Brookfield targets $3.5 bln for fourth mid-market PE fund

Brookfield Asset Management is in the market raising its fourth middle-market focused private equity fund targeting US$3.5 billion, according to a person with knowledge of the situation and a fundraising document seen by peHUB.

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

“Huge skin (in the game),” the LP said. “They’ve been 25 percent to 50 percent of the previous three funds as well.”

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

Fund IV will focus on 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, according to the document. Fund IV will charge a 1.75 percent management fee on committed capital, 1.5 percent on investment capital, and have an 8 percent preferred return.

Brookfield will use 100 percent of any transaction, monitoring, director and break-up fees to offset the management fees, according to the source.

If Brookfield hits the target, Fund IV would be significantly larger than Fund III, which closed on US$1 billion in 2010, according to a document provided by the firm. 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 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 one of largest infrastructure funds ever raised, pulling in US$7 billion and handily beating its US$5 billion target.

As reported by peHUB Canada in December, Brookfield’s private equity group gave considerable focus to deals in the North American energy industry in 2014, backing add-on acquisitions by Ember Resources and acquiring substantial debt in Energy Future Holdings.

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