Overseas LPs seek to emulate Brookfield partnerships with ‘Maple 8’

Brookfield Asset Management’s efforts to develop LP relationships in Asia and the Middle East are drawing heavily on a partnership model pioneered in Canada.

This was a talking point in a fundraising panel held last week at Brookfield’s 2023 Investor Day. Craig Noble, CEO of alternative investments and the panel’s moderator, said partnerships formed with Canadian pensions years ago is “a playbook and a foundation for what we’re doing now to grow around the world.”

Chase Moran, senior vice-president, client relationship management, agreed, saying, “Canadians are some of the most sophisticated institutional investors. Beyond fund investments, they have been investing in co-investments in a very meaningful way. In a lot of ways, they invented the partnership style of investing.”

Brookfield was “fortunate to partner with Canadian institutional investors from the beginning,” she said. “We have worked with roughly 60-70 percent of public plans” including the so-called Maple 8 – CPP Investments, CDPQ, Ontario Teachers’ Pension Plan, PSP Investments, BCI, Alberta Investment Management Corp, OMERS and HOOPP.

“Very few – if any – are doing what Brookfield is doing in Canada,” she said. “Why is this important? We’re seeing investors across the world emulate this partnership style of investing. We’re seeing it in Japan, South Korea, were certainly seeing it the Middle East, and in the US as well.”

Brookfield is among several GPs on the hunt for fresh capital sources at a moment when traditional North American LPs are cash-strapped. A prodigious source is overseas investors, such as Asian and Middle Eastern sovereign wealth funds and family offices, some of which are new or underexposed to private equity and other alternative assets.

When vying for commitments from overseas LPs, Brookfield is encountering many looking to replicate the partnerships it built with the Maple 8 and other Canadian pensions.

“We work with some of the largest and growing investors across Asia-Pacific,” Niel Thassim, managing partner, private funds, said. “And in a number of conversations we’ve had over the last decade they’ve said, ‘We’ve watched the Canadians evolve and mature in alternatives. We know Brookfield has been working side-by-side with them. Can you work with us in the same way?’ ”

A similar theme is being expressed by Brookfield’s Middle East relationships. LPs in the region “know investors are seeking their capital, which means they’re able and more willing to be astute in how they pick who they want to work with,” Dola Sowemimo, vice-president, client relationship management, said.

This has led them to ask GPs questions like, “Sure, strong track records, but what more can you provide?” he said. “What sort of relationships, what sort of partnerships, can you bring?”

A key deliverable in the partnership model touted by Brookfield is “creating and generating a large and attractive pipeline of co-investments and joint ventures,” Thassim said. This helps LPs wanting “to develop a direct investment capability or just get deeper insights into the investments they have with us.”

Sowemimo agreed, saying there are Middle Eastern LPs so large “they won’t even engage with you unless they know and believe you can provide co-investments to them of a scale that makes sense.” In addition, they insist on being connected with the “relevant investment professional” in sectors of interest. “They don’t want to speak with just me.”

“The partnership model means investing in and creating investment structures and wrappers and feeders that make it more cost- and capital-efficient for our investors to invest in funds with us,” Thassim said. It is also about “being truly aligned.”

Brookfield sees a diverse client base as a major factor in its plan to raise up to $100 billion of third-party capital inflows this year. In the first quarter, the firm reported LPs in Asia and the Middle East had accounted for about 40 percent of commitments in the prior 12 months.

Quotations used in this story were edited for length and clarity.