In brief: How Brookfield separates impact from infra

The Global Transition Fund has a similar target return and investor base to its conventional infrastructure funds, so how does Brookfield's impact strategy differ?

Brookfield Asset Management’s $15 billion Global Transition Fund, which could reasonably be described as the world’s largest private markets impact fund, has a lot of similarities to its conventional infrastructure funds. Isabel O’Brien from affiliate title Infrastructure Investor has an insightful interview on the topic: subscribe or register with Infrastructure Investor here to read the full article. For New Private Markets readers, here are some key points:

  • BGTF will have a lifespan of 12 years with two one-year extensions – the same as the firm’s flagship infrastructure funds.
  • The LP base also reflects Brookfield’s investors in infra funds. “[Our LP base is a] similar kind of mix to what we would see in our other funds,” said Natalie Adomait, managing partner of Brookfield’s renewable power and transition group.
  • The target IRR is “in the range of our infrastructure funds, [but] probably slightly higher”, said Adomait. Unlike the regular infra funds, however, BGTF will invest “on a return spectrum”, with some lower risk investments, such as investments alongside a regulated utility in building out renewables infrastructure, and some will be further up the risk-return spectrum (such as scaling up new technologies).
  • A total of $2.5 billion has already been deployed into investments including three renewable power generation assets. Adomait said renewables assets are “the first and immediate investment opportunities and that’s where a lot of our capital is being deployed”.

So what’s the difference? There will be three major themes driving investments by BGTF: clean energy, business transformation and sustainable solutions.

Clean energy is relatively straightforward – investing in renewables and storage. Sustainable solutions will entail investments that aid in the decarbonisation of an entire sector and/or customer base. Business transformation entails investing “alongside companies to achieve any of their net-zero objectives”. An example of this would be the firm’s ultimately unsuccessful pursuit of Australian energy business AGL.