Brookfield raises largest-ever fund to invest US$28-billion in infrastructure assets

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Brookfield Asset Management Ltd. raised US$28-billion for its latest flagship infrastructure fund, surpassing its fundraising target and defying a tough environment that has made it harder for some rivals to raise new money.

The fifth Brookfield Infrastructure Fund that closed this week is 40 per cent larger than its US$20-billion predecessor, and the average size of commitments from about 200 limited partners roughly doubled. Brookfield has also attracted US$2-billion in co-investments into deals it has made through the fund, bringing the total amount of money raised so far to US$30-billion.

It is the largest fund Brookfield has ever raised, and the biggest closed-end private infrastructure fund in the world, according to the asset manager. Brookfield had aimed to raise US$25-billion.

So far, Brookfield has invested about 40 per cent of Infrastructure Fund V into six deals, which include its US$4.7-billion acquisition of freight container giant Triton International Ltd., and its US$15-billion stake in a semiconductor project in Arizona in partnership with Intel Corp.

In a year when fundraising has been a slog for many asset managers, Brookfield has been a notable outlier and is on track for a record year after raising US$61-billion through the first three quarters.

Across private markets, cash-crunched limited partners (LPs) have been hunting for liquidity and shifting the mix of their investments as high interest rates have dented returns from public equities and made bonds more attractive. That has made it harder for many private equity firms and asset managers to raise new money, though Brookfield has benefited from a trend that has seen investors flock to the largest fund managers.

“It is a tougher fundraising environment. Investors are taking longer, they’re investing less. But for us, we found that was more than offset by the fact that investors are consolidating with fewer managers,” Rene Lubianski, a managing partner in Brookfield’s infrastructure group, said in an interview. “Even in a tougher environment, there was still support from both existing and new investors.”

Most of the LPs that joined the fifth flagship infrastructure fund were existing investors with Brookfield, the company said. They include large public pension funds such as the California Public Employees’ Retirement System (CalPERS), according to data from Bloomberg LP, but also sovereign wealth funds, insurance companies, endowments and family offices.

Brookfield saw an increase in commitments from sovereign wealth funds to its fifth infrastructure fund, in particular from investors in the Asia Pacific region and the Middle East. Sovereign funds are keen to get access to co-investment opportunities, which can offer significant returns with fewer fees, and are willing to make major commitments to flagship funds to build up relationships.

In the fifth Brookfield infrastructure fund, which held the close of its first phase of fundraising in the summer of 2022, commitment sizes from LPs generally increased in size across the board, but there is a higher concentration of very large investors at the top end.

“We had some investors come in at very, very significant amounts – amounts that we didn’t think, when we got into this business 15 years ago, were even possible,” Mr. Lubianski said.

Infrastructure has proven an attractive asset class to many investors as the cash flows it generates are typically steady, set out in contracts that are sometimes indexed to inflation, which has protected their value as prices have soared. As a result, some large institutional investors are still boosting their allocations to infrastructure, even as they have hit investment limits for other asset classes such as private equity.

Brookfield executives have said they see major opportunities in certain areas of infrastructure such as data centres that support cloud computing and the development of artificial intelligence, and a variety of projects aimed at reducing carbon emissions.

Brookfield has also targeted investments in shipping and transportation – the Triton International deal is a high-profile example – as geopolitical tensions appear to be driving a trend toward “deglobalization,” redrawing the world’s supply chains.

“With significant momentum in the sector as a result of multi-decade investment themes, we look forward to deploying the Fund’s remaining capital,” Brookfield Infrastructure chief executive officer Sam Pollock said in a statement.