Exclusive: White Oak launches evergreen vehicle

The new open-ended fund offers access to the firm’s private credit strategy but does not tie-up investor cash for a set period. Investors can give notice when they wish to withdraw funds and will be repaid as the private assets mature.

San Francisco-based White Oak Global Advisors has launched an open-ended vehicle that will allow investors to gain exposure to the firm’s private credit strategy without tying up capital in a standard closed-ended fund, Paul Ahrens, a managing director with the firm, told PDI

The new fund, White Oak Fixed Income Fund, will invest 10 percent of its assets in liquid strategies with the remaining 90 percent committed to the private sponsor-less senior secured mid-market lending transactions in which White Oak specialises.

The firm launched its latest closed-ended fund last year and is targeting $1 billion for White Oak Summit Fund, the successor to White Oak Pinnacle Fund, as reported by PDI in November.

The new evergreen fund is complementary to that but investors will be able to withdraw cash after giving White Oak notice. When an investor gives notice, the firm stops investing that investor’s capital into private deals, explained Landy Pheloung, also a managing director with the lender. After six months, White Oak starts to return capital with pro rata shares of maturing assets gradually paid out to the investor until their whole commitment is repaid. The structure emulates that of real estate open-ended funds, Pheloung added.

Over the first two years of the new evergreen fund’s lifetime, White Oak expects to raise between $1 billion and $2 billion dollars, ramping up to as much as $4 billion over a five-year time period, Ahrens said. White Oak had expected the strategy to appeal to smaller investors less able to lock-up capital but a wide range of investors have expressed interest, Ahrens added.

Net target returns for the White Oak Fixed Income Fund, at around LIBOR plus nine percent, are lower than the 10 percent to 12 percent targeted by Summit. Neither vehicle is leveraged, noted Pheloung.

White Oak’s deal pipeline is very strong, added Pheloung, and the new closed-ended fund, Summit, should close at around $1.2 billion in the third quarter of this year. The fund has a hard-cap of $1.5 billion, they added.

White Oak’s lending strategy includes asset-based term loans, amortizing loans, unitranche loans and debtor-in-possession financings. The firm’s average loan transaction size is around $7 million to $150 million. The term of the loans ranges from 12 to 60 months and the typical company size is between $5 million and $50 million of annual EBITDA, according to the firm’s website. 

The firm was founded in 2007 by Barbara McKee and Andre Hakkak. McKee previously worked at KKR Financial, while Hakkak was chief investment officer at Alpine Global. In addition to San Francisco, White Oak has offices in New York and Dallas and opened a Denver office last year.

This story was updated on 9 July 2015 to correct Barbara McKee's name, it was incorrectly reported as Margaret McKee.