Brookfield’s new ‘super-core’ fund collects $1.6bn so far

The open-ended fund launched last year offers investors long-term exposure to assets that do not generate as high returns as the firm’s flagship fund series.

Brookfield Asset Management has raised $1.6 billion to date for an open-ended fund targeting “super core” infrastructure assets, according to a regulatory filing.

The Toronto-based fund manager launched the Brookfield Super-Core Infrastructure Partners fund in May 2018 in a bid to give investors access to infrastructure assets that do not generate returns as high as its flagship fund series. The open-ended structure, which allows Brookfield to hold assets for an undesignated amount of time, suggests the fund is about offering investors long-term yield.

According to documents published by the University of Manitoba’s endowment fund, which in January approved a $75 million commitment to Brookfield Super-Core Infrastructure Partners,  the fund will invest in “essential and mature assets” across the energy, power, utilities and transportation sectors in North America, Western Europe and Australia. The fund has a target IRR of between 8 and 9 percent and a target cash yield of 5 to 6 percent. It has a target size of $5 billion.

A spokeswoman for Brookfield declined to comment for this story.

In announcing the fund last year during an earnings call, Brookfield chief executive Bruce Flatt described the super-core vehicle as a “perpetual” fund structure.

“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 return that we get in our more opportunistic funds,” Flatt said at the time. “So the [core] infrastructure fund will target that.”

Brookfield Infrastructure Fund IV, the firm’s newest flagship vehicle, which held first close in May on more than $14 billion, is targeting around 13 percent net returns, according to pension documents published online. The fund is targeting investments in energy, transportation, renewables and telecommunications.

Brookfield is not the first fund manager to expand its product offering by launching a fund targeting core assets. In July 2018, Macquarie Infrastructure and Real Assets closed the Macquarie Super Core Infrastructure Fund Series 1, on €2.5 billion, well above its €1.5 billion target. That vehicle is targeting 7-8 percent net returns and a 5 percent cash yield. The €2.5 billion fundraising is set to be the first in a series of three, with each expected to be of around an equal size. Macquarie’s vehicle is structured as a 20-year fund starting from its Series 1 close.

“The new fund has been developed in partnership with investors to complement MIRA’s existing European infrastructure funds, targeting investments in core regulated assets through a long-term, yield-focused vehicle,” MIRA said in a statement at the time.