Brookfield Asset Management Inc. has another $1-billion (U.S.) under management, after wrapping up fundraising for a timber fund that met hotter-than-expected demand.
Brookfield set out to raise $750-million to invest in timberland and said commitments exceeded the target. Toronto-based Brookfield also put in $250-million of its own money.
The cash will be used to buy timber in the U.S., Brazil and Australia, for starters, with other countries such as Canada perhaps getting a look down the road.
The fund comes not long after another Brookfield manager, Brookfield Infrastructure, got out of the timber business, which it called a "lower yielding" asset, to focus on other areas.
The timber industry has contributed a few significant deals to the Canadian M&A landscape in recent months. In the second quarter of the year, two of the biggest deals came from this sector. Brookfield Asset Management and some of its related investors were sellers in both the deal for Longview Timber LLC to Weyerhaeuser Co. for about $2.65-billion and the sale of Longview Fibre Paper and Packaging Inc. to KapStone Paper and Packaging Corp. for about $1-billion.
"Many analysts and investors have taken Brookfield's divestitures, along with stronger US housing starts through 2013 and growing log and lumber exports to China, as pointing towards a recovery for the forestry industry – despite again-softening lumber prices," PricewaterhouseCoopers wrote in a recent report on Canadian M&A. The report noted that private equity players such as Brookfield had identified value in the industry several years ago, where traditional players were slower to do so, and were willing to act more aggressively.
( Boyd Erman is a Globe and Mail Capital Markets Reporter & Streetwise Columnist.)
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