Brookfield raises US$28 billion for largest-ever infrastructure fund

financialpost.com:

Canadian private capital group Brookfield has raised a record-sized US$28 billion infrastructure fund as institutional investors plough cash into strategies they expect will benefit from higher interest rates and a shift away from globalization.

The fund, raised by the group’s Brookfield Infrastructure Partners arm, is the largest-ever dedicated to investing in assets such as airports, toll roads, pipelines and natural gas export plants. It is also the biggest fund ever raised by Brookfield, which manages US$850 billion across sectors spanning real estate, credit and insurance, renewable energy and corporate buyouts.

The record haul comes as other large asset managers including Blackstone and KKR, and specialized infrastructure investors such as Global Infrastructure Partners, have raised substantial new funds or are setting ambitious goals for new funds. GIP is targeting US$25 billion for its latest infrastructure fund, while Blackstone has set a goal to manage more than US$100 billion in infrastructure.

Since last year, when central banks began to drive up global interest rates in an effort to tamp down inflation, many institutional investors have treated infrastructure as a haven from rising price trends. The assets often generate revenues indexed to inflation, even as they are financed with fixed-rate debt.

By contrast, higher interest rates have created new challenges for traditional corporate buyouts. Leading private equity firms have recently pared fundraising goals for such deals as investor enthusiasm weakens.

Sam Pollock, chief executive of Brookfield’s infrastructure investment arm, told the Financial Times that he believes a “deglobalizing” world, where large companies are bringing production closer to home