Side Letter: Brookfield’s spin-off; India’s FoF hopeful; Railpen’s ESG efforts

Brookfield Asset Management is listing a chunk of its asset management business. Plus: Why this Indian multi-family office has lofty ambitions for its next fund and Railpen is stepping up its engagement with private managers. Here's today's brief, for our valued subscribers only.

Just happened

Brookfield’s Bruce Flatt: Turning the firm into a ‘pure-play’ asset manager (Source: Brookfield)

A Flatt-ering comparison
Last week, Brookfield Asset Management formally unveiled plans to list a portion of its asset management business, having first hinted about doing so in a February letter to shareholders. The rationale, chief executive Bruce Flatt said on a Thursday earnings call, is to transform into a pure-play asset manager.

About 25 percent of Brookfield’s manager business will be listed in New York and Toronto, with the estimated distribution of shares valued at about $20 billion. The listing will mean that Brookfield’s proceeds will no longer have to support the parent company’s proprietary investments and can be distributed instead as dividends, with financial statements that are more comparable with its peers.

Private Equity International’s Carmela Mendoza has compiled this handy list of three things you ought to know about the move. Here are some other highlights from the call:

  • Brookfield recorded $5 billion of inflows from perpetual products in the quarter across PE, real estate and infrastructure, and has a range of new platforms targeting the retail channel.
  • Most of these products are only just being formed and distributed within private wealth, but, according to Flatt, will be significant.
  • Tech, once seen as overly expensive, is now a focus due to the slump in valuations.
  • The firm has begun raising its third technology fund and already earmarked an initial pipeline of seed investments.
  • Brookfield is in market with about 50 funds, including its flagship PE fund Brookfield Capital Partners VI, which is seeking $12.5 billion, and its debut Global Transition Fund, which has a $15 billion target.

Family matters
India’s PE market has garnered attention of late as a viable alternative for those seeking to diversify away from China in the wake of its regulatory crackdown and rising geopolitical tensions – this is at least one factor that helped drive deal value in the country to a record $61 billion last year, per Bain & Co. LPs seeking exposure to this market, however, are typically limited either to large pan-regional or global funds, Asia-focused fund of funds, or via the small handful of Indian GPs large enough to accommodate international capital at scale.

Waterfield Advisors, an Indian multi-family office, is hoping to provide overseas LPs another route in. The institution is in the process of wrapping up its debut India-focused fund of funds, which is likely to raise something in the region of $70 million from domestic individuals and family offices. Small though this first fund might be, Waterfield is already drawing up ambitious plans for a successor, for which it expects to seek $300 million to $400 million.

“We want to raise a lot more… international capital for our next fund,” Siddharth Jhunjhunwala, head of Waterfield FoF, tells PEI this morning. “There is a clear pipeline where you can actually deploy that much capital in the country, both with respect to emerging and established fund managers.” You can read the interview in full here.

All change
Here are a couple of LP people moves to start the week. Side Letter has learned that Matt Vorachen, a PE portfolio manager at Dutch asset manager and pension administrator MN will leave this month to join Achmea Investment Management. He will take up a similar role at Achmea in mid-June, according to two sources with knowledge of the matter. Vorachen, who has spent five years at MN, will also be involved in the co-investment programme Achmea launched in 2019 alongside Blue Sky Group and SPF Beheer.

Elsewhere, Harvey Hakjin Bae, former head of Americas PE at Korea’s National Pension Service of Korea, has left the 83.6 trillion-won ($756 billion; €646 billion) institution after 11 years, per LinkedIn. Bae has joined SK Square, a newly formed investment unit of listed chipmaking giant SK Telecom/SK Hynix, as managing director for investment and partnerships. It is unclear who will replace him at NPS.

They did the math

Venturing abroad
Speaking of India and China, the Global Private Capital Association (formerly EMPEA) has this morning published venture capital investment statistics for the first quarter of 2022. India enjoyed the best year-on-year growth globally, with the $9.3 billion invested in Q1 representing a 284 percent increase from the same period last year. Deal value in China, on the other hand, fell 33 percent year-on-year to $12.87 billion – the only market studied by the GPCA to record a decline – likely as a result of its regulatory crackdown on data-heavy assets and online tutoring, among others


Fast-tracking ESG
Railpen, the £37 billion ($45 billion; €43 billion) UK pension fund, is stepping up its engagement with private managers over the coming year, citing poor quality of ESG data and reporting, affiliate title Responsible Investor reports (registration required). The plan will involve further integrating climate and net-zero considerations into its mandates.

A number of Railpen’s peers have also taken stricter approaches to ESG: the Pension Protection Fund said in March that it had previously walked away from deals where managers’ ESG standards were subpar, affiliate title New Private Markets (registration required) reported at the time. These moves suggest that as mandatory ESG reporting comes into force in the UK, LPs can and will take matters into their own hands to improve the quality of what they’re receiving.

Dig deeper

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

16 May

18 May

19 May

20 May

Today’s letter was prepared by Alex Lynn with Carmela Mendoza and Helen de Beer