Data assets a likely landing spot for recycled Brookfield Infrastructure capital

Brookfield Infrastructure Partners sees “significant opportunity” for investments in digital infrastructure in the short term as the firm seeks to liquidate up to $2 billion as part of a capital recycling programme.

Sam Pollock, the chief executive of Brookfield Asset Management’s listed subsidiary, said during an earnings call on 3 May that it would be taking a look at assets that support the distribution and management of data as it repositions the $61 billion of assets it has under management.

Pollock called data one of the world’s “fastest growing commodities,” and said the trend would “persist for the foreseeable future”. He said growth in the sector was largely driven by increasing data consumption and demand for faster mobile internet networks. “We have identified this exponential growth in data users worldwide as a significant opportunity, particularly with the large-scale infrastructure investments that will be required to support data transportation and storage,” he said.

BIP’s first major deal in the sector was in 2015, when it led a consortium that acquired a 50 percent stake in French broadcast tower operator TDF in a deal valued at $2.2 billion. BIP has also added data centres in Europe, North America and Brazil to its portfolio, as well as a stake in a UK fibre distribution utility.

Data and telecommunications investments generated the smallest portion of funds from operations this quarter for BIP at $28 million. This compared with $139 million for the transportation sector, $137 million from utilities and $107 million from energy.

BIP’s growing interest in data infrastructure comes as it looks to redeploy money made from a capital-recycling programme. Bahir Manios, the firm’s chief financial officer, said on the earnings call BIP was exiting mature investments and was “on track” to create between $1.5 billion and $2 billion in proceeds from sales over the next 18 months.

Manios added that BIP’s previously announced sale of the firm’s stake in port terminal operator Euroports, for an undisclosed amount, is expected to generate $130 million of after-tax proceeds when the transaction closes in June. UK-based PD Ports, the firm’s other port asset, is receiving a $17 million investment to expand the asset’s capacity by as much as 20 percent by 2020, he said.

The $1.3 billion sale last year of Chilean toll road company Transelec generated $360 million in net proceeds, Manios said, which BIP has since deployed as part of its $200 million investment in Brazilian data centre company Ascenty. As part of the latter deal, BIP formed a joint venture with global data centre provider Digital Realty Trust to take co-ownership of a portfolio of eight data centres in São Paulo, Campinas, Rio de Janeiro and Fortaleza. Ascenty has since expanded in Chile as well.

Other investments supported by the sale of Transelec include BIP’s $1.9 billion acquisition of a 1,500km natural gas pipeline in India, its largest transaction in the country to date; and the first part of its $3.3 billion purchase of assets in Western Canadian Midstream, a business it acquired from Enbridge last July.