Brookfield Acquires Majority Stake in Angel Oak Companies

Brookfield is taking a bigger bite of the private credit business, acquiring a majority stake in a mortgage lender and investor as it tries to keep up with the likes of Blackstone and Apollo Global Management.

The asset manager is taking a 50.1 percent stake in Angel Oak Companies, Bloomberg reported. The specifics of the financial arrangement were not disclosed.

With the acquisition, Brookfield’s investors will gain access to Angel Oak’s residential mortgage credit business; it also has an asset management arm. Angel Oak manages more than $18 billion in assets, specializing in non-qualified residential mortgages. The company has originated $30 billion worth of residential mortgages in the past decade.

The firm’s mortgage origination business provides loans for borrowers who wouldn’t normally qualify for traditional mortgages from banks or the government. For instance, it provides bank statement loans for those who are self-employed and mortgages for people with assets, but no income from employment.

Angel Oak often bundles its debt into bonds of variable risk and size. This year, the company has already issued at least three residential mortgage bonds tied to its originated non-qualified mortgages.

Angel Oak co-chief executive officers Sreeni Prabhu and Mike Fierman will retain their roles as Angel Oak maintains independent operations.

Brookfield’s credit arm has $317 billion in assets under management. That’s split between partnerships the asset manager has with other credit firms and its own deployed capital.

While non-qualified mortgages are not a large part of the home loan market, they are growing in share as creditworthy borrowers seek alternative ways to finance their purchases.

After cratering in the aftermath of Consumer Financial Protection Bureau regulations in 2014 — hitting a nadir of less than 3 percent of the market in 2020 — the usage has nearly doubled from that point to about 5 percent of the market in the first half of 2024, according to Scotsman Guide.

— Holden Walter-Warner