Brookfield makes over 30% GP commitment to latest PE fund

The Toronto-headquartered manager is targeting up to $9bn for its fifth flagship private equity vehicle.

Brookfield Asset Management has raised over $7 billion for its fifth flagship private equity fund, and has itself committed a whopping $3 billion – or about a third – of the vehicle’s fundraising target, Private Equity International has learned.

The Toronto-headquartered manager launched Brookfield Capital Partners V in March and is targeting between $8.5 billion and $9 billion, according to 25 January investment committee meeting documents from the New Jersey Division of Investment.

It is unclear whether the firm’s GP commitment includes employee capital. Brookfield declined to comment.

Over 80 percent of investors in the $4 billion 2015-vintage Fund IV re-upped in Fund V, said managing partner Leo van den Thillart, on the firm’s fourth quarter earnings call on Thursday.

An area of focus last year was the private wealth channel, which represented 10 percent of capital raised in 2018. Brookfield expects to continue tapping high-net-worth investors and family offices in its fundraising efforts in 2019 and has 10 relationship managers who work with HNWIs, he added.

Brookfield raised almost $2 billion from its private wealth channel for its latest flagship real estate fund – the $15 billion Brookfield Strategic Real Estate Partners III, according to van den Thillart.

Minnesota State Board of Investment committed $250 million to the fifth private equity fund, more than double its investment in Fund IV. New York State Common Retirement Fund committed $400 million and New Jersey Division of Investment invested $100 million, according to PEI data.

Brookfield made a $3 billion GP commitment to Fund V and is charging a management fee of 1.675 percent, according to investor documents.

Capital raised for Fund V will follow the same strategy as its predecessor, backing business services and industrials companies in North America and Asia-Pacific. Fund IV delivered a 63.97 percent net internal rate of return and 3.05x investment multiple as of September, according to MSBI documents.

Brookfield’s LPs are predominantly from North America and large amounts of capital are also coming from Asia, the Middle East and Europe, van den Thillart said. Over the last three years the firm has grown its LP base by 75 percent and now has over 600 investors, he added.

The firm recorded its most “successful fundraising year yet” last year with $26 billion of capital raised across its funds.

Brookfield’s capital raising efforts in the last year include the final close on its third flagship real estate fund – the second largest-ever property fund to have closed – and it is on track to hold a first close in March for its fourth infrastructure fund, which has a $17 billion target. A further $10 billion of capital was raised across a variety of other strategies, including over $1 billion for its long-life real estate funds, $1 billion in the first close of its long-life infrastructure fund and $6 billion in co-investments, van den Thillart said.