Brookfield Asset Management is relishing the benefits of spinning-out new business lines, including more potent fundraising.
To be clear: Brookfield has always been a multi-strategy manager, over time building platforms in areas like infrastructure, private equity, real estate and renewables.
But in recent years, the firm has accelerated product growth through various means. This has given it more exposure to private debt, obtained in the 2019 acquisition of a majority stake in Oaktree Capital Management, and a new or deeper presence in spaces like energy transition, insurance, secondaries and technology.
A benefit of product proliferation, when combined with robust fundraising, is an ability “to raise and deploy capital more consistently year to year and in different market environments,” president Connor Teskey said in a year-end earnings call.
The point is a key one, especially in a downturn. By adding to the product suite, Brookfield acquires a built-in capacity to adjust to market shifts. If, for example, private equity is under pressure because of LP cash constraints, the difference can be made up in segments less affected by this factor or that are gaining ground due to other trends.
This capacity is reflected in more than “100 active funds across our business that cover a wide range of assets classes, products and strategies, many of which we are fundraising for at any given time,” Teskey said. With the help of a cross-channel fundraising machine, this allows for roughly $75 billion raised annually “separate and apart from our flagship funds.”
Overall, Brookfield should be able to “annually raise $90 billion to $100 billion on average at this point in time,” he said.
Developing first-time business lines owes to “our adaptability to the ever-changing market environment and our focus on adding new products and solutions for our clients,” he said. Going forward, this activity will likely be “an even bigger driver of our business.”
Diversifying private equity
In making these points, Teskey cited a number of newly launched and forthcoming initiatives in Brookfield’s private equity platform.
Not long ago, private equity consisted solely of a flagship buyout strategy, emphasizing control investing in global business services, industrials and infrastructure services, often in complex deals. In 2023, Brookfield wrapped up its latest vehicle in the series, Brookfield Capital Partners VI, raising $12 billion.
Today, private equity also takes in special investments, a strategy providing flexible capital solutions, such as non-control equity, as well as secondaries, which emerged from last year’s acquisition of the private equity secondaries unit of Deutsche Bank’s DWS.
Teskey cited several more recent initiatives, including Pinegrove Capital, a joint venture with Sequoia Heritage, the wealth vehicle of Sequoia Capital, that will acquire venture and technology-oriented secondaries assets. Pinegrove is raising a debut fund in the first half of this year, he said, seeded with $500 million from its sponsors.
In addition, Brookfield will in 2024 unveil a Middle East private equity fund, intended to “leverage our deep relationships” in the region, he said.
Finally, Brookfield will roll out a financial infrastructure strategy, geared to “opportunities in digital payments and services, a key pillar in the digitalization of the global economy,” Teskey said. To this end, the firm last year hired ex-Worldpay CEO Ron Kalifa as vice chair, private equity, and head of financial infrastructure investing.
Earlier this month, Brookfield appointed Anuj Ranjan as CEO of its private equity team, replacing the long-serving Cyrus Madon.