Brookfield closes ‘Americas’ infra fund on $2.7bn

The close marks at least the fifth above-target infrastructure fundraising of the year and gives the Toronto-based asset manager a flagship platform for investments in North and South America. The firm originally targeted $1.5bn for the Brookfield Americas Infrastructure Fund.

Brookfield Asset Management has closed its North- and South America-focused infrastructure fund on $2.7 billion, besting its initial target by $1.2 billion, the firm said in a statement.

The fund’s close came a day after the Canadian investor secured a final commitment for the so-called Brookfield Americas Infrastructure Fund from a California-based pension. On 16 September, the San Diego County Employees Retirement Association unanimously approved a $75 million commitment for the fund, moving the needle for Brookfield’s expectations for a final close up from about $2.6 billion to the announced $2.7 billion.

“We’re looking forward to dialing back the fundraising efforts,” John Stinebaugh, the fund’s chief financial officer, told the San Diego pension at the conclusion of a videotaped meeting last week.

Brookfield said the fund attracted capital from sovereign wealth funds and public and private pension plans in North America, Europe, Asia and the Middle East.

The fund’s close marks the third above-target infrastructure fund-close in North America this year. In January, Alinda Capital Partners, a New York-based infrastructure fund manager, closed its second fund on $4 billion against a target of $3 billion. And in August, New Jersey-based Energy Capital Partners raised $4.3 billion for its second fund against a target of $3.5 billion.

Including European fund managers, the close marks at least the fifth above-target infrastructure fund close this year: Paris-based Cube Infrastructure and Netherlands-based DIF Infrastructure each closed infrastructure funds above their initial targets in recent weeks.

However, the Brookfield fund includes a sizeable commitment from the firm itself. Brookfield had told potential investors in a pitchbook marketing the fund that it would make a commitment of at least $500 million to the fund, “but in any event not less than 25 percent”.

“That is our alignment of interest with our fellow investors,” Brookfield senior managing director Harry Goldgut told the San Diego pension last week.

The 25 percent, or $660 million, will be “primarily funded by Brookfield Infrastructure Partners”, Brookfield said in a statement. Brookfield Infrastructure Partners is Brookfield’s Toronto and New York-listed infrastructure fund.

The Brookfield Americas Infrastructure Fund is also about 18 percent invested, according to the firm’s pitchbook. The fund has invested approximately $475 million to date from the fund across four assets. These include a $35 million investment in a hydroelectric plant in Maine, a £100 million (€119 million; $156 million) investment in British port operator PD Ports, an A$295 million (€213 million; $279 million) investment in the Dalrymple Bay Coal Terminal in Australia, and a $6 million investment in a start-up power transmission project in Texas.

The fund also has an exclusivity arrangement to acquire a half-interest in a small hydro plant in California, Goldgut said, and may buy into wind power development projects in the same state.

Long-term, Brookfield hopes to have 25 percent of its capital invested in Latin America. Goldgut told the San Diego pension during its presentation last week that “the lion’s share” of these investments will go to Brazil and Chile. North America will make up 60 percent of the fund’s investments and non-Americas investments will comprise 15 percent.

Other highlights of the fund’s terms include:

     – A focus on the utilities, renewables, transportation and energy sectors;
     – A fund life of 12 years plus two one-year extensions;
     – A target gross investment return of 15 percent;
     – Management fees of 1 percent on committed capital and 1.5 percent on  
       invested capital;
     – A carried interest of 15 percent over a preferred return of 8 percent;

The fund is part of a broader array of property-, power- and infrastructure-focused investment funds managed by Toronto-based Brookfield. The firm has established private funds and investment programs totaling $22 billion since 2001. Overall, Brookfield has $100 billion of assets under management.