First look

Brookfield’s year of two halves
At the end of June, it looked like the infrastructure fundraising year might just end on an unprecedented high at Brookfield Asset Management. Its Global Transition Fund had closed on $15 billion and, at its Q2 2022 earnings, it reported $20 billion raised for Brookfield Infrastructure Fund V, just $5 billion shy of its target.

A $21 billion first close was recorded at Q3 earnings, as well as a $2.8 billion first close for Brookfield Infrastructure Debt Fund III. At its Q4 earnings last week, Brookfield revealed BIF V had inched up to $22 billion, with IDF III raising a similar amount in the quarter. With $93 billion raised across the business in 2022, it was a record year for BAM, but infrastructure is certainly feeling that slower pace of fundraising in H2.

The strength of the GTF fundraising – the energy transition’s largest-ever vehicle – is not being ignored, though. A second fund will be out “sooner rather than later”, likely in H1 2023, and will be “meaningfully larger than the initial fund”, Connor Teskey, president of BAM and head of Brookfield’s renewable and transition business, told the earnings call.

Given the strength of the energy transition mega-trend, there will likely be no market slowdown for that one.

Infra keeps KKR busy
A similar trend was to be found on earnings day at KKR, which recorded a 9 percent gross return in 2022 for infrastructure, dwarfing returns generated by private equity (-14 percent), real estate (2 percent), leveraged credit (-3 percent) and alternative credit (2 percent). Infrastructure was, as head of IR Craig Larson told analysts, “the single busiest area in our firm”, adding that it was a “real success story and a real growth story”.

You can read more about how that came to be in our November cover story, but there were signs of a fundraising slowdown for KKR too. Its open-end Diversified Core Infrastructure Fund added $300 million to reach $8.4 billion, but the firm’s Asia Pacific Infrastructure Investors II vehicle seemed to stall. Having raced to $4 billion in H1, the fund added a further $1.5 billion in Q3, while just another $100 million was added in Q4, according to accounts.

Worries? Co-CEO Scott Nuttall said struggling LPs were “predominantly a US pension fund dynamic” and “the overall picture is not consistent”.

Keep calm and carry on, then.

How to lose friends and alienate an industry
Citing worries the Danish open-door scheme for the granting of permits for offshore wind might be in breach of EU law, the scheme was suspended with immediate effect on 6 February until the issue of legality has been settled. There had been no complaints, according to the Danish Energy Agency.

There are 33 pending projects with a potential generation capacity of 21GW in the pipeline.

The decision did not find favour with the wind turbine industry. The CEO of Vestas told a Danish broadsheet: “We are the first industrial nation to eliminate a domestic market, entirely on our own initiative. It is unprecedented if you consider any nearby civilised countries.”

Danish energy giant Orsted is also not happy; it had partnered with Copenhagen Infrastructure Partners for four projects totalling 5.2GW that are now stalled.

By 2030, Denmark had hoped to add 9GW through tenders to the current 2.3GW of offshore wind capacity. However, these tenders are yet to be auctioned and key players are… frustrated.

Taking kredit
Swedish private equity firm Altor is on a mission to build “the leading green transition bank” and is doing so by acquiring an 80 percent stake in Austria’s Kommunalkredit. Founded in 1958, the Viennese bank has evolved into an infrastructure specialist providing financing for projects across the sector. In the past seven years, however, Kommunalkredit provided financing to around 200 “green” projects.

A spokesperson told The Pipeline it would not narrow its sector focus under Altor’s ownership, but projects that support the energy transition and environmental protection “will receive even higher priority and support going forward”.

That means that at least 40 percent and up to 50 percent of Kommunalkredit’s annual infrastructure financing activity will go towards renewable energy projects, environmentally friendly mobility and water management. At least 30 percent will be provided for social infrastructure  and/or digital communications projects, while the remaining 10 percent will be made available for new “green” solutions, the spokesperson said.

Grapevine