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.”
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.
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.
“Tonight, I’m announcing new standards to require all construction materials used in federal infrastructure projects to be made in America. Made in America. I mean it.”
President Biden, in his State of the Union address, doubles down on infrastructure protectionism
AMP fundraisers cross the InfraBridge
Following this month’s completion of its acquisition of AMP Capital’s global infrastructure equity business – now renamed InfraBridge – DigitalBridge has announced two senior appointments.
Alice Franks has been named head of Europe capital formation and Brian Lee as co-head of Asia capital formation – both join from AMP Capital as part of the transition, where they were previously responsible for leading capital formation and investor relations across Europe and Asia, respectively. Lee will work alongside Tae Ahn as co-heads of Asia capital formation and investor relations.
Franks had spent the last six years at AMP Capital – following stints at First Sentier Investors, and Igneo Infrastructure Partners – while Lee had been with AMP Capital for eight years after roles at Wellington Global Investment Management, UBS Global Asset Management in Hong Kong and UBS Hana Asset Management in Korea.
DigitalBridge said in a previous statement that Damian Stanley, previously global co-head, value-added infrastructure equity at AMP Capital, will serve as managing partner of InfraBridge.
I Squared Capital is in no doubt about the growth potential of digital infrastructure, with its latest deal – nLighten – establishing a European edge data centre platform with an initial focus on Germany.
The company has been backed with $500 million in equity from ISQ Global Infrastructure Fund III, an executive team comprised of former Equinix leaders and the acquisition of an undisclosed amount of German data centres from I Squared portfolio company EXA Infrastructure, a broader telecommunications firm based in the UK.
The creation of the company adds to I Squared’s global data centre portfolio, including KIO Networks in the Americas and BDx in Asia.
“We will be close to the customer, bring connectivity ecosystems to regional markets, and actively support the energy transition,” said Harro Beusker, nLighten’s CEO and co-founder, in a statement.
Given that data centres are notoriously difficult to green, The Pipeline is waiting to be nLightened on just what that support for the energy transition will look like.