Brookfield targets $3.5 bln for fourth fund; to share 100% of deal fees

  • Brookfield itself will kick in $1 bln 
  • Predecessor Fund III closed on $1 bln 
  • Firm to share 100% of deal and other fees with LPs

Brookfield Capital Partners IV will include about $1 billion from Brookfield, a Canadian asset manager with about $200 billion of assets under management, said the the person, a limited partner who has heard the fund pitch. 

The LP described the firm as having “huge skin” in the game. “They’ve been 25 percent to 50 percent of the previous three funds as well.” In another LP-friendly move, Brookfield plans to use 100 percent of any transaction, monitoring, director and break-up fees to offset the management fees, according to the LP.

Andrew Willis, a spokesman for Brookfield, declined to comment. Bloomberg reported in October that Brookfield was planning to launch fundraising with a $3 billion target.

Fund IV will be earmarked for control buyouts and turnarounds in the middle market. Terms on the fund are fairly standard, with a four-year investment period and a 10-year term with two one-year extensions possible, according to the document. Brookfield plans to charge a 1.75 percent management fee on committed capital, to charge 1.5 percent on invested capital after the investment period, and to provide investors an 8 percent preferred return.

If Brookfield hits the target, Fund IV would be significantly larger than Fund III, which closed on $1 billion in 2010. Performance data for Fund III was unavailable.

Senior executives on Brookfield’s private equity team include Senior Managing Partners Joe Freedman and Cyrus Madon. Managing partners include Dominic Gammiero, Peter Gordon and Jon Haick based in Toronto, Alexander Greene in New York, Jim Reid in Calgary, and Hugh Sutcliffe in Vancouver, according to Brookfield’s website.

Last year, Brookfield closed the second largest infrastructure fund ever raised, pulling in $7 billion and handily beating its $5 billion target.

(Clarification: Brookfield plans to charge 1.5 percent on invested capital after the investment period of Fund IV ends; the original version of this story left it unclear when the management fee switches over.)