Brookfield raises US$2 billion for Middle East fund backed by PIF

For Brookfield, the US$2 billion first close provides fresh firepower to capitalize on an expanding pipeline of Middle Eastern deals. Photo by Peter J. Thompson/Postmedia

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The investment firm is committing US$500 million to the private equity fund, while a group of strategic investors comprising the Public Investment Fund and other global and regional institutional partners contributed the remainder, according to a statement seen by Bloomberg News.

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The fund will pursue buyout and growth opportunities across the Middle East in sectors including financials, consumer services and technology, with a target of allocating 50 per cent of its investments to Saudi Arabia.

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Deep-pocketed sovereign wealth funds and government-backed investors across the Gulf have continued pursuing deals even after the United States-Iran war started in February, while global firms have signalled their commitment to the region.

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On Saturday, Brookfield, alongside Blackstone Inc. and KKR & Co., agreed to a US$16 billion infrastructure partnership involving Kuwait’s oil-export pipelines. Blackstone also announced the opening of an office in Kuwait, its second in the six-member Gulf Cooperation Council.

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The first close of the Brookfield Middle East Partners fund comes amid a lull in the regional conflict after the U.S. paused its almost two-week run of strikes against Iran, while the Islamic Republic signalled it was refraining from retaliation and held talks with Oman over the Strait of Hormuz.

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The successful first close marks another step in Brookfield’s rise as one of the largest foreign investors in the region. It oversees roughly US$16 billion of assets in the Middle East across private equity, real estate and infrastructure, and has steadily expanded its presence as governments accelerate economic diversification programs.

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The fundraising also underscores Saudi Arabia’s evolving approach to deploying the financial muscle of the PIF. While the nearly US$1 trillion wealth fund has long invested tens of billions of dollars with global asset managers overseas, it is increasingly using those relationships to channel international capital into the domestic economy.

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The partnership with Brookfield will help anchor international private equity in Saudi Arabia and the broader region, Yazeed Al-Humied, deputy governor and head of Middle East and North Africa investments at PIF, said in the statement. “It will also accelerate deal flow while continuing to bring world-class expertise to the local capital market ecosystem.”

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The new fund also arrives as private equity firms search for pockets of growth amid subdued dealmaking in North America and Europe, where elevated borrowing costs and geopolitical uncertainty have weighed on transactions.

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For Brookfield, the US$2 billion first close provides fresh firepower to capitalize on an expanding pipeline of Middle Eastern deals. “We see a compelling opportunity to partner with businesses across the region and position them for long-term growth,” Brookfield Corp. chief executive Bruce Flatt said.

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