable to BAM and 33.3% to BN."
• "All mature carried interest is due to BN therefore BAM's net amount of mature carried interest retained is $nil."
• Tracking Shares: a series issued by Brookfield US Holdings Inc. ("BUSHI") "provides BN with an economic interest equal to effectively 100% of the carried interest earned in mature funds." The Tracking Shares give BN a redemption right equal to the fair value of the mature-fund carry entitlement, net of compensation costs.
• Clawback: "BN and the Asset Management Company are responsible for clawback obligations in relation to carried interest … in the same proportion."

The carry-to-BAM bound is therefore exact, not estimated:

The dollar tables (BAM 10-K notes, carry shown on a 100% basis)

• The new-fund accrued carry balance more than doubled in 2025 ($693M → $1,636M, almost entirely from fund fair-value gains of +$943M) — this is BAM's building carry annuity. BAM's economic share is 66.7% ≈ ~$1.09B accrued (unrealized).
• The mature-fund balance is winding down ($1,394M → $197M) and is 100% BN's — BAM's net mature carry is $nil by construction.
• Realized carry to BAM was $nil in FY2025 (down ~$25M YoY; the prior year's realizations were from a first real-estate flagship fund's dispositions, mostly mature → BN). So BAM booked no realized carry income this year.
• Non-controlling interest on BAM's books is "comprised of BN's one third share of carried interest revenue generated on new funds" (NCI balance $336M → $373M in 2025).

Mechanism + structure context

• The economics flow to BN through three instruments: the Relationship Agreement (2022-11-08), special Tracking Shares of subsidiaries (incl. BUSHI) for the mature-fund 100%, and redeemable NCI + preferred shares for the new-fund 33.3%.
• A 2025 Arrangement (the up-C collapse) made BAM Ltd the direct parent of the Asset Management Company (ULC), which is BAM's accounting "Predecessor." This reorganized the corporate ownership but preserved the carry split unchanged via the instruments above.
• A new Services Agreement (dated 2025-12-09) among BN, BAM and the Asset Management Company governs cost-recovery services between the entities — it does not alter the carry split.
• BN 40-F (FY2025 AIF) confirms the mirror at the structural level: BAM is listed as BN's principal subsidiary; BN holds BAM plus "four perpetual affiliates." (BN's own granular carry-receipt accounting sits in its financial-statements exhibit; the BAM 10-K already presents both sides, so it is the authoritative, more-granular source on the split.)

Verdict + reasoning

1. Correct the deep-dive: the split is not opaque. Brookfield discloses the carry allocation more precisely than the deep-dive assumed — exact percentages (0% / 66.7% to BAM), the governing agreements by name and date, dollar tables on a 100% basis with the BN portion broken out, and the clawback proportion. The "opacity discount vs BX/KKR/APO" bear point is unfounded and should be struck. If anything, the mechanism (Tracking Shares + redeemable NCI routing carry to a controlling parent) is unusual, but it is transparently described.

2. The substantive thesis finding — BAM is more FRE-pure than the deep-dive implied. Realized carry to BAM was $nil in FY2025; mature-fund carry is 100% BN's. So BAM's current earnings — and the 22x forward multiple — are being paid almost entirely for fee-related earnings, with carry as nearly-free optionality. This confirms and reinforces the payout-ratio investigation (2026-05-28-bam-payout-ratio-sustainability), which found the dividend is funded by recurring FRE and that carry is currently a drag on DE, not a funding source.

3. There is a building, unrealized carry annuity — but it's optionality, not run-rate. BAM's 66.7% share of the $1,636M new-fund accrued balance (~$1.09B, unrealized) grows as post-2022 vintages season and begin realizing. This is genuine upside not yet in the FRE-based multiple — but it is lumpy, fair-value-driven (so it can reverse, as the mature balance's $734M swing shows), and years from steady realization. Modestly supportive of multiple durability; not a near-term catalyst.

4. Net read on the comp-set premium. BAM being structurally FRE-pure (it forgoes mature-fund carry entirely and shares new-fund carry) means lower carry-beta than BX/KKR/APO — cleaner, more recurring earnings (supports a premium FRE multiple) but no big carry windfalls in boom realization years (caps upside). The deep-dive's "BAM 22x vs APO 13x" comparison should be read with this in mind: you are paying up for a lower-volatility fee stream, not a typical GP's carry-levered earnings. No conviction change (medium holds); the correction tightens why the multiple is what it is.

Routed back to the deep-dive

• Section (a) asterisk 3 and the bear-case "carry economics opacity" point corrected inline in the May 26 BAM deep dive; the open-question line marked resolved with the bounded split. No watchlist/perspective mutation (BAM/BN coverage already handled via the alt-managers tracking list created 2026-05-26; thesis/conviction unchanged).

Sources

• BAM FY2025 10-K (filed 2026-03-02): SEC EDGAR Archives/edgar/data/1937926/000162828026013098/bam-20251231.htm — carry-split language ("BN entitled to 33.3% on new funds … retain all mature"; "66.7% attributable to BAM and 33.3% to BN"; "BAM's net … mature carried interest retained is $nil"), Relationship Agreement (2022-11-08), Tracking Shares / BUSHI 100%-mature mechanism, accrued new-fund table ($305M→$693M→$1,636M), mature-fund table ($1,394M→$931M→$197M), realized carry $nil FY2025, NCI = BN's one-third new-fund share, 2025 Arrangement, Services Agreement (2025-12-09). Downloaded to /tmp/bam-10k.htm for extraction.
• BN FY2025 40-F (filed 2026-03-18): SEC EDGAR Archives/edgar/data/1001085/000100108526000006/ — AIF exhibit a2025-40xfex991aif.htm confirms BAM is BN's principal subsidiary + perpetual affiliates; BAM Partnership control (Flatt/Cockwell/partners one-third each in the trustee).
• Sibling investigation: 2026-05-28-bam-payout-ratio-sustainability (carry is a DE drag, not the dividend funding source — cross-consistent).
• Deep-dive being refined: 2026-05-26-bam-deep-dive (section (a), bear case, open questions).