Oaktree Capital Management is planning to list its shares on the New York Stock Exchange in a deal that would value the asset manager at between $8bn and $9bn, people familiar with the matter said.
Oaktree, which manages $85bn, mostly in debt investments, listed shares four years ago on a quasi-public exchange set up by Goldman Sachs. But the effort proved a disappointment because investors found it difficult to trade the stock.
At that time, Oaktree raised about $700m through the sale of about 30 per cent of its shares. The rest remained with its founders, Bruce Karsh and Howard Marks, and other Oaktree principals. Now, Oaktree has hired Goldman to lead an exercise that will involve the transfer of the shares on the quasi-public exchange to the NYSE, a person familiar said. As a result, no new money will be raised for the asset manager.
The planned Oaktree listing on the NYSE comes amid a rebound in share prices for alternative asset managers. The person familiar with the Oaktree offer said the company would seek a higher valuation than that of Apollo Global Management, which also listed on the quasi-public Goldman exchange before going fully public.
Although not widely known, Oaktree has more assets under management than either KKR or TPG and is considered a leader in debt investing. Mr Marks was a pioneer in the market for “junk” bonds and is well-known for his letters to investors, which enjoy a reputation in the debt world much like that of Warren Buffett’s letters to his Berkshire Hathaway equity holders.
Mr Marks’s partner, Mr Karsh, specialises in distressed assets. In the aftermath of the financial crisis, Mr Karsh made big profits investing in over-leveraged firms such as CIT, a finance company. He also has focused on over-leveraged companies controlled by private equity firms. In 2009, Oaktree and Apollo acquired Aleris, an aluminium company, for less than half the $3.3bn that TPG paid for the group in 2006.
The deal involved Oaktree and Apollo buying Aleris debt at bargain prices after TPG decided to let the company default on its obligations. After markets recovered, however, the new owners of Aleris were able to pay themselves a dividend.
Earlier this year, Mr Karsh’s distressed investment fund returned some money to investors, saying prices in the market were no longer attractive. Fund managers rarely give investors their money back because it means forgoing fees.
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