Brookfield Grabs Quick $1B in New 'Special Opps' Push
Brookfield Grabs Quick $1B in New 'Special Opps' Push
By Tom Stabile
Brookfield Asset Management raised a quick $1 billion last quarter in a new wide-angle special opportunities fund – aiming for a less travelled product area in which Blackstone Group and others
have raised big sums and face little competition.
Brookfield is aiming for $5 billion overall in the new strategy, part of a suite of products the $385 billion manager has been launching in the last two years to complement its flagship real estate, infrastructure, and private equity funds. The manager is finishing a fundraising cycle for the latest vintage in each of those asset classes, with $27 billion raised over the past year toward an infrastructure fund targeting $20 billion, a private equity vehicle that has brought in $8 billion, and a real estate fund that closed in January with $15 billion.
Brookfield raised $19 billion overall last quarter, led by $10.2 billion for the infrastructure fund and $500 million for its private equity fund. But that quarterly fundraising haul also featured newer vehicles, including $1 billion for the new special opportunities fund, $700 million for a long-life infrastructure strategy, and $500 million for its new opportunity zone fund, which it landed on several advisor platforms this year.
The new special opportunities fund has the most sweeping mandate of the newer products, able to invest through either control or minority stakes in equity, credit, and hybrid deals – and across
private equity, real estate, and infrastructure – with a purview essentially of any promising deals that don’t fit into its existing funds.
“This program allows the flexibility to invest across a wide range of opportunities beyond the scope of existing mandates we have in funds,” said Bruce Flatt, CEO at Brookfield, on its second quarter earnings call earlier this month. “The funds could be deployed across the risk reward spectrum, so some returns could be in the low teens and some are opportunistic returns. They just don’t fit the mandates of our flagship strategies.”
The model Brookfield is using echoes strategies from several of its large private fund peers, most notably Blackstone, which has raised $29.6 billion in capital across various vehicles and coinvestments since the 2012 launch of its tactical opportunities business.
Others plying the area include Ares Management, which has $2.9 billion in a special opportunities fund that targets minority stakes in “stressed, distressed and opportunistic situations,” and TPG
Sixth Street Partners, a TPG affiliate whose Adjacencies funds have about $9.3 billion, with a heavier focus on credit investments. And Fortress Investment Management has run a hybrid
version of the strategy since 2002, when it launched its Drawbridge Special Opportunities vehicle, which is in a hedge fund format, but often targets illiquid assets that don’t fit in its private equity strategies.
Hedge funds were the earliest players using the approach, with larger managers moving beyond their single-strategy models to add special opportunities themes to grab a broader set of assets,
says Alan Pardee, managing partner at Mercury Capital Advisors, a placement agent.
“Hedge funds created a box-for-everything strategy, and Blackstone looked at that and said, ‘Why can’t we do it?’” he says, noting that Blackstone applied it to a drawdownstyle
private equity format. “It was a stroke of brilliance… And it’s no surprise that anything successful has its imitators.”
But it’s also an area that may not end up with a lot of competitors, because investors will likely only favor managers that have a broad set of products – and expertise on a wider range of investments – to populate these “all-other buckets” with viable deals, Pardee says.
“Blackstone proves there is demand for it, but we’re not sure there is demand for somebody to apply this strategy in areas where they don’t have experience,” he says. “The appetite from investors for funds with a very broad mandate across a lot of things will only be for the larger firms that have a lot of different ways of attracting deal flow.”
One way that smaller players might compete on the margins of this investment style is to create funds adjacent to their specialties, Pardee adds. “They’re not entrusting capital to a middle market
buyout specialist to go invest anywhere,” he says. “But you might be able to create a special fund that looks at everything else in your own deal flow, including credit [investments] alongside your
In addition to its new special opportunities strategy, Brookfield is also betting big on its long-dated funds, launched in 2016 and 2017. It expects to raise $50 billion each in separate real estate, infrastructure, and renewable energy strategies over time in open-end funds designed to hold assets longer than typical private vehicles, while targeting 7% to 11% returns. Those funds have to date brought in about $5 billion, Flatt said on the recent call.
And even though Brookfield only recently closed its flagship opportunistic real estate fund and may soon close its flagship infrastructure strategy, it may be back in the market with successor funds relatively soon, because each of those new vehicles is already 50% invested, Flatt said. “So… the follow-on funds come relatively quickly afterwards,” he said, later noting that Brookfield’s fund documents allow it to pursue a successor vehicle after investing 75% of the prior version.
Brookfield is also set to add another $124 billion to its coffers sometime this fall when its deal to acquire Oaktree Capital Management is set to close.
eWTP Arabia spotlights Arab-Asian collaboration at SuperReturn Middle East
Dubai, UAE: eWTP Arabia Capital, a leading Saudi Arabia and China based growth stage venture fund, is co-sponsor of SuperReturn Middle East, the leading private equity event serving the Middle East…
Mercury adds US secondaries advisory exec
The adviser and placement agent sees a growing opportunity in the US lower middle market, particularly in preferred equity. Mercury Capital Advisors has brought a new hire over from the…
Springwater Capital partners with Morningside Capital Management and LSV Advisors in a structured solution of a European portfolio of alternative assets.
Springwater, a leading pan-European special situations investment firm, received a preferred equity investment in a portfolio of European private equity assets with a value of over €100 million. Fresh capital raised will…
Infrastructure Managers Rake in $124B for
New Fundraising Record
Money poured into infrastructure funds at a record pace last year, powered by factors such as a post-pandemic rebound, a range of potential risk and return options and a wide…
Mercury Capital Advisors Boosts its US Origination and Distribution Capabilities
Mercury Capital Advisors announced today that it has added James Howe and Michael Dunham as Partners to further enhance its origination and distribution capabilities. Howe and Dunham are based out…
Mercury Capital Advisors Adds Masashi Hirose and Eugene Park to Growing Team
Mercury Capital Advisors announced today that it has added Masashi Hirose as Partner and Eugene Park as Principal to boost distribution and project management efforts for the firm, respectively. Hirose…
Gaw Capital Partners Takes Top Spot in APAC Fund Manager Ranking by PERE
September 1, 2021, Hong Kong – Gaw Capital Partners ranked first in PERE’s APAC Fund Manager Guide, a ranking based on capital raised over a five-year period, which shows the top 50 fund managers…
Mercury Capital Advisors Appoints Michael Ricciardi as Chairman Emeritus
Mercury Capital Advisors (“Mercury”), among the world’s elite global private fund placement and advisory firms, today announced that it has appointed Michael Ricciardi, Chief Executive Officer and Co-founder of the…
Mercury Capital Advisors Announces Four Senior Hires for Distribution Team
Mercury Capital Advisors today announced that it has added four senior professionals to amplify distribution efforts for the firm. Matthew Haimes, based in London, Jill Cohen and Jennifer Tunney, both…
10 Biggest Trends Shaping the Next 3 Decades, According to Big Investors
Institutional investors and family offices in a recent survey cite digitization, aging population and climate change as the most important trends that will shape the global economic landscape in the…
Investcorp partners with 17Capital to structure portfolio of alternative assets
17Capital, the global go-to source of strategic financing for investors in private equity, and Investcorp, a leading global provider and manager of alternative investment products, are collaborating to structure a…
Opportunity-Zone Funds Gaining Momentum
After a slow start, managers of opportunity-zone funds have been raising capital at an accelerated rate, according to Real Estate Alert’s second-annual review of the sector. Twenty-two sponsors working independently…
Oaktree Leads Rush of New Distressed Funds Seeking $30B
A wave of distressed debt and special situations funds has hit the market in recent weeks in response to the Covid-19 pandemic downturn, jumpstarting a segment that had dwindled to…
Crisis Sidetracks Fund Shops’ Equity Raises
The coronavirus chaos is taking its toll on fund managers’ capital campaigns. Operators across the country are postponing initial and final closes, or discussing doing so, as investors focus on…
PE giants eyeing 2 opportunities amidst COVID
We talked to 14 private-equity insiders about how they’re planning to play the coronavirus turmoil. They identified 2 huge opportunities. Market chaos is creating crises and opportunities. Private-equity firms are…
LPs Slow Pledges to Debt Vehicles
Demand for high-yield-debt funds appears to have softened in the past year. The amount of equity raised by active closed-end vehicles is down for the first time since 2013, according…
Investors Tap the Brakes on Fund Commitments
After several years of explosive growth, the market for high-yield real estate funds is slowing. The total amount of equity managed in closed-end funds fell for the first time since…
Bain, TPG Go Long in Major Push into Public Equities
Bain Capital and TPG have rolled out new vehicles focused on long-hold public equities – aiming for billions of dollars in new capital and further blurring the lines between the…
Brookfield Grabs Quick $1B in New ‘Special Opps’ Push
By Tom Stabile Brookfield Asset Management raised a quick $1 billion last quarter in a new wide-angle special opportunities fund – aiming for a less travelled product area in which…
Why Investcorp is buying Mercury
We don’t often see managers buying placement agents, but in this instance the rationale is clear. In an industry in which growth is currently the norm (spoiler alert: our PEI…