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Brookfield Infrastructure Fund V raises record £23bn

Written by Wed 6 Dec 2023

Brookfield Asset Management has raised £23 billion ($30 billion) at the close of its flagship global infrastructure equity fund.

The asset management company announced that the Brookfield Infrastructure Fund V (BIF V) successfully secured £22 billion ($28 billion), along with around £1.5 billion ($2 billion) in related co-investment vehicles. 

BIF V now stands as the world’s largest closed-ended private infrastructure fund. BIF V also represents the largest raised by the company, securing 40% more than Brookfield’s prior fund in 2020.

BIF V received support from 200 diverse limited partners that surpassed its £19 billion ($25 billion) fundraising target. 

The Fund predominantly secured capital from existing investors, including public and private pension plans, sovereign wealth funds, financial institutions, endowments, foundations, and family offices.

“With significant momentum in the sector as a result of multi-decade investment themes, we look forward to deploying the Fund’s remaining capital and creating long-term value for our investors,” said Sam Pollock, CEO at Brookfield’s Infrastructure Group.

BIF V is expected to support investment opportunities in digitisation, decarbonisation, and deglobalisation. Aligned with these long-term themes, the fund employs an investment strategy focused on high-quality assets crucial to the global economy. 

BIF V has invested around 40% of its capital across six key areas, including renewables, transport, data centres, and telecom towers to generate sustainable value. This has been achieved through an active asset management approach.

Brookfield will invest £5.5 billion ($7 billion) through cash on hand and the issuance of new stock. 

Brookfield has established infrastructure partnerships with organisations including Intel, Deutsche Telekom, and Reliance Industries. These collaborations are focused on the development of assets, encompassing semiconductor fabrication plants, fibre networks, and cell towers.

In July, Digital Realty announced a joint venture with Reliance Industries and Brookfield Infrastructure to develop data centres in India. The venture aims to meet the critical infrastructure needs of enterprises and digital services companies in the country.

In February, Deutsche Telecom announced it had completed the partial sale of its tower business in Germany and Austria to DigitialBridge and Brookfield. 

Brookfield’s Investment Fund One of Many

The results of the close of the Brookfield Infrastructure Fund V arrived as other large asset managers have raised or have set goals for new funds.

In October, Blackstone reached the £31 billion ($40 billion) targeted volume for its infrastructure business in six years. Infrastructure Investor reported this was despite the then Blackstone President, Tony James, stating the target would be reached over the next decade. 

In an earnings call, the current President of Blackstone, Jonathan Gray, predicted the group’s business could grow to £79 billion ($100 billion) over time.

IPE Real Assets reported that Global Infrastructure Partners are seeking to raise £19.8 billion ($25 billion) for its latest fund to target investments in energy, transportation, water and waste, and digital infrastructure assets in The Organisation for Economic Cooperation and Development member countries.

Why Infrastructure?

The Financial Times reported that, amid central banks raising global interest rates to curb inflation, institutional investors are increasingly turning to infrastructure as a resilient opportunity.  

Infrastructure assets stand out as appealing options as they often provide inflation-indexed revenues and are financed with fixed-rate debt.

In contrast, the surge in interest rates has presented obstacles for traditional corporate buyouts, leading top private equity firms to revise down fundraising targets due to waning investor enthusiasm.

CEO of Brookfield’s infrastructure arm, Sam Pollock, shared his perspective on a deglobalising world. This is where large companies bring production closer to home and source energy from geopolitical allies. Pollock said this shift has significantly broadened the supply of infrastructure investments.

“I think there is a huge amount of opportunity to deploy capital that should soak up any money coming in,” said Pollock to The Financial Times.

Pollock emphasised the need for substantial new capital in reshoring critical industries such as energy and semiconductors to the US. Pollock stressed this was crucial for reinforcing supply chains and improving energy infrastructure.

Pollock also said that an investment of £794 billion ($1 trillion) will be required to overhaul global digital infrastructure. This will include creating new data centres, fibre optics, and tower communication networks.

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Written by Wed 6 Dec 2023

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