Oak Hill takes over NGP BDC as subadvisor

 Oak Hill will take over the management of the renamed vehicle from NGP and diversify its investment into areas beyond energy.

Oak Hill Advisors, the New York-based lending firm, has been appointed as sub-advisor to NGP Capital Resources Company, a business development company (BDC) and lender that handles about $200 million. The vehicle was be renamed OHA Investment Corporation and was recently approved by the company’s shareholders, NGP and Oak Hill announced last week (30 September).

The BDC was previously managed by NGP itself and mostly focused on energy, but Oak Hill will work to expand the portfolio beyond energy, though it’s too early to tell which other strategies it might pursue and Oak Hill declined to comment.

NGP had been going through a review process of its BDC for some time and hired an external advisor to review the portfolio and management of the company. They considered replacing the advisor, selling the portfolio and other options, but ultimately, in July, decided to go with hiring Oak Hill, whose fee structure was also more favourable than other potential providers.

The transaction included appointing a new board of directors for the BDC, comprised of Glenn August, founder and chief executive of Oak Hill Advisors; Robert Okun, its chief investment officer for US credit and senior partner; Stuart Oran, a partner at Liberty Hall Capital; James Stern, chairman of The Cypress Group, and Frank Tannura, former chief executive of Packaging Dynamics Corporation.

Bob Long, the former chief executive of investment management firm Conversus Asset Management, was appointed as chief executive of OHA Investment Corporation. He has also previously worked at Bank of America as head of its $6.5 billion Strategic Capital Group and co-head of the Real Estate Mezzanine Group.

OHA Investment Corp has also established an investment committee that includes August, Okun, Long on an ex-officio basis, and Steven Wayne, a managing director at OHA who is responsible for mid-market and sponsor-originated transactions.

“We are excited to become the company’s investment advisor, and this transaction marks a meaningful step in the expansion of our middle market investment business. With OHA’s deep experience in the credit markets and success in direct lending, we believe we can create significant value for stockholders by diversifying the company’s portfolio and improving its performance,” August said in a statement.

 “I look forward to this opportunity to take advantage of OHA’s investment capabilities and industry expertise to expand and enhance the Company’s portfolio. As CEO, I will be focused on sharing our story with the investment community and leveraging the OHA platform for the benefit of our stockholders,” Long added.

OHA is an independent investment firm that’s specializes in direct lending, high-yield bonds, leveraged loans, distressed investments, mortgage strategies and corporate structured products. It has about $24 billion of capital under management and employs a fundamental value-oriented strategy focused on credit analysis, relative value and active risk management.