Brookfield targets $3.5 bln for fourth middle-market fund

Brookfield is in the market raising its fourth middle-market focused private equity fund targeting $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 $1 billion from Brookfield, a Canadian asset manager with about $200 billion of assets under management, said the 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 $3 billion target.

Fund IV focuses 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, which steps down to 1.5 percent on invested capital after the investment period 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 $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 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 what was at the time the second largest infrastructure fund ever raised, pulling in $7 billion and handily beating its $5 billion target.

Clarification: This story has been updated to explain the management fee on Fund IV steps down after the investment period to 1.5 percent on invested capital.

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