Going Global to Boost Revenue

GLOBAL DEVELOPMENT: Brookfield has a 50% stake in London's Canary Wharf, a 16-million-square- foot office and retail property.

There's one surefire way that North American companies can boost revenues—expand beyond borders. For a case study, look at Brookfield Asset Management. Over the last decade, shares in the alternative asset management company rose by 230%, compared with 75% for the benchmark S&P 500. Brookfield's assets under management jumped from $30 billion to more than $200 billion over that same time period.

In 2005, most of Brookfield's assets were in North America. But management realized that by investing internationally in property, infrastructure, renewable energy, and private equity, the company could expand its asset base. In addition to its investments in North and South America, Brookfield's portfolio now includes assets in Australia, Europe, India, and China.

"The only way to successfully grow at that pace is to take a global view," says Kelly Marshall, a managing director at Brookfield.

Here's how it has done so: by teaming up with sovereign wealth funds and other institutional investors, along with global banks such as HSBC.

Boots on the Ground
For most major companies, international expansion is a necessity, says Marianne Rowden, president and CEO of the American Association of Exporters and Importers: "Once you've saturated the market, who else are you going to sell to?"

Indeed exporting companies had an average three-year post-IPO cumulative return of 45%, compared with 15% for non-exporting companies between 1985 and 2010, according to the Midwest Finance Association.

When Brookfield arrived in London "we weren't aggressive," says Marshall. "What we did was old-school knocking on doors and building relationships. As much as technology has helped, business is still about building personal relationships."

Finding Partners
That relationship-building has more than paid off. In 2002, Brookfield took a 22% stake in the Canary Wharf Group, owner of Canary Wharf, London's iconic 16-million-square-foot office and retail property. In April, Brookfield, along with the Qatar Investment Authority, Qatar's sovereign wealth fund, purchased the rest, raising their stake to 50%.

When it comes to international growth, partnerships are critical, agrees Rowden. That could be business partners, but it's also local lawyers, accountants, brokers, and anyone else who can help an American executive better understand a new market and facilitate connections with potential clients, she says.

Having a strong financial partner is also important, adds Marshall. For the Canary Wharf acquisition, HSBC helped Brookfield manage the transaction. "They help us understand the nuances," he says.

Expanding into Europe
Many American businesses today have their sights set on Europe, says Marc Lhermitte, a Paris-based partner at Ernst and Young—which estimates that foreign direct investment inflows into Europe grew by 36% in 2014 over the year prior, the largest gain of any region in the world. As well, 59% of investors think that Europe will become more attractive over the next three years, compared with 38% who said the same in 2012.

"It's a massively sophisticated market with impeccable logistics and a history of trade routes and partnerships," says Lhermitte. "It's an old continent that has been doing business for centuries."

Europe, and the U.K. in particular, remain on Brookfield's radar. "The U.K. real estate market is poised for continued growth," says Marshall.

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