Brookfield set to raise lion’s share of sixth buyout fund’s $12.5bn target

Brookfield Asset Management will soon bring in most of the target for its latest flagship buyout offering as part of a record run of fundraising.

The firm is “finalizing” an initial close for Brookfield Capital Partners VI at $8 billion, CFO Nicholas Goodman said in a second-quarter 2022 earnings call. It is doing the same for Brookfield Infrastructure Fund V, which is slated to capture $20 billion.

With $8 billion in the bank, Brookfield Capital Partners VI would have 64 percent of its $12.5 billion target. The vehicle could secure as much as $15 billion, sources told Buyouts last year, with the GP likely to pony up $3 billion to $4 billion.

The private equity group, headed by Cyrus Madon, wrapped up Fund VI’s predecessor in 2019 at $9 billion.

The announcement of imminent closes for Brookfield’s buyout and infrastructure offerings came with news of robust capital raising across a mix of strategies. The firm saw “record inflows” of $56 billion, Goodman said, $41 billion during Q2 2022 and $15 billion after the quarter’s end. Highlights included $15 billion collected by a debut energy transition fund.

Perhaps because of this, Brookfield is already preparing for new flagship fund launches. Its 11th opportunistic credit vehicle, closed last year at $16 billion, is moving to 80 percent invested or committed, Goodman said, paving the way for “the next vintage later this year.”

All this suggests the $750-billion Brookfield is faring surprisingly well in a challenging fundraising market, especially for private equity. PE fundraising in North America, for example, fell 18 percent year over year in the first half, according to Buyouts’ data.

In reply to a question on the topic, CEO Bruce Flatt said, “tougher times always mean consolidation of every business.” In this environment, LPs “cut their relationships down and usually the large, diverse, scaled professional managers get capital” while some others do not. “Luckily,” he said, “we’re on the positive side of that.”

In the earnings call, Brookfield also announced major leadership changes tied to its plan to spin-out an $80 billion asset management unit. The changes, which include “advancing younger executives as fast as we can,” Flatt said, seem to anticipate long-term succession events.

Following the spin-out, Brookfield Asset Management, which will own 75 percent of the new unit, will be renamed Brookfield Corp. Flatt will remain its CEO, with Goodman appointed president and CFO. The adjacent Brookfield Reinsurance will continue to be led by Sachin Shah.

Flatt will also be CEO of the freshly separated asset manager, with Connor Teskey appointed president, and Mark Carney, the one-time Bank of England and Bank of Canada governor, appointed chair.

In addition, there will be senior changes in the PE group. Madon, a nearly 25-year veteran of Brookfield, will stay on as CEO, but will be joined by Anuj Ranjan as president. Ranjan, hired in 2006, is currently head of private equity for Europe, the Middle East and Asia and head of business development.

The firm’s PE strategy is focused on control investing in global business services, industrials and infrastructure services. Fund VI will extend its reach by targeting opportunities in healthcare and technology sectors, Madon told Buyouts last year.