Brookfield strikes confident tone for 2023, sees more record fundraising

In contrast with some of its peers, Brookfield Asset Management is feeling bullish about its fundraising prospects in the year ahead.

“Despite macro-economic headwinds…we expect 2023 to be another very strong year for the business overall and for fundraising – on par with 2022, which was a record year,” CEO Bruce Flatt said in a first-quarter earnings call.

Flatt’s forecast owes in part to capital inflows to date. They totaled $19 billion, including $13 billon of commitments between January and March, bringing inflows over the past 12 months to almost $100 billion. In 2022, the firm raised a then record $93 billion.

In a shareholders letter, Brookfield said it is now able “to raise $75-to-$100 billion annually for investing.”

Fundraising is being driven by five flagship offerings and several complementary strategies. They include a sixth buyout fund, Brookfield Capital Partners VI, which has so far secured $9 billion, or 72 percent of its $12.5 billion target. Brookfield said this vehicle, along with a fifth infrastructure fund that currently stands at $24 billion, are nearing final closings.

“Both funds already exceed the size of their prior vintage, and we still have meaningful capital to raise for these strategies,” CFO Bahir Manios said.

Among the other strategies is a second energy transition offering. Brookfield Global Transition Fund II was rolled out this month with an undisclosed target. However, it is expected to be larger than its predecessor, “given the strong demand from institutional capital,” Manios said. The debut fund wrapped up last year at $15 billion.

Brookfield’s confidence can be attributed to “the diversity of our business,” president Connor Teskey said. While the fundraising environment “is perhaps a little softer today than it has been in the past,” he said, “we are fortunate that we are overexposed to the asset classes that are of greatest interest to investors.”

In addition, the firm benefits from “the diversity of our client base,” he said. This affords flexibility, as LPs “feeling certain headwinds” are offset by others “seeing tremendous tailwinds.” In the shareholders letter, Brookfield said it is raising more non-US capital, with investors in Asia and the Middle East making up about 40 percent of commitments in the past 12 months.

A factor in Brookfield’s ability to draw capital from Asian and Middle Eastern sources is its investment presence in these regions, Flatt said: “Our relationships are…not just about fundraising.”

Brookfield’s bullish tone contrasts somewhat with a number of its large peers. While many peers also anticipate robust, multi-strategy fundraising in the year ahead, tight supply conditions are forcing several to rethink their forecasts, at least with respect to private equity.

Apollo Global Management, for example, expects to bring in less for a tenth flagship buyout vehicle than the $25 billion targeted. In a final closing later this year, it projects commitments “in the low-$20 billion range,” co-president Scott Kleinman said this week.

Similarly, Carlyle earlier this month said it is planning for a “lower buyout fundraising outlook.” The firm’s eighth flagship buyout offering, launched two years ago with a $22 billion target, has so far accumulated $14.4 billion.

At the end of the first quarter, Brookfield had assets managed of $825 billion spread across five strategies: infrastructure, private debt, private equity, real estate and renewable power and transition.