Is Brookfield Biting Off More Than it Can Chew?
According to data from the Sovereign Wealth Fund Institute (SWFI), increasingly asset owners such as sovereign wealth funds and large pensions have augmented allocation to unlisted infrastructure. The money flows have created bubbles in the world of private infrastructure, forcing asset owners, managers and other investors to pay more for infrastructure assets. Toronto-based Brookfield Asset Management, within a nine-month span, raised the biggest private infrastructure fund in history – closing US$ 14 billion in equity commitments for Brookfield Infrastructure Fund III. The original fundraising target was US$ 10 billion. Brookfield Infrastructure Fund III, which targets core infrastructure assets on a value basis, has a four-year investment period that will last 12 years – subject to annual extensions. To be fair, US$ 4 billion of that amount is being committed by Brookfield Infrastructure Partners L.P. and Brookfield Renewable Partners L.P. However, US$ 6.2 billion was committed from 77 new investors, which include fresh backers from China, Japan and South Korea, out of 120 investors. Asian investors such as Korean pensions are eager to push capital toward single-digit generating illiquid infrastructure assets. Even so, the surging demand for investments outside the volatile world of listed equities and negative interest rates in government bonds have created substantial demand for real assets.
That limited partner money would be at substantial political risk, as Brazil is undergoing a tumultuous period of exposed corruption.
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