Colombia and beyond

Fundraising is tough. Everyone knows that and just one data point to illustrate the point should suffice: infrastructure funds globally raised only $4.7 billion in the first half of the year. That’s about one fifth their 2008 total, according to fundraising data recently published by San Francisco-based placement agent Probitas Partners.

But it’s all just doom-and-gloom for fundraisers out there. For evidence that well-crafted investment propositions delivered by a credible manager can still get funded, look no forther than Brookfield Asset Management.

The $80 billion, Toronto-based asset manager made headlines last month after raising $1.2 billion for two new infrastructure funds it manages.

One of them is a Colombia-focused infrastructure fund, which held a first close on $320 million, according to a statement issued by the firm. The fund is targeting $400 million in overall commitments.

The Canadians are not the only investment group to have developed in interest in Colombian infrastructure. They are, however, to our knowledge, the only manager to have achieved a first close on an infrastructure fund dedicated to the country. This was not done without local support: Brookfield said the fund attracted commitments from Colombian institutional investors, including insurance firms and pension funds. Brookfield itself will participate in up to 30 percent of the fund.

The new fund not Brookfield’s first country-specific fund in Latin America, but it is the first focused solely on infrastructure, according to a person familiar with the firm. It may soon have competition. In February, a consortium led by emerging markets-focused investment firm Ashmore Investment Management was selected to manage the Infrastructure Fund of Colombia, a fund sponsored by the Colombian government and two multilateral institutions in the region. The fund is targeting $500 million in commitments

Country-specific fundraising projects similar to Brookfield’s and Ashmore’s are underway in other parts of Latin America as well – with some success. Last year, for example, Darby Overseas Investments, the private equity division of investment manager Franklin Templeton Investments, closed its Brazil Mezzanine Infrastructure Fund on R$387.5 million (€147 million; $216 million). Brazilian billionaire Eike Batista is also reportedly planning to invest big in Brazilian infrastructure with a $5 billion to $10 billion private equity infrastructure fund. Further north, Macquarie has opened an office in Mexico City and is looking to raise a country-specific infrastructure fund.

At Brookfield, the Colombian mission is not the only one to have advanced. In addition, the firm has been making progress with a regional initiative, the Brookfield Americas Infrastructure Fund.

In August, the firm disclosed in a regulatory filing submitted to the US’ Securities and Exchange Commission (SEC) late last month that it had sold $900 million of commitments for the fund. That means that it has raised about $250 million since April, when it told the SEC in a separate filing that it had raised $650 million for the fund, which was incorporated last year. Not a bad clip, especially when news keeps trickling out of sponsors in the US and Europe abandoning infrastructure funds that failed to catch favour with investors.

For now, Brookfield is keeping mum about the fund and what it intends to do with it, so as to not fall foul of SEC fundraising rules. But if recent earnings calls for its other infrastructure fund, the New York- and Toronto-listed Brookfield Infrastructure Partners (BIP), is any indication, natural gas will likely find its way into the new fund’s portfolio in some shape or form.  “We think over the next 5 to 10 years that the natural gas generation is going to be a considerable chunk, potentially even greater than the majority of new gas fired generation build in North America,” John Stinebaugh, BIP’s chief financial officer, said during an analyst briefing in September.