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Owl Rock targets $2bn with first fund in opportunistic strategy

The firm hired a new managing director and promoted another to run the opportunistic strategy, which will focus on what one source called 'companies that just haven’t gone quite right.'

Owl Rock Capital Partners is targeting $2 billion for an opportunistic fund, according to a Form D filed last week, adding a strategy aimed at helping companies facing unforeseen and unprecedented struggles due to the coronavirus pandemic.

Owl Rock Opportunistic Fund is hitting the market at the same time the firm is shopping its latest flagship fund and business development company, or BDC. That strategy is targeting $5 billion, as Buyouts reported, and has received commitments and/or equity stakes from Rhode Island State Treasury and New Jersey Division of Investment, and Oregon State Treasury.

Park Hill Group is working as placement agent on the fundraising.

In May, Owl Rock hired Jesse Huff, formerly of Oaktree Capital Management, to run the opportunistic strategy along with managing director Nicole Drapkin, according to a press release. Drapkin is a veteran of Canada Pension Plan Investment Board and Goldman Sachs.

Last year, before covid, Buyouts reported the fund was in the works, backed by a minority investment from Dyal Capital Partners, part of Neuberger Berman. Dyal owns 20 percent of the firm, according to documents from the Rhode Island State Treasury website.

Last year, sources told Buyouts the fund is not targeting distressed companies, but rather ones which “aren’t pristine, but are perfectly attractive businesses,” as one source put it.

Before launching this strategy, the firm did not “have a home for companies that just haven’t gone quite right,” a source told Buyouts in November. “That doesn’t make them bad businesses, or bad loans, it just means circumstances are a bit more complex.”

The opportunistic fund strategy “focuses primarily on making opportunistic investments in US mid-market companies by providing a variety of approaches to financing,” according to Owl Rock’s most recent form ADV, filed July 21.

Types of financing include “originating and/or investing in secured debt, unsecured debt, mezzanine debt, other subordinated debt, interests senior to common equity, as well as equity securities (or rights to acquire equity securities) which may or may not be acquired in connection with a debt financing transaction.”

Owl Rock was founded in 2016 by Doug Ostrover, one of the founders of GSO, now owned by Blackstone, KKR veteran Marc Lipschultz and Craig Packer, who previously worked at Goldman Sachs.

Action Item: read Owl Rock’s form ADV here.

Update: This story was updated to include the placement agent on the fundraising.