File photo of Bruce Flatt, chief executive of Brookfield Asset Management.Brett Gundlock/Reuters
If you have a railroad or a port for sale, there's a big new buyer as Brookfield Asset Management just closed a massive $7-billion (U.S.) infrastructure fund that will invest in such things as transportation and energy assets. The new money has the potential to bump up Brookfield's fee income markedly.
Brookfield blew right through the $5-billion target. There are more than 60 investors, including sovereign wealth funds, insurers, and public and private pension plans. Brookfield is putting in $2.8-billion of its own money (through its Brookfield Infrastructure Partners and Brookfield Renewable Energy Partners LP subsidiaries), meaning $4.2-billion is coming from outside investors. Brookfield said half the investors are rookies at putting money into Brookfield funds.
The new fund will surely significantly boost Brookfield's fee income.
At a 1.5 per cent management fee, which is in the ballpark for funds of that size, the new outside assets would represent about $63-million a year in additional income for Brookfield. That would be before any performance fees.
In August, the company said its fee-bearing capital under management was on the order of $78-billion, so a fresh $4-billion of outside money would raise that by roughly 5 per cent. At the time, Brookfield said it was marketing five private funds. Since then, it has also closed a $1-billion timberland fund. (Brookfield declined to disclose the fee structure on the new infrastructure fund.) The fund will look in the Americas, Europe and Australasia for assets. Other asset classes in the crosshairs are renewable power and utilities.
"We are pleased to launch this Fund at a time when we see strong opportunities to invest in high quality core infrastructure assets on an attractive risk-adjusted return basis," said Sam Pollock, Senior Managing Partner and Chief Executive Officer of Brookfield's Infrastructure Group, said in a release. "We believe real assets such as infrastructure are an important and growing component of institutional portfolios, and we see significant potential for investments in all the regions where we operate."