L.A. Firms Near Deal With Pipe Co.

Oaktree Capital Management LP and GFI Energy Ventures LLC are poised to make an investment in Sheehan Pipe Line Construction Co., a Tulsa-based company that has been family owned since 1903, according to a regulatory filing.

It’s unclear exactly how large the investment will be, though it would come out of the firms’ joint investment vehicle, OCM/GFI Power Opportunities Fund II, a $1 billion fund that closed in 2005 which invests in energy and related infrastructure projects. The fund typically invests between $40 million and $100 million in buyouts, recapitalizations, emerging growth deals, growth capital investments and mid-market investments. Sectors of interest include electricity, natural gas and industrials.

The Federal Trade Commission granted the buyout shops early termination of anti-trust review for the deal under the Hart-Scott-Rodino Act on June 17. Such a clearance typically means the buyer and seller have reached at least a tentative agreement on a deal and are trying to expedite the anti-trust review period. Officials from Oaktree Capital, GFI Energy and Sheehan Pipe Line Construction did not return efforts to reach them for comment.

Services provided by Sheehan Pipeline Construction include construction of cross-country main lines, relocation or replacement of existing lines, and cleaning and re-coating of existing lines.

The company’s CEO, R. David Sheehan Jr., is listed as the seller in the filing. Sheehan is a descendent of company founder John Sheehan. Born in 1852, the elder Sheehan is championed as a pioneer of the pipeline industry on the company’s Web site, having laid some of the first pipelines in the Western United States.

Professionals at Oaktree Capital and GFI Energy, both of which are based in Los Angeles, have partnered on deals for more than a decade, even before they joined forces in 1999 to raise OCM/GFI Power Opportunities Fund, a $454 million pool. Prior to raising the funds in partnership with Oaktree Capital, GFI Energy originated 20 transactions, of which Oaktree Capital was a lead investor in 13, according to GFI Energy’s Web site.

Oaktree Capital manages a plethora of debt and equity funds with a wide variety of strategies, from mezzanine funds to funds targeting deals in Europe, China and emerging markets. The firm manages $55 billion for many of the best known institutional investors. Oaktree Capital closed on OCM Opportunities Fund VIIb LP, a vehicle for distressed debt investments, in June 2008 with pledges totaling $10.9 billion, and it’s reportedly targeting between $4 billion and $6 billion for its next fund, OCM Opportunities Fund VIII LP, according to Dow Jones.