Brookfield Asset Management Inc. has closed the biggest fund in its history, raising US$20-billion from institutional investors who have a seemingly insatiable demand for infrastructure assets.
The Toronto-based company initially set a US$17-billion target for Brookfield Infrastructure Fund IV when it was announced in late 2018. Brookfield says it put US$5-billion into the fund itself, and raised the remainder from 170 institutional investors, including pension plans, sovereign wealth funds, insurance companies and other investors. About three-quarters of investors were already participants in other Brookfield funds.
Brookfield announced a “first close” of the fund in 2019, with more than US$14-billion, and has already made US$8-billion in investments, the company said Friday. These include Genesee & Wyoming Inc., the largest short-haul rail operator in North America, as well as natural gas pipelines in North America, renewable power assets across the globe, and data infrastructure businesses in South America, New Zealand, India and Britain.
Big investors, chasing returns in a low-interest-rate environment, have increasingly looked to private “alternative” assets such as real estate, private companies and infrastructure, including toll roads, mass transit, power plants and data storage.
Brookfield is one of a handful of private-asset managers with global scale, with more than US$500-billion in assets under management in various funds. Brookfield took a majority stake in distressed-debt specialist Oaktree Capital Management in 2019, adding more than US$100-billion in assets.
Brookfield chief executive officer Bruce Flatt told shareholders in the Toronto Stock Exchange-listed company that they believe institutional investors will push toward having 60 per cent of their portfolios in alternatives, up from 25 per cent today. Over the past two years, Brookfield has raised more than US$50-billion across several funds, including a US$9-billion private-equity fund and a US$15-billion real estate fund that closed last year.
Brookfield’s infrastructure funds have grown in size in recent years, from US$2.7-billion for the first in 2010, to US$7-billion, then US$14-billion, with all surpassing their targets by 40 per cent or more.
Brookfield’s US$5-billion contribution to the newest fund will come from two limited partnerships that trade on the New York and Toronto stock exchanges: Brookfield Infrastructure Partners LP and Brookfield Renewable Partners LP.
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David Milstead