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Brookfield Asset Management is stepping up its bet on artificial intelligence, launching a strategy centred on the development of data centres, chip storage and other infrastructure needed to support the technology.
Some investors have been backing away from AI, believing the sector to be overhyped and poised for a potentially painful drop in valuations, but Bruce Flatt, chief executive of the investment group, was bullish on the sector.
“While the potential of AI is widely acknowledged, the scale of infrastructure investment and the operating capabilities required to support its growth remain under-appreciated. Trillions of dollars are required,” said Flatt.
“We believe AI infrastructure is one of the defining investment themes of the decade,” Flatt said in a letter co-signed by Brookfield president Connor Teskey as the New York and Toronto-listed company reported second-quarter results on Wednesday.
Brookfield reported that fee-related earnings rose to $676mn in the three months to June, up 16 per cent on the same period last year, while distributable earnings rose 12 per cent to $613mn.
The group, one of the world’s largest asset managers, does not break out the value of its AI investments, but has ploughed more than $100bn into digital infrastructure, including telecom towers, data centres and fibre optics.
The firm said its new, dedicated AI infrastructure strategy would build on its “technical and operational expertise across the AI infrastructure value chain”.
In February it announced a €20bn programme to develop data centres, chip storage and other infrastructure in France, and in June said it would work on a similar offering in Sweden. It also agreed to lend $750mn to a US AI infrastructure provider.
Rocky macro conditions have made it difficult for many investment groups to deploy capital. But the pledge to muscle further into AI comes against the backdrop of a more favourable investing environment generally, Brookfield said, owing to investors’ interest in real assets.
The firm has ploughed $85bn into new investments this year and sold more than $55bn of assets, which it said was its highest level of activity in years.
The increased pace was due partly to its real estate business, which sold $15bn of assets this year, and its infrastructure business, which sold nearly $13bn, including a portfolio of data centres.
“A year ago, investors were waiting for a window of stability to begin evaluating transactions. Today, many are standing ready to put capital to work, generating a heightened level of activity across our business,” Flatt said.
Brookfield’s clients handed the firm $22bn to invest in the second quarter, including for its global fund targeting the energy transition, which the group expects to raise more capital next quarter. That fund has raised more than $15bn so far, exceeding the haul of its predecessor.
Brookfield also highlighted retirement markets as an area for expansion, pointing to another Brookfield arm’s recent acquisition of life insurer Just Group and its stable of pension assets.
