Brookfield Builds Record $25 Billion War Chest for Acquisitionsby
Alternative asset manager sees strong demand from Asia
New funds in infrastructure, real estate and private equity
Brookfield Asset Management Inc., Canada’s largest alternative asset manager, said Friday it raised $25 billion for its flagship funds over the past 12 months, giving the company a record level of capital on hand across its platforms to pursue acquisitions.
Assets under management rose 16 percent from a year earlier to $240 billion, the Toronto-based firm said. The company received commitments from 300 institutional investors and sovereign fund partners for its three flagship funds, and expects another 50 or more before final close.
“Our capital is raised throughout the world, and we continued to see strong support from U.S. and Canadian corporate and state pension plans,” Bruce Flatt, Brookfield chief executive officer, said in a letter to shareholders. “Our Middle Eastern fund partners continue to support us with major commitments, and we are seeing very meaningful increases from Asia in every fund we have raised.”
Brookfield said it closed its $9 billion global real estate fund, raised $12 billion in the first close of its infrastructure fund, which has a hard cap of $14 billion, and raised $3.5 billion for its private equity fund.
The company continues to find uses for the funds, deploying $18 billion in capital over the past 12 months, including $4 billion in the first quarter. Those acquisitions include a self-storage business with 108 properties, office buildings in London, Sydney, Boston and Washington, and multi-family projects in Texas and California. It closed the purchase of a Colombian power generation operation and wind farms in Brazil.
During the quarter, Brookfield agreed to purchase Australian ports and rail company Asciano Ltd. with its partners for roughly A$9 billion ($6.5 billion).
Flatt said contrary to speculation sovereign wealth funds are withdrawing capital from real assets, they actually increased during the quarter to about $6.5 trillion. Although the pace of the increase may be slower in recent years, the scale of the funds mean compounding capital at 5 percent will add over $300 billion annually, he said.
“As a result, while there are some exceptions, we do not see sovereign funds slowing their investments in real assets any time soon,” Flatt said in the letter. “Furthermore, the above excludes the many trillions of capital for real assets in pension funds and insurance plans, and these plans are also looking for returns in real assets to supplement bonds’ anemic returns.”
Flatt said he believes the largest increase in fundraising over the next decade will be from Asia, which will eventually account for a third of Brookfield’s capital, up from about 10 percent today.
Brookfield reported first-quarter net income of $636 million, or 23 cents a share, down 55 percent from $1.4 billion, or 73 cents a share, a year earlier. The company said funds from operations grew 26 percent in the quarter to $703 million, or 69 cents a share, up from $557 million, or 55 cents per share, a year earlier.