Brookfield Infrastructure Targets 10% FFO Growth as AI Investments Accelerate

Key Points

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• Brookfield Infrastructure targets approximately 10% FFO-per-unit growth this year, up from its 7% average between 2023 and 2025, supported by its organic backlog, recent investments and capital recycling.

• The company plans to deploy more than $2 billion in 2026 and expects returns of at least 15%, with major opportunities in AI infrastructure, semiconductor facilities and industrial partnerships. Its AI strategy includes GPU-as-a-service, AI factories and expanded Bloom Energy power partnerships.

• Brookfield is proposing to merge BIP and BIPC into a single publicly traded corporation, potentially creating a roughly $30 billion company with more than twice the trading liquidity; a security-holder vote is scheduled for Oct. 14.

Brookfield Infrastructure Partners (NYSE:BIP) said it expects its growth rate to accelerate as contributions from its organic backlog, recent investments and capital recycling begin to build, while management emphasized that the company intends to maintain its financial discipline and target higher-return opportunities.

Chief Executive Officer Sam Pollock said the company expects funds from operations, or FFO, per unit growth of approximately 10% this year, compared with average annual growth of about 7% from 2023 through 2025. Since inception, Brookfield Infrastructure has compounded FFO per unit at roughly 14%, Pollock said.

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“We believe the business is now moving back toward the growth profile that the investors in this room have come to expect from us,” Pollock said.

Financial position and capital deployment

Pollock said Brookfield Infrastructure has generated 10% FFO per unit growth year to date while retaining about $2.6 billion of corporate liquidity, BBB+ investment-grade credit ratings and a 65% payout ratio. He said the company has secured roughly $1.4 billion in growth investments and expects to deploy more than $2 billion this year.

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The planned deployment is diversified among investments in a semiconductor facility, the company’s growth backlog and industrial partnerships, according to Pollock. Management expects average returns of 15% or higher on capital currently being deployed, above its historical target range of approximately 12% to 15%.

Pollock attributed the opportunity set to what he described as an infrastructure “super cycle,” the expansion of AI infrastructure and Brookfield’s ability to source opportunities through its broader ecosystem. He said the company is not pursuing higher returns by assuming greater risk, citing its focus on high-quality counterparties, contractual protections and underwriting discipline.

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Brookfield Infrastructure has also secured approximately $1.4 billion in asset-sale proceeds this year, excluding about $1.2 billion in proceeds from the Csquare initial public offering that were used to repay debt. Pollock said the company remains on track to exceed its $2 billion annual capital-recycling target.

Simplification proposal and scale strategy

The company is proposing to combine BIP and BIPC into a single publicly traded corporation, BIP Inc. Pollock said the underlying business and investment strategy would not change, but the revised corporate structure is intended to make the security easier to own, broaden its potential investor base and improve trading liquidity.

A security-holder vote is scheduled for Oct. 14, with closing expected in the fourth quarter if approvals are received. Pollock said the combined company would be roughly a $30 billion business and could have more than twice the trading liquidity.

President Scott Peak said scale has become essential to accessing major infrastructure opportunities and corporate partnerships. He cited Brookfield Infrastructure’s $200 billion of assets under management, 50 portfolio companies in 15 countries, more than 100 closed transactions representing over $75 billion of equity deployed, and another $20 billion of equity projects under development.

Peak said larger transactions can offer better entry values because they may have fewer credible buyers, while also providing more opportunities to improve operations, margins, contracting, capital allocation and financing structures. He said recent acquisitions including Triton, Hotwire and Colonial had produced bolt-on acquisitions, margin improvements and asset monetizations within their first 12 to 24 months of ownership.

According to Peak, Brookfield Infrastructure’s average equity deployment per deal rose to $600 million since 2021 from $300 million between 2015 and 2020, while average target returns increased to more than 15% from 12% to 15%.

AI infrastructure opportunity

Management identified AI infrastructure as a major new deployment channel, alongside traditional mergers and acquisitions and organic growth within existing portfolio companies. Managing Partner Sikander Rashid said Brookfield now estimates AI infrastructure capital expenditures could reach $10 trillion, up from the $7 trillion addressable market figure the company had previously discussed.

Rashid said the company’s Radiant platform will provide GPU-as-a-service, including data centers and compute capacity, to technology companies and sovereign governments. He said Brookfield is focused on take-or-pay contracts, investment-grade customers and contract structures designed to provide returns on and of capital over the initial term.

Managing Director Lief Williams described AI factories as large-scale, purpose-built campuses integrating power, data-center infrastructure and, in some cases, compute capacity. He said a gigawatt-scale facility can require $50 billion to $60 billion of investment and could generate unlevered yield-on-cost returns above 10%.

Williams highlighted announced AI factory sites in Paducah, Kentucky, and Keephills, Alberta. He said the Paducah site is a former Department of Energy campus that previously served 3 gigawatts of load, while the Keephills site has seven high-voltage transmission lines connected to its interconnection point.

Rashid also said Brookfield expanded its partnership with Bloom Energy to $25 billion from an initial $5 billion. The partnership is intended to provide behind-the-meter power solutions, with Brookfield serving as capital partner for investment-grade customers under contracts generally lasting 10 to 15 years.

Organic backlog and growth outlook

Chief Financial Officer David Krant said Brookfield Infrastructure’s approved organic-growth backlog has reached $6 billion, excluding capital for its Intel joint venture. The company also has another $3 billion of projects in planning and commercialization and at least $6 billion of earlier-stage opportunities, he said.

Krant said Brookfield expects to deploy $2 billion to $3 billion annually going forward across traditional M&A, AI infrastructure and organic growth. The company expects to invest about $2.5 billion in AI infrastructure over the next five years, or roughly $500 million annually.

Management is targeting a minimum 15% equity return across those channels. Krant said the base business can grow 4% to 6% annually from inflation indexation and volume growth without additional investment, while deploying $2 billion annually at a 15% return could add roughly 5% per-unit growth.

Pollock said Brookfield Infrastructure’s units currently offer a dividend yield of more than 5%. He said management expects accelerated FFO growth and the proposed corporate simplification to support future distribution growth, liquidity and investor interest.

About Brookfield Infrastructure Partners (NYSE:BIP)

Brookfield Infrastructure Partners L.P. is a global owner and operator of essential infrastructure assets. The partnership’s portfolio includes businesses in utilities, transport, midstream energy, and data infrastructure, with assets that support the movement of people, goods, energy, and data.

Its utilities operations include electricity transmission and distribution, natural gas distribution, and water and wastewater systems. The transport business encompasses assets such as toll roads, rail, ports, and other transportation infrastructure.

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