Brookfield Private Equity Fund

Fund Risks

DISCLOSURES

This website is not an offer to sell nor a solicitation of an offer to buy securities of the Fund. Any offering of securities of the Fund will only occur in accordance with the terms and conditions of the Private Placement Memorandum (and the applicable Fund Agreements, as defined in the Private Placement Memorandum), which describes more fully the implications, terms and risks of the Fund.

Complete information on the risks associated with BPE are set out in BPE’s registration statement on Form 10 and any such updated factors included in BPE’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

SUMMARY OF RISK FACTORS

The Fund may purchase certain instruments or utilize certain investment techniques that carry specific risks. An investment in the Fund involves considerations and risk factors that prospective investors should consider before subscribing. Certain risks associated with the Fund are summarized below, and they are further described together with additional risks and conflicts in “Risk Factors” and “Conflicts of Interest” in the Private Placement Memorandum. Investors should carefully review the risks and conflicts described below and the risks described within “Risk Factors” and “Conflicts of Interest” in the Private Placement Memorandum.

Investment Risks in General. All investments in securities risk the loss, including the complete loss, of capital. An investment in the Fund involves a significant degree of risk, relating both to the types of investments contemplated by the Fund and the Fund’s ability to achieve its investment objective, and therefore should be undertaken only by those investors capable of evaluating the risks of the Fund and bearing the risks it represents. Before purchasing units in the Fund, prospective investors should carefully consider, among other factors, the following risk factors, as well as other information provided in the Private Placement Memorandum, and the subscription agreement for the Fund, together with the Fund Agreements, as the same may be further amended, supplemented or amended and/or restated from time to time. The risk factors herein and in the Private Placement Memorandum do not purport to be a complete list or explanation of all risks involved in an investment in the Fund. Additionally, each of the risk factors listed, on its own, could have a material adverse effect on the Fund or the value of an investment in the Fund. Prospective investors should not construe the performance of investments by Brookfield Asset Management, or BAM (together with the Manager, Brookfield Corporation, and each of their respective affiliates, collectively, “Brookfield”); other public and private investment vehicles and programs that Brookfield currently manages and participates in and may in the future manage and participate in, including co-investment vehicles, sidecar vehicles, separate accounts, region-specific vehicles, strategy-specific vehicles, sector-specific vehicles and proprietary vehicles and, in the case of each of the aforementioned fund vehicles, each entity formed as a parallel fund, executive fund, companion vehicle, feeder vehicle, co-investment vehicle or alternative investment vehicle thereof (together with Brookfield, the “Brookfield Accounts”); or the General Partner as providing any assurances regarding the future performance of the Fund. No guarantee or representation is made that the Fund’s investment strategy will be successful, and investment results may vary substantially over time. Adverse changes in regulation and provincial, national or international economic conditions—including, for example, financial market fluctuations, local market conditions, governmental rules and fiscal policies, availability of terms of debt financing, and interest rates—can affect substantially and adversely the prospects of the investments and performance of the Fund. There can be no assurance that the Fund will meet its investment objective or that a unitholder will receive a return of their capital. As such, a unitholder should have the ability to sustain the loss of their entire investment in the Fund. Prospective investors must rely on their own examination of, and their own ability to evaluate, the nature of an investment in units, including all of the risks involved in making such an investment. Prospective investors should consult their own legal, tax, investment and accounting advisors in connection with evaluating the purchase of units. 

General Economic Conditions. Changes in general global, regional and/or U.S. economic and geopolitical conditions may affect the Fund’s activities. Interest rates, general levels of economic activity, the price of securities, and participation by other investors in the financial markets may affect the market in which the Fund makes investments or the value and number of investments made by the Fund or considered for prospective investment. Material changes and fluctuations in the economic environment—particularly of the type experienced in the years following 2008 and the bank distress, including the receivership of Silicon Valley Bank and Signature Bank in early 2023, that caused significant dislocations, illiquidity and volatility in the wider global economy; and the market changes that resulted from the spread of the novel coronavirus—also may affect the Fund’s ability to make investments and the value of investments held by the Fund or the Fund’s ability to dispose of investments. 

Such changes and fluctuations have, and in the future may have, a material effect on general economic conditions, consumer and business confidence, and market liquidity. Any economic downturn resulting from a recurrence of such marketplace events and/or continued volatility in the financial markets could adversely affect the financial resources of portfolio companies. Investments can be expected to be sensitive to the performance of the overall economy. Moreover, a serious pandemic, natural disaster, armed conflict, threats of terrorism, terrorist attacks and the impact of military or other action could severely disrupt global, national and/or regional economies. A resulting negative impact on economic fundamentals and consumer and business confidence may negatively impact market value, increase market volatility and reduce liquidity, all of which could have an adverse effect on the performance of investments, the Fund’s returns and the Fund’s ability to make and/or dispose of investments. While the Fund may seek to capitalize on capital dislocations by investing opportunistically in industries or situations affected by the aforementioned conditions, no assurance can be given as to the effect of these events on the Fund’s investments or the Fund’s investment objective. 

Highly Competitive Market for Investment Opportunities. The success of the Fund depends, in large part, on the availability of a sufficient number of investment opportunities that fall within the Fund’s investment objective and the ability of the General Partner and the Manager to identify, negotiate, close, manage and exit those investment opportunities. The activity of identifying, completing and realizing attractive investments is highly competitive and involves a high degree of uncertainty, especially with respect to timing. There can be no assurance that the General Partner or the Manager will be able to locate and complete investments that enable the Fund to invest all of its capital in opportunities which satisfy the Fund’s investment objective or realize the value of these investments, nor can there be any assurance that the Fund will be able to make investments on favorable terms and conditions. Failures in identifying or consummating investments on satisfactory or favorable terms could reduce the number of investments that are completed, reduce the Fund’s returns, and slow the Fund’s growth. 

Limited Operating History. The Fund has limited operating history upon which a prospective investor can evaluate the likely performance of the Fund. The past investment performance of any other Brookfield Account (including any investments made thereby) or any investments managed by Brookfield or the officers or other investment professionals of Brookfield cannot be construed as any indication of the future results of an investment in the Fund. Although certain officers and other investment professionals of Brookfield, both individually and together, have experience investing in private equity transactions, their past experience cannot be relied upon as an indicator of the ability of the Fund to execute on its investment strategy and achieve its investment objective. There will be no minimum amount of total subscriptions necessary to establish the Fund. In the event the Fund is not successful in procuring substantial subscriptions, it may have an adverse effect on the Fund. Moreover, the Fund is subject to all of the business risks and uncertainties associated with any new fund, including the risk that it will not achieve its investment objectives and that the value of the Fund’s units could decline substantially. While the General Partner intends to make investments that have estimated returns commensurate with the uncertainties involved, there can be no assurance that the Fund will be able to implement its investment strategy or achieve its investment objective or that any unitholder (as defined in the Private Placement Memorandum) will receive a return of capital. Unitholders should have the ability to sustain the loss of their entire investment in the Fund.

Risk Associated with Investment Strategy. The Fund will invest across sectors, geographies and economic cycles, drawing on Brookfield’s global footprint, deep expertise in certain sectors and situations, and value-add as a strategic partner.

The Fund intends to invest in and/or alongside Brookfield Accounts and/or third-party investment vehicles managed by third-party fund managers. Such a strategy may involve different risks than funds, investment vehicles or other programs or arrangements which pursue investments in narrower asset classes, industry sectors or geographies. There can be no guarantee that the Manager will invest with a focus on a particular asset class, industry sector or geography, as the Manager’s determination of whether to pursue a particular opportunity will depend on many factors. Since it is unclear precisely what types of investments the Manager will pursue, it is difficult to predict how the Fund will be affected by risks associated with investing in a particular asset class, industry sector or geography, and as the investment program of the Fund develops and changes over time, an investment in the Fund may be subject to additional and different risks that are not presently known to the Manager or are currently deemed immaterial. There can be no guarantee that all, or even the majority of, risks associated with investment in a particular asset class, industry sector or geography have been disclosed herein. Additionally, while the Fund is primarily expected to invest alongside Brookfield Accounts, it may from time to time be the sole Brookfield-sponsored vehicle participating in an investment. The universe of investment opportunities the Fund may seek to invest in is necessarily limited, and unitholders have no assurance as to the degree of diversification of the Fund’s investments, either by geographic region, asset type or sector. This can create risks, as certain different types of investments may be better suited to perform well in certain economic climates or in other situations than others, and the Fund will not necessarily have access to such investments. To the extent the Fund concentrates investments in a particular issuer, industry, security or geographic region, its investments will become more susceptible to fluctuations in value resulting from adverse economic, political, regulatory and business conditions with respect thereto. The Fund reserves the right to invest in fewer portfolio companies than it would ordinarily target and thus be less diversified. Investors should maintain a suitably diversified portfolio of investments and are encouraged to seek the advice of their financial advisors with a view to achieving the same. Furthermore, the aggregate return of the Fund may be substantially adversely affected by the unfavorable performance of any single investment. Moreover, since all of the Fund’s investments cannot reasonably be expected to perform well or even return capital, for the Fund to achieve above-average returns, one or a few of its investments must perform very well. There can be no assurance that this will be the case. In circumstances where the General Partner and/or the Manager intend to refinance all or a portion of the capital invested in a transaction, there will be a risk that such refinancing may not be completed, which could lead to increased risk as a result of the Fund having an unintended long-term investment as to a portion of the amount invested and/or reduced diversification. 

Investment Performance. The Fund will make investments based upon analyses of current returns and estimates and projections of internal rates of return developed by the Manager that may be available with respect to potential investments. Because projections are inherently subject to uncertainty and factors beyond the control of the Manager, investors have no assurance that the investments will yield the returns expected by the Manager. It is possible that the Fund will not be able to acquire assets at favorable prices or on favorable terms and conditions, thereby reducing expected returns. Acquisitions and debt investments entail risks that investments may not perform in accordance with expectations and that anticipated costs of improvements to bring an acquired portfolio company up to standards established for the market position intended for that portfolio company may exceed budgeted amounts. The Fund may not be successful in identifying suitable assets that meet its investment criteria or in consummating acquisitions or other investments on satisfactory terms. Failures in identifying or consummating investments on satisfactory terms could reduce the number of investments that are completed and slow the Fund’s growth. In addition, subsequent to the Fund’s acquisition of a particular investment, the Manager may adjust targeted returns to reflect changes in market conditions. There can be no assurance that the Fund will make a profit on its investments or recover any part of its invested capital during any anticipated period of time.

Valuation Risk. Valuations of the Fund’s assets that are calculated by the General Partner will be done in good faith in accordance with the Fund’s valuation policy (the “Valuation Policy”). The Fund will retain an independent valuation advisor (the “Independent Valuation Advisor”) to identify, recommend, and manage third-party appraisers to perform reviews with respect to each investment no less frequently than annually. In the months when such a valuation is not based on a review, the Independent Valuation Advisor will provide the Fund positive assurance regarding the reasonableness of such valuation as of the valuation date.

Within the parameters of the Fund’s Valuation Policy, the valuation methodologies used to value the Fund’s investments in companies and other private assets and certain other investments will involve subjective judgments and projections and may not be accurate. Valuation methodologies will also involve assumptions and opinions about future events, which may or may not turn out to be correct. Valuations of the Fund’s investments will be only estimates of fair value. Because these fair value calculations will involve significant professional judgment in the application of both observable and unobservable attributes, the calculated fair value of the Fund’s assets may differ from their actual realizable value or future fair value. Ultimate realization of the value of an asset depends to a great extent on economic, market and other conditions beyond the Fund’s control and the control of the General Partner, Brookfield and the Fund’s Independent Valuation Advisor. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller. As such, despite the General Partner’s efforts, the carrying value of an asset may not reflect the price at which the asset could actually be sold in the market, and the difference between carrying value and the ultimate sales price could be material. In addition, there may be a relative scarcity of market comparables on which to base the value of the Fund’s assets, and accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the valuation. The General Partner may have limited access to information that bears on valuation, especially in situations where, for example but without limitation, the Fund has a minority investment or the Fund has an investment in another Brookfield Accounts and/or third-party investment vehicle. Such valuations will affect the calculation of the General Partner’s Performance Participation Allocation and the Management Fee. There will be no retroactive adjustment in the valuation of such assets, the offering price of the Fund’s units, the price the Fund paid to redeem units, or NAV-based or performance-based fees it paid, directly or indirectly, to the General Partner, Brookfield and the Special Unitholder (as defined in the Private Placement Memorandum) to the extent such valuations prove to not accurately reflect the realizable value of the Fund’s assets. While the Fund believes its NAV calculation is consistent with widely recognized valuation methodologies, there are other methodologies available to calculate NAV. As a result, other funds of other sponsors focused on private equity investments may use different methodologies or assumptions to determine NAV. 

Use of Leverage. The extent to which the Fund uses leverage may have the following consequences to the unitholders, including, but not limited to: (i) greater fluctuations in the net assets of the Fund, (ii) use of cash flow for debt service rather than distributions, or other purposes, and (iii) in certain circumstances the Fund may be required to prematurely dispose of portfolio companies to service its debt obligations. So long as the Fund is able to realize a higher net return on its portfolio companies than the then-current cost of any leverage together with other related expenses, the effect of the leverage will be to cause holders of units to realize higher current net investment income than if the Fund were not so leveraged. On the other hand, the Fund’s use of leverage will result in increased operating costs. Thus, to the extent that the then-current cost of any leverage, together with other related expenses, approaches the net return on the Fund’s portfolio companies, the benefit of leverage to holders of units will be reduced, and if the then-current cost of any leverage together with related expenses were to exceed the net return on the Fund’s portfolio companies, the Fund’s leveraged capital structure would result in a lower rate of return to holders of units than if the Fund were not so leveraged. There can also be no assurance that the Fund will have sufficient cash flow to meet its debt service obligations. As a result, the Fund’s exposure to losses may be increased due to the illiquidity of its assets generally.

No Market for Units; Restrictions on Transfers. An investment in the Fund is likely to be a long-term commitment. It is anticipated that there will be a significant period of time before the Fund will have completed its investing in portfolio companies. Units in the Fund have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”), the securities laws of any state, or the securities laws of any other jurisdiction, and therefore they cannot be resold unless they are subsequently registered under the Securities Act and other applicable securities laws, or unless an exemption from registration is available. It is not contemplated that registration of the units in the Fund under the Securities Act or other securities laws will ever be effected. There is no public market for units in the Fund, and none is expected to develop. Each unitholder will be required to represent that they are a “qualified purchaser” (as defined in the Investment Company Act of 1940, and rules thereunder) and “accredited investor” (as defined in Rule 501 of Regulation D under the Securities Act) and that they are acquiring units for investment purposes and not with a view toward resale or distribution. Except by operation of law, a unitholder will not be permitted to assign, sell, exchange or transfer any of their interest, rights or obligations with respect to their units, unless the unitholder provides 60 calendar days’ notice to the General Partner (or such reasonably shorter period as agreed to by the General Partner). The General Partner may refuse such requested transfer for certain reasons. Therefore, redemption of units by the Fund will likely be the only way for a unitholder to dispose of their units. It is uncertain as to when profits, if any, will be realized by a unitholder and if such unitholder will realize profits from the Fund prior to the Fund redeeming its units. Whether the Fund has sufficient liquidity to meet a unitholder’s request for redemption (a “Redemption Request”) will be determined by the General Partner. The Fund will not be obligated to liquidate any asset in order to meet Redemption Requests, and because of the illiquid nature of holdings in portfolio companies, the Fund may not have sufficient cash flow to meet Redemption Requests at any given time. If the General Partner determines there is insufficient liquidity to meet Redemption Requests under the Fund’s quarterly Redemption Program (as defined below), such requests will be delayed until the General Partner determines there is sufficient liquidity, and such delay may be significant. In addition, there are substantial restrictions on the redemption of units under the Fund’s limited partnership agreement. 

Redemption Program. At the discretion of the General Partner and in accordance with the Fund’s limited partnership agreement, the Fund expects to implement a redemption program (the “Redemption Program”) in which it currently intends to offer to redeem Class S units, Class D units, Class I units and Class B-2 units (as defined in the Private Placement Memorandum), on a quarterly basis, up to 5% of all classes of units outstanding (either by number of units or aggregate NAV). The General Partner may, in its discretion and in accordance with the Fund’s limited partnership agreement, cause the Fund to offer to redeem more than the 5% quarterly redemption limitation in any calendar quarter. The General Partner may amend or suspend the Redemption Program if in its reasonable judgment it deems such action to be in the Fund’s best interest, including, but not limited to, for tax, regulatory or other structuring reasons. [The Redemption Program is expected to commence in the first quarter of 2026, although the General Partner retains discretion to cause the Fund to commence the Redemption Program prior to such date.] Pursuant to the Fund’s limited partnership agreement, any Redemption Request for units that have not been outstanding for at least two (2) years will be subject to an early redemption fee (the “Early Redemption Fee”) equal to 5% of the NAV of the units being redeemed (calculated as of the Redemption Date) for the benefit of the Fund and therefore indirectly its unitholders. The two-year holding period is measured as of the subscription date immediately following the prospective Redemption Date. For illustrative purposes, a unitholder that acquires units on October 1st would not be subject to an Early Redemption Fee for participation in a redemption offer that has a valuation date of September 30th two years later (or any time thereafter). The General Partner may otherwise from time to time waive the Early Redemption Fee in its discretion.

FORWARD-LOOKING STATEMENTS 

Certain information contained in this sales material constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue” or “believe”; or the negatives thereof, or other variations thereon, or comparable terminology. These forward-looking statements reflect the current expectations, estimates, projections, opinions, assumptions or beliefs of the Manager and the General Partner based on information currently available to the Manager and the General Partner. Such forward-looking statements are not facts and include opinions based on the Manager’s and the General Partner’s experience and expectations about the investments the Fund will make. Due to various risks and uncertainties, actual events or results or the actual performance of the Fund may materially differ from those reflected or contemplated in such forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, volatility in financial markets, tax consequences, changes in applicable laws, and other risks associated with investing in securities, and also those factors discussed under the section “Risk Factors” in this sales material and the Private Placement Memorandum. Accordingly, you should carefully review the “Risk Factors” and “Conflicts of Interest” sections of the Private Placement Memorandum for a discussion of the risks and uncertainties that the Manager and/or the General Partner believe are material to the Fund, its business, operating results, prospects and financial condition. 

The Manager and the General Partner disclaim any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results, or otherwise. No representation or warranty is made as to future performance or such forward-looking statements. Although the Manager and the General Partner believe the assumptions presented in forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance, and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. 

The information contained herein is for educational and informational purposes only and is not intended as and may not be relied on in any manner as legal, tax or investment advice, a recommendation, or as an offer to sell, or a solicitation of an offer to buy any securities offered by Brookfield Corporation and its affiliates (together, “Brookfield”). Brookfield may not have verified (and disclaims any obligation to verify) the accuracy or completeness of any information included herein, including information that has been provided by third parties, and you cannot rely on Brookfield as having verified any of the information. Any outlooks or forecasts presented herein are as of the date appearing in this material only and are also subject to change without notice. Past performance is not indicative of future performance, and the value of investments and the income derived from those investments can fluctuate.

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