Oaktree Capital Management is set to buy Fifth Street Asset Management for $350 million, just two months after the Greenwich, Connecticut-based credit-focused asset manager put itself up for sale.
The asset manager went on the block this April, according to The Wall Street Journal, which reported the news Thursday.
Fifth Street’s portfolio has shown diminishing value over the last year, particularly in the decline in net asset value of its two business development companies. The firm’s shares have fallen by roughly 45 percent this year, with market value of $189 million as of Wednesday’s close.
Fifth Street also issued a statement on Friday confirming that they were in talks about a potential sale of the firm, but did not name an interested buyer or bid price. A spokeswoman declined to comment further, and Oaktree declined to comment as well.
The market values of the BDCs the firm manages – Fifth Street Finance Corp and Fifth Street Senior Floating Rate Corp – have dropped 27 percent and 14 percent, respectively, so far in 2017, the article also showed.
As late as this February, the firm was trying to stabilise these BDCs’ declining NAV by other means than buyout. Patrick Dalton, chief executive officer at FSC, outlined on the first-quarter earnings call several proposed changes to the portfolio and investment strategy, including reducing the BDC’s exposure to healthcare, tech and for-profit education, scaling back its non-accrual investments, and reducing its incentive fee.
Oaktree’s purchase of Fifth Street would come as the Los Angeles-based firm launches its first senior debt fund this year. Oaktree manages about $100 billion in assets.
Fifth Street manages about $4 billion in assets as of the first quarter, according to its website.