2022 is set to be the year of the mega-fund

A mere two years ago, mega-funds were the sole proviso of Brookfield and GIP. As we look to next year, no fewer than four of these vehicles are set to reach a final close.

In July 2016 we wrote, somewhat breathlessly, that “Toronto-based Brookfield Asset Management has surpassed Global Infrastructure Partners to close the largest infrastructure fund ever raised at $14 billion”. It didn’t take long for GIP to get back on top, which it did in January 2017, when it closed its third flagship vehicle on $15.8 billion.

You’d have to wait until 2019 to find any managers surpassing those two tallies. Two of them eventually did: GIP in December 2019, when it closed its fourth flagship on $22 billion; and Brookfield in February 2020, when it closed its fourth fund on $20 billion.

Like the Amur leopard, one of the rarest cats on earth, the infrastructure mega-fund – which we are defining, rather generously, at $14 billion minimum – was glimpsed infrequently, its sight inspiring equal amounts of awe and trepidation, especially if you were sharing the fundraising trail with one of them.

Well, those days have ended.

As we cast a casual glance at the fundraising calendar for 2022, we are expecting no less than four mega-funds to close next year (if not before). There’s Stonepeak Infrastructure Partners’ fourth flagship, set to close on its increased $14 billion hard-cap in January; I Squared Capital’s third fund, due to close on its revised $15 billion hard-cap, also early next year; Brookfield’s Global Transition Fund (which, for our money, still sounds a lot like an infrastructure/renewables fund), aiming for a $15 billion-plus March close; and KKR’s fourth global flagship, which was targeting $12 billion but had already reached a $14.2 billion first close over the summer. And let’s not forget the €15.7 billion November final close of EQT’s fifth fund, the largest vehicle of 2021.

So that’s five mega-funds, raising north of $75 billion, all likely closing within a few months of each other. If you want a sign of how far the asset class has come in recent years, its rapidly ballooning mega-fund count is a good barometer. But what’s especially interesting is how far the asset class has come just since the pandemic has started.

Looking at our ranking of the 50 largest fund managers in the world in 2016, when Brookfield’s first mega-fund closed, only the top three firms had raised more than $20 billion over the ranking’s five-year period. Even in 2019, when our second batch of mega-funds closed, our top 50 ranking showed only the top four firms raising over $20 billion. In 2021, however, our newly expanded II 100 list shows all of the top nine GPs amassing over $20 billion.

What’s more, these fundraising tailwinds show no sign of abating. In Probitas Partners’ recent Private Equity Investor Trends: 2022 Survey – its infrastructure surveys were paused during covid, but will resume next year – the asset class was “the area of most interest” among investors looking to allocate to or interested in real assets.

In October 2020, we hazarded a guess that the 2020s will be infrastructure’s decade. Looking at the strength of fundraising in 2022 – as well as across private markets in general – gives us confidence that the asset class is onto a good start.