Oaktree Capital Management

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Oaktree Capital Management, Inc.
IndustryFinancial services
FoundedApril 1995; 26 years ago (1995-04)[1]
FoundersHoward Marks, Bruce Karsh, Steve Kaplan, Larry Keele, Richard Masson, Sheldon Stone[1]
Los Angeles, California
Number of locations
Key people
Jay Wintrob
John Frank
(Vice Chairman)
Bruce Karsh
(Co-Chairman and CIO)
Howard Marks
AUMUS$153 billion (as of March 31, 2021)[3]
OwnerBrookfield Asset Management

Oaktree Capital Management is an American global asset management firm specializing in alternative investment strategies. It is the largest distressed securities investor in the world and is one of the largest credit investors in the world.[4]

As of December 31, 2020, the company managed $148 billion[3] for its clientele which includes 73 of the 100 largest U.S. pension plans, as well as public funds, foundations, corporate and insurance companies, endowments, and sovereign wealth funds.[5][6]

The firm was co-founded in 1995 by a group that had formerly worked together at the TCW Group starting in the 1980s. On April 12, 2012, Oaktree Capital Group LLC became listed on the NYSEOAK.[7][8]

On March 13, 2019, Brookfield Asset Management announced that it had agreed to buy 62% of Oaktree Capital Management for about $4.7 billion.[9][10]

Firm overview[edit]

Oaktree is headquartered in the Wells Fargo Tower in Los Angeles, seen here as the building on the left

With headquarters in Los Angeles,[11] the firm has over 950 employees[12] and offices in 18 cities worldwide (Los Angeles; London; New York City; Hong Kong; Stamford, Connecticut; Tokyo; Luxembourg; Paris; Frankfurt; Singapore; Seoul; Beijing; Amsterdam; Dubai; Houston; Shanghai; and Sydney).[7][10] The company's co-chairman, Howard Marks, is known in the investment community for letters to investors called the "Oaktree memos”.[13]

Investment philosophy[edit]

Oaktree emphasizes an opportunistic, value-oriented, and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing (including private equity and special situations), convertible securities, real estate and listed equities, with a focus on opportunities that offer a margin of safety.[7] The firm's motto is “if we avoid the losers, the winners will take care of themselves.”[14]

Investment focus[edit]

Oaktree invests across the capital structure, with an emphasis on senior debt in companies and markets where it has what it calls a “knowledge advantage.” Distressed or otherwise ailing companies, according to Oaktree, provide such opportunities.

Since its 1995 formation, Oaktree has become the largest distressed-debt investor in the world.[15][16] In 2008, it raised $10.9 billion for what was the largest-ever distressed debt fund, its Opportunities Fund VIIb.[17] As reported in The Washington Post on June 26, 2011, Oaktree's 17 distressed-debt funds (which do not use leverage) have averaged annual gains of 19% after fees for the past 22 years.[18]

Oaktree invests in 4 asset classes: credit, private equity, real assets and listed equities.[7]

Investor base[edit]

Oaktree's clientele includes 73 of the 100 largest U.S. pension plans, 38 states in the United States, over 400 corporations and/or their pension funds, over 340 university, charitable and other endowments and foundations, 15 sovereign wealth funds.[19][20] According to the Wall Street Journal, Oaktree has “long been considered a stable repository for pension-fund and endowment money.”[21][10]

The company's distressed-debt funds are often over-subscribed, and in 2010 Oaktree turned down potential investors due to self-imposed limits on fund size.[22] By law, clients are required to be so-called accredited investors, however, sub-advisory relationships with mutual funds such as The Vanguard Group, Eaton Vance, and Russell Investment Group and its public funds (BDCs, Non-Traded REIT, and SICAV vehicles) provide smaller investors access to Oaktree's portfolio managers.


Early years (1995–1999)[edit]

Oaktree was founded in 1995 by a group of principals who first joined together at the TCW Group in the mid-1980s[23] to manage high yield bonds, convertible securities, distressed debt, real estate, and principal investments.[24] Within three months of its founding in 1995, “more than 30 TCW clients transferred $1.5 billion in assets to Oaktree.”[25][26]

Oaktree has formed various sub-advisory relationships since 1995. In 1996, Oaktree was selected as the sub-advisor for the Vanguard Convertible Securities Fund.[24]

Since 1995, Oaktree has created what it refers to as “step-out” strategies, usually coincident with the opening of new offices around the world. Its growth in strategies has largely focused on expanding into European and Asian markets. Between 1997 and 1999, Oaktree created 3 new strategies: Emerging Markets Absolute Return in 1997, European High Yield Bonds in 1999, and Power Opportunities in 1999.[20] Oaktree was one of the first U.S.-headquartered alternative asset managers with dedicated European investment teams focused on credit.[24]

Expansion (2000–2010)[edit]

In 2001 Oaktree continued to introduce new "step-out" strategies, starting with Mezzanine Finance. Asia Principal Opportunities (2006) followed, along with European Principal Investments (2006), European Senior Loans (2006), U.S. Senior Loans and Value Opportunities (2007), Global High Yield Bonds (2010), Emerging Markets Equities (2011), and Real Estate Debt (2012).[24][27][20]

In 2005 the Securities And Exchange Commission ordered Oaktree to pay a fine, interest, and disgorge profits after the SEC ruled they had "sold securities short" before the five legal business days after a public offering pricing had gone public. Oaktree was required to put in place policies and procedures to prevent violations in the future.[28]

In 2008, the firm raised $11 billion for their distressed debt fund.[17][29] In 2009, Oaktree was selected by the U.S. Treasury, along with eight other managers (BlackRock, Invesco, AllianceBernstein and others)[30] to participate in the government's Public-Private Investment Program (PPIP).[31] At the time of Oaktree's inclusion in the PPIP program, The New York Times reported: “Howard S. Marks is the sort of financier who Washington hopes will help fix the nation’s tumbledown banks.”[32] As of December 31, 2018, the Oaktree PPIP Fund, L.P. had a gross return of 28%.[27][33][20][10]

Recent years (2010–present)[edit]

Relationship expansion

In recent years, the company has formed several strategic relationships. In 2009, Oaktree acquired a 20% stake in DoubleLine Capital, a Los Angeles-based investment firm specializing in mortgage-backed fixed income portfolios.[34]

Its relationship with Vanguard was expanded in 2011 when Oaktree was selected as one of four firms to manage Vanguard's Emerging Markets Select Stock Fund. In 2010, Oaktree was named one of three advisors to the Russell Global Opportunistic Credit Fund and was selected as a manager for the Credit Suisse (Lux) I Fund in 2011.[24]

In 2017, Eaton Vance launched the Oaktree Diversified Credit NextShares exchange-traded managed fund with Oaktree as subadvisor. Also, in 2017, Oaktree launched two BDCs: Oaktree Specialty Lending Corporation and Oaktree Strategic Income Corporation.

In 2018, Oaktree filed a registration statement to launch a non-traded REIT.[35]

European sovereign-debt crisis

Seeking investment opportunities created by the European sovereign-debt crisis,[36][37] Oaktree started its European Principal Fund III in November 2011 with committed capital of some €3 billion.[38]

Other recent funds

According to the company's published financial results, Oaktree raised $12 billion for Oaktree Opportunities Funds X and Xb (“Opps X and Xb”).[20] Like its other Opportunities funds, Fund X and Xb will focus on “market pricing inefficiencies resulting from company reorganizations and restructurings, and the senior and secured debt of operationally sound, overleveraged companies in the United States and Western Europe.”[39] New strategies, such as Strategic Credit, European Private Debt, Emerging Markets Total Return, Emerging Markets Opportunities, Value Equities, Infrastructure Investing, Real Estate Income, European High Yield Bonds and Senior Loans, Global Credit, and Middle Market Direct Lending were also added to the platform.[20]

In September 2020, it acquired the majority stake in Zzoomm, a UK-based telecommunications company for £100 million. It was Oaktree's first direct investment in a telecommunications firm. According to the company's managing director Pablo Velez, the fund should aid in "operating expertise and experience with growth platforms".[40]

NYSE listing

On April 12, 2012, Oaktree became a publicly traded partnership with shares listed on the NYSE.[8] The company was previously listed on GSTrUE, a private over-the-counter exchange run by Goldman Sachs[41] which officially ceased operations[42] in 2012 after Oaktree, along with Apollo Global Management (in 2011), de-listed and moved to the NYSE.[43]

Acquisition of Control by Brookfield

On March 13, 2019, Brookfield Asset Management announced that it had agreed to buy 62% of Oaktree Capital Management for about $4.7 billion, creating one of the world’s largest alternative money managers.[9][10] On September 30, 2019, completion of the acquisition of a majority stake by Brookfield Asset Management was announced.[44]

Investment funds[edit]

Oaktree's current investment activities are divided across four asset classes: credit, private equity, real assets and listed equities.[10][45] Fund structures within each asset class vary, and are organized into closed-end, open-end, or so-called “evergreen” fund types.

Oaktree's fund offerings are organized into three broad categories based on liquidity and lock-up period:

  • Closed-End Funds: Closed-end funds are structured as limited partnerships that have a 10- or 11-year term and have a specified period during which clients can subscribe for limited partnership interests in the fund. Closed-end funds have a three-, four- or five-year investment period.
  • Open-End Funds: Commingled open-end funds are structured as limited partnerships that admit clients as new limited partners on an ongoing basis. Unlike closed-end funds, these funds do not have an investment period. Capital may be committed to new investments at any time during the fund's life.
  • Evergreen Funds: “Evergreen funds” invest in marketable securities on a long and short basis. Like open-end funds, Oaktree's evergreen funds accept new capital on an ongoing basis. Clients in evergreen funds are generally subject to a lock-up period of between one and three years.[27]

Select past and current investments[edit]

See also[edit]


  1. ^ a b "The Oaktree story". Los Angeles: Oaktree Capital Management. Archived from the original on 2010-05-01. Retrieved 2010-05-12.
  2. ^ "Oaktree's global presence". Los Angeles: Oaktree Capital Management. Archived from the original on 2010-04-30. Retrieved 2010-05-12.
  3. ^ a b "About Oaktree".
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  5. ^ "About Oaktree". www.oaktreecapital.com. Retrieved 2017-06-17.
  6. ^ "SEC FILING | Oaktree Capital Group LLC Form 10-Q". services.corporate-ir.net. Retrieved 2018-08-05.
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  8. ^ a b Lattman, Peter (April 12, 2012). "Private Goldman Exchange Officially Closes for Business". Business Day: DealBook.
  9. ^ a b "Brookfield to Acquire 62% of Oaktree Capital Management". NASDAQ.com. Retrieved 2019-03-14.
  10. ^ a b c d e f "Document". www.sec.gov. Retrieved 2019-07-16.
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  40. ^ Nic Fildes (27 September 2020). "Oaktree invests £100m in British broadband". Financial Times. Retrieved 28 September 2020.
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  43. ^ Lattman, Peter (April 12, 2012). "Private Goldman Exchange Officially Closes for Business". The New York Times. Retrieved 2012-01-12.
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Further reading[edit]

External links[edit]