Brookfield Raises World’s Largest Private Infrastructure Debt Fund at $6B

Brookfield Asset Management announced the closing of its third global infrastructure debt fund with a record $6 billion in capital commitments, making it the largest private fund of its kind.

Having raised around $1.5 billion of the equity for Brookfield Infrastructure Debt Fund III (BID III) from investors in Asia Pacific, the company aims to allocate 10-20 percent of its new strategy to projects in the region’s transport, renewable power, data centre, utility, and energy transit sectors, with a focus on Australia, New Zealand, Japan, Korea, and Singapore.

“We intend to ramp up our investment activity across Asia Pacific during the coming 18 months as we see significant opportunities to invest across our key investment themes,” said Sean Robertson, senior vice president at Brookfield Infrastructure. “From acquisition financing to capex facilities and refinancings, Brookfield offers a range of solutions built upon the strength and expertise of our local and global teams.”

Launched in 2022, the BID III fund has already deployed over half of its capital as it looks to achieve stable, inflation-protected returns from contractual or regulated cash flows. Also last year the company launched its $27 billion Brookfield Infrastructure Fund V, the latest edition of its flagship infrastructure equity strategy, which has been investing in data centres since 2018 with the series having traditionally achieved internal rates of return of 11 to 14 percent, according to statements by the company.

Record Fundraising

The Canadian asset manager committed $600 million of its own capital into BID III alongside investors including the Maine Public Employees Retirement System, which contributed $250 million, and the New Mexico State Investment Council which committed $150 million, according to public records. Brookfield declined to comment on the identities of its Asia Pacific backers.

Ranked among the top 50 money managers globally with $850 billion under management this year, Brookfield raised more than twice as much capital for its BID III as it had for its predecessor vehicle, which closed at $2.7 billion in 2020. The new edition of the strategy is more than six times larger than the BID I fund, which closed on $884 million in cash in 2018.

BID III’s closing figure includes $400 million in discretionary co-investment capital. Over 60 percent of the investors have not invested into any of the previous Brookfield Infrastructure Debt funds, reported Bloomberg.

The previous infrastructure debt fund provided a $300 million loan facility to Vivint Solar, Utah’s solar power company, in June 2020. In the same month, Brookfield also financed Toronto-based renewable energy project manager Polaris Infrastructure Inc. with a $27 million loan.

Renewable power and data infrastructure will be core to the fund, Brookfield said, with the announcement coming out the same week that the Toronto-headquartered firm agreed to purchase Florida-based colocation provider Cyxtera following its June bankruptcy. The $775 million Cyxtera acquisition will add seven US data centres to the Canadian property giant’s portfolio as Brookfield plan to merge its holdings with its Evoque data centre platform.

Last October, Brookfield spent $1 billion to buy the renewable energy division of UK developer Banks Group. The alternative investment manager also teamed up with Singapore government giants GIC and Temasek in March to pursue an acquisition of Australian electricity and gas provider Origin Energy, but that A$20 billion ($13 billion) joint bid was rejected by Melbourne-based superannuation fund AustralianSuper this past week.

Scaling Up in Infrastructure

Brookfield announced the fundraising milestone for its infrastructure fund as debt funds come into vogue with some of the world’s largest private equity players, with LA-based investment manager Ares Management Corporation in January having closed on $5 billion for its Infrastructure Debt fund V.

As carbon concerns drive a shift to sustainable energy sources, The International Energy Agency reported renewable electricity generation records in 2022, with projects within the sector, including wind and solar, accounting for 83 percent of total additions to power generation capacity.

“This is a great time to be investing in infrastructure debt. With capital constraints across the market, we are increasingly becoming borrowers’ preferred partner and continue to see a number of opportunities to offer flexible solutions for businesses across the globe,” said Hadley Peer Marshall, managing partner of Brookfield’s Infrastructure Group.

Brookfield’s infrastructure division has $161 billion in assets under management, contributing to the group’s total of $850 billion.