BIP: The Consequences of a Toxic Financial Structure
BIP's financial structure incentivizes BAM to maximize fees with policies, taken to the extreme, are toxic for the limited partners. Right-sizing the expense structure implies steep losses.
Full report here:
On first view, drivers of fees - a higher unit price and higher distributions to limited partners - may seem to align the interests of the managers and owners. However, the unintended consequence of BIP’s success is that financial policies have become toxic for limited partners. Units have been transformed into a variation of a pyramid scheme, where the profits of the underlying investments alone cannot pay the bloated fee structure and expected investor returns. Comparing BIP with a sister entity that was launched in 2023 by Brookfield Asset Management illuminates BIP’s fatal flaws clearly.
There have been a lot of reports like this, the main theme being that cash flows do not support the unit distributions. The reports have been debunked by Manlobbi at Shrewdm.com here:
https://www.shrewdm.com/MB?pid=846395257