Brookfield expands funds range with open-ended core vehicle

The Canadian fund manager has launched a ‘perpetual’ infrastructure fund to cater to investors looking for fixed-income alternatives.

Brookfield Asset Management has launched an open-ended core infrastructure fund targeting assets that do not generate returns as high as its more opportunistic vehicles, the Canadian fund manager’s chief executive said on Thursday.

Bruce Flatt announced on Brookfield’s first quarter earnings call the launch of two “additional perpetual fund products”: a core infrastructure fund and an Australia core real estate fund, saying there’s a “big appetite for these types of products as a fixed-income alternative”.

“What we found is there’s many assets out there that our clients would love to own as an alternative to fixed income but don’t meet the thresholds of returns that we get in our more opportunistic funds. So, the [core] infrastructure fund will target that,” Flatt said.

The open-ended vehicle is not a successor to the $14 billion Brookfield Infrastructure Fund III. That fund, which closed in 2016, is now 50 percent committed and invested, Blatt said. Infrastructure Investor previously reported that Brookfield plans to launch its next “flagship” infrastructure fund this year, with reports suggesting BIF IV could target as much as $20 billion.

Blatt added the possibility of eventually launching an open-ended renewables-focused fund as well.

Brookfield has mentioned adding new infrastructure strategies since last year, when infrastructure head Sam Pollock said on a conference call with investors the firm is “looking at super core funds” to expand its investor base.

“We don’t think that we’ve really maximised the number of people who can invest in a unique infrastructure story,” he said, adding that he hopes to see Brookfield’s infrastructure investor base expanded by up to $1 billion a year.

Brookfield, which now manages around $285 billion in assets, reported generating almost $500 million from asset sales this quarter, according to the firm’s first quarter earnings report. From its infrastructure group, the firm closed the sale of its 28 percent interest in Chilean transmission company Transelec for $1.3 billion in March.