With $20bn for Fund V, infra leads the way in Brookfield’s Q2

In addition to nearing a first close for its latest flagship, Brookfield raised nearly $1bn for its open-end super-core strategy and circa $3bn for its third debt fund.

Infrastructure has emerged as a star performer in Brookfield Asset Management’s Q2 earnings report, as the firm nears a $20 billion first close for its fifth flagship infrastructure fund.

Brookfield Infrastructure Fund V is seeking to raise $25 billion, although a hard-cap has not been established, according to documents from the Ventura County Employees Retirement Association. The LP, which committed $40 million to the vehicle earlier this year, said it expected Fund V to exceed its $25 billion target.

According to VCERA documents, Fund V is targeting a 10 percent net internal rate of return and a 1.8x net multiple, in line with previous flagships. Brookfield is providing a 25 percent GP commitment to the fund, an amount that would total $6.25 billion if Fund V’s target is reached. VCERA chief investment officer Dan Gallagher said it was “highly unusual to see a manager invest such a large percentage into its fund”.

The firm was able to raise $3 billion for its two perpetual capital funds in real estate and infrastructure in Q2. According to a source familiar with Brookfield’s fundraising plans, less than $1 billion of that will go towards Brookfield Super-Core Infrastructure Fund, bringing the open-end fund’s total capital raised to just under $8 billion. In the earnings call, Brookfield chief financial officer Nicholas Goodman said fundraising for the strategy is “going very well [with] probably about another $1 billion in the queue”.

Lastly, Brookfield Infrastructure Debt Fund III raised approximately $3 billion during this second quarter, according to our source. The vehicle, like its predecessors, focuses on providing junior/mezzanine debt.

These announcements come just months after Brookfield closed its inaugural energy transition fundBrookfield Global Transition Fund – on a whopping $15 billion. One of the biggest fund closes of the year, the vehicle is also the largest energy transition-focused vehicle in history and one of the first funds to prioritise both impact and financial returns at scale.

Strong tailwinds

During a Q&A session at the end of the earnings call, when asked how LP appetite has been shaping up in recent months, Brookfield chief executive Bruce Flatt recognised the asset class’s strong tailwinds.

“I would say if I took the investment strategies, infrastructure and renewables – which are highly inflation-sensitive and cash-flowing – are probably the most positive that people want to invest into. If you take all private equity, it would be the hardest in fundraising [based on] anecdotes you’d hear out there. So, I’d say that’s the spectrum of it. And real estate probably sits in the middle.”

He added: “But for us, I don’t think there’s any real change [in fundraising patterns] over the [the past few months]. It’s sort of the same as it always has been.”

Despite the worsening macroeconomic trends, the Canadian asset manager was able to report record capital inflows amounting to $56 billion overall. Additionally, the firm was able to report $1.5 billion of net income and $1.2 billion of distributable earnings for common shareholders.