Oaktree Capital Management is lagging behind all other pre-qualified firms chosen by the US Treasury to take part in the Public Private Investment Program to hold a first close on its fund.
Marathon Asset Management recently held a first close, reportedly on $400 million, for its PPIP fund, leaving Oaktree as the sole standout. The nine pre-qualified managers selected by Treasury have to raise a minimum of $500 million for the programme.
PPIP is meant to revive the credit environment in the US by taking 'bad assets' off the balance sheets of banks. PPIP managers have raised more than $5 billion of equity as part of the US government’s legacy securities programme.
The US Treasury today said in a statement Marathon and partner, the banking firm Blaylock Robert Van, held an initial close on its Public-Private Investment Program (PPIP) fund. According to an unnamed Treasury source cited by Bloomberg, Marathon raised $400 million, below the $500 million minimum required.
To date, eight of the nine selected PPIP managers have raised a total of $5.07 billion of private commitments, which will be matched by a further $5.07 billion of government funding and then doubled with Treasury debt capital to provide $20.26 billion of purchasing power.
The US government unveiled nine pre-selected managers to take part in the legacy securities part of its PPIP plan, including AllianceBernstein, together with Greenfield Partners and Rialto Capital Management; BlackRock; Invesco; Marathon Asset Management; RLJ Companies and Western Asset Management; the TCW Group and Wellington Management Company.
Only Oaktree Capital Management has yet to announce a first close, according to a search of Treasury press releases. Today’s statement said the Treasury expected to announce an initial closing for the remaining public-private investment fund “soon”. Oaktree said it did not comment publicly on its activities.
The government said in July it would give each manager 12 weeks to raise a minimum of $500 million in private equity commitments. That date passed in September, with the government expected to become increasingly flexible owing to the constricted fundraising environment.
Oaktree has been busy raising two other funds, Oaktree Opportunities Fund VIII and Oaktree Principal Fund V. Oaktree's eight opportunities fund is targeting between $4 billion and $6 billion. The firm is trying to raise $5 billion for its fifth principal fund, which employs a “loan-to-own” strategy.
While institutional investor appetite for PPIP remains fairly robust, with several US pensions recently committing capital to the programme, one notable exception, the $199 billion California Public Employees' Retirement System, has decided not to take part in the programme.