North America: Brookfield CEO articulates optimism for Q4 fund launch 

13 August 2018 - 12:00 am UTC

Brookfield Asset Management CEO Bruce Flatt stated during the company’s 2Q18 earnings call that contemporary market conditions are expected to make the company’s fourth infrastructure fund considerably larger than its predecessor.

“There are very significant amounts of capital available today on the supply side of institutional investors for infrastructure,” Flatt stated, “so that should mean that we – that does probably mean that we can have a larger fund than we have today.”

Inframation reported in April that the firm is expected to launch a USD 20bn fundraise for Brookfield Infrastructure Partners IV (BIF IV) in 4Q18. Ben Vaughan, Managing Partner for the firm’s Infrastructure Business reiterated the scheduled launch and added that the company has “now committed about 75% of the capital from our current infrastructure fund, which was a USD 14bn fund that we raised in 2016.”

Brookfield is expected to hold a first close of BIF IV in 1Q19, as previously reported. The GP made a USD 4bn commitment to its previous flagship infrastructure fund, and is expected to make a subsequent substantial commitment to its fourth fund. 

 “So we’re now positioned to begin fundraising for the next flagship infra fund, and we expect to start this in the fourth quarter of this year,” Vaughan continued, “with interest rates continuing to be on the low end, infrastructure remains a core and growing real asset allocation across our investor base, so we’re excited to get this going.”

On the transactions opportunity front, Flatt expressed optimism on the availability of deals in the market, stating “we see no lack of availability of transactions…I don’t think it’s really that much more difficult than it was three years ago. And probably our name is known better in the business globally and therefore, it may even be easier in some places.”

The company recently launched the fundraising process for the Brookfield Super-Core Infrastructure Partners fund, an open-ended vehicle that will run in parallel to its other investment strategies. Through the fund the manager will target investments that have a lower risk-return threshold than its other flagship infrastructure funds, such as regulated utilities and transport businesses. 

Brookfield Infrastructure Partners III activity
Brookfield recently announced three acquisitions to be made from its third infrastructure fund. The first of which is the acquisition of AT&T’s U.S. data center business for USD1.1bn or 560m of equity. The company of will then acquire 100% of Enbridge’s Western Canadian natural gas gathering and processing business for USD 3.3bn, representing a total equity investment of 1.8bn. Subsequently, the company announced the acquisition of 100% of the shares of Enercare Inc., a provider of residential energy infrastructure in North America. The total enterprise value of the company is USD3.3bn, with an equity commitment of 2.3bn. 

Vaughan added that the company initiated a strategy well over a year ago targeting mostly midstream as the U.S. is transitioning to being a net exporter of energy. “So there’s a big need for capital to invest, to extract, transport and process the resources,” Vaughan stated, “Our opportunities set here includes potential asset carve-outs that take private and partnership arrangements.”

Brookfield Infrastructure Partners III targets net returns between 12-15%.