Renewable energy is among the targets for the Sequoia China Infrastructure Fund
Canada’s Brookfield Asset Management on Thursday announced that it has backed a China-focused infrastructure vehicle led by Sequoia China, the mainland branch of the famed Silicon Valley venture capital firm.
Dedicated to supporting China’s new economy, Sequoia China Infrastructure Fund aims to invest in infrastructure developments supporting the mainland’s digital economy, new energy and life science sectors with both physical facilities and financing, the two companies said in a release. The fund recently closed at an undisclosed sum after submitting an SEC filing in October of 2021.
“Sequoia China Infrastructure Fund will become another partner of choice for Chinese entrepreneurs in supporting companies’ visions with the backdrop of an exciting growth story of China’s new economy,” said Neil Shen, Founding and Managing Partner of Sequoia China. “We are thrilled to partner with Brookfield, with its expertise in infrastructure investing globally. Together, we will assist businesses to thrive in every aspect of their expansion needs.”
Brookfield, which manages $650 billion in assets globally, is participating in the fund as a limited partner as it has been ramping up its investment in data centres and renewable energy facilities across Asia Pacific in recent years, backing strategies in Australia and India as global institutions chase the rapidly growing digital infrastructure sector.
Technology-Property Convergence
With Brookfield’s support, Sequoia, one of China’s most active tech investors, plans to pursue opportunities in new energy and digital infrastructure, ambient and cold chain warehousing, tech parks and manufacturing facilities.
Bruce Flatt, CEO of Brookfield Asset Management
The fund will also provide financing for fast-growing companies, with Brookfield’s global management pointing to a role for the company’s Oaktree credit division in the new venture.
“The combined strengths of Sequoia China and Brookfield, together with our Oaktree franchise, enable us to offer holistic solutions to entrepreneurs looking to expand their businesses,” said Brookfield chief executive Bruce Flatt. “We look forward to collaborating with Sequoia China to support the growth of some of the most exciting companies in the country.”
The statement explained, without elaborating, that the joint venture will provide entrepreneurs with “new forms of capital to support their infrastructure requirements as they scale their businesses.”
The partners say they hope to leverage Brookfield’s expertise in managing alternative assets alongside Sequoia’s experience helping to build China’s new economy.
“We are excited to announce our latest strategic partnership as Brookfield continues to expand its footprint and capabilities in China. Sequoia China’s unrivalled insight into the country’s new economy coupled with Brookfield’s global expertise will deliver a powerful suite of solutions to business owners and entrepreneurs. We look forward to working together on the many opportunities that lie ahead.” said Brookfield’s head of China Stuart Mercier.
The fund has attracted interest from several leading institutional investors, including sovereign wealth funds, pension funds and asset management companies, Sequoia said in a separate release.
Shen and Sequoia are well known in mainland tech circles for having backed top tech firms like Bytedance, Pinduoduo and Meituan, with the company having gradually edged into the real estate realm in recent years through investments in JD Logistics and DNE Group, the new identity of recently merged China commercial and industrial developers D&J and New Ease.
For Brookfield, which has $12 billion in assets under management in China, the deal promises to expand a portfolios with already includes the 152,839 square metre (1.6 million square foot) One East commercial complex in Shanghai, as well as the former Pradera Asia retail portfolio which the company acquired in June last year for $1.4 billion.
Brookfield declined to disclose financial details of the fund and Sequoia China had not yet responded to inquiries from Mingtiandi by the time of publication.
Pan-Asian Expansion
Brookfield’s participation in the Sequoia fund comes just half of a year after the firm’s infrastructure division formed a 50-50 joint venture with NYSE-listed real estate investment trust Digital Realty to establish a data centre platform in India named BAM Digital Realty.
That JV made its first acquisition in July, when it paid INR 600 crore ($80 million) to acquire a 30-acre plot in India’s Navi Mumbai from developer K Raheja Corp, according to local newspaper Business Standard, with plans to develop a data centre on the site.
That India initiative was Brookfield’s second data centre strategy in the region, after the firm’s 2019 acquisition of Australian-based hyperscale data centre operator DCI Data Centre.
In addition to its investments in digital infrastructure, Brookfield, has in recent years been one of the largest investors in Asia Pacific logistic properties – another real estate sector closely tied to the new economy. In 2018 the company gave that logistics angle an injection of infrastructure by entering into a 50:50 joint venture with GLP to develop and operate rooftop solar panels on warehouses and commercial developments managed by Asia’s largest warehouse developer and operator.
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