Oaktree Raising Billions For Funds, Eyes Retail

“Looking ahead, we anticipate continued strong…fundraising success,” John Frank, managing principal of Oaktree, told investors.

Frank reported a “good response” to the initial marketing of its Oaktree Principal Fund VI LP, a turnaround/distressed debt vehicle. Oaktree sees no difficulty reaching its $3 billion target over the next 12 months for that fund. Its predecessor, Oaktree Principal Fund V LP, carries a vintage of 2009.

The firm is also readying the launch of a host of products aimed at retail-level investors. It hired an executive to help roll out these products, but it did not name the person. Calls to Oaktree seeking additional information were not returned.

“Our goal for this year is really to develop a full retail program, and admittedly, we are still at the beginning stages of that, but we’ve organized ourselves to do that,” Frank told investors during its quarterly conference call. Oaktree surpassed its fundraising goal for its Oaktree Enhanced Income Fund LP with a total of more than $2 billion, including leverage.

The Los Angeles financial services private equity firm, which went public about one year ago, also drew $900 million for its Strategic Credit strategy. It expects it’ll add another $1 billion to it by the end of the year. Fundraising is “going well” for its new Oaktree Real Estate Opportunities Fund VI LP, with about $750 million taken in thus far and a plan to hit its target of $1.5 billion before the end of the year.

Oaktree expects to meet or exceed its $500 million target for a new strategy called Oaktree Emerging Market Opportunities Fund LP for distressed emerging market debt. “The opportunity here is immense,” Frank said. ” At $2.8 trillion and growing at a compounded annual growth rate of 21 percent, the size of the emerging market corporate debt market is fast approaching that of the $3.5 trillion U.S. and European high-yield and leveraged loan market.”

Some of Oaktree’s distress-oriented funds are currently distributing more than they’re investing because of the strong selling environment.

“It is … harder for some of our groups to find attractive buying opportunities,” Frank said. “Today we don’t foresee triggering the investment period of our newest distressed opportunities fund, Opps IX, for some months; though of course that could change depending on circumstance.”

Oaktree Opportunities Fund IX LP, or Opps IX, held its financial close last November with $5 billion in total committed capital, according to data from Thomson Reuters.

On April 10, Oaktree staged an initial public offering for portfolio company Taylor Morrison. With the success of the IPO, Oaktree said it has now recovered about 60 percent of its equity investment in the home builder and it holds stock worth more than $1 billion in the company.

All told, Oaktree has raised about $10.7 billion in the past year. Its assets under management remain at about $79 billion — despite $13.3 billion in distributions from its closed-ended funds — because of its fundraising and returns, the firm said.

Oaktree said its first-quarter distributable earnings increased to a record $295 million, up from $137.3 million in the year-ago period, on higher incentive income and growth in investment income proceeds from Oaktree funds and investment management firm DoubleLine Capital LP and its affiliates.