Oaktree Capital Management is launching Oaktree Lending Partners and related vehicles. OLP is targeting $10 billion in equity commitments, sought from institutional investors.
OLP will look to make senior secured loans of $500 million or more to private equity-owned US companies, the statement said. It is looking to leverage buyouts by companies with more than $100 million in EBITDA.
Oaktree believes this market is especially attractive now. There are record-high levels of committed private equity capital yet to be deployed, but only limited debt capital to leverage it. Banks have retreated from this form of lending and non-bank lenders are often fully invested or have other constraints on their capacity.
Yields on large LBO loans have increased over the last year due to a spike in base rates and the shortage of funding. The companies targeted by such transactions often have established track records and the critical mass that can let them weather economic cycles. Together, Oaktree says, these factors make a compelling case for the risk-adjusted return potential available in this sector.
Also, Oaktree contends, its partnership with 17Capital, the NAV-lender based in New York and London, differentiates it from other lenders. The strategic partnership was announced nearly a year ago.
The Oaktree statement quotes Armen Panossian, its head of performing credit, saying that the firm’s strengths, including the 17Capital relationship, “combined with our deep sponsor relationships developed over 20 years in the business of direct lending, enable us to consistently source high-quality, proprietary investment opportunities”.
As of 31 December 2022, Oaktree had $170 billion in assets under management.