Report: Oaktree has $18bn target for new opportunistic fund

Oaktree Opportunistic Fund XII may become the largest private debt fund ever, and a sign of the times.

Oaktree Capital Management has set an ambitious target for its Oaktree Opportunistic Fund XII. According to a Bloomberg report, the fund manager, with $179 billion in assets under management, is seeking $18 billion for its latest vintage. If attained, that would make it the largest private-debt fund ever.

Private Debt Investor was not able to confirm the report. A spokesperson for Oaktree declined to comment.

Oaktree launched its Fund XII in February 2023 and, according to PDI data, in April received a $150 million commitment from the Virginia Retirement System.

The ambitious target is a symptom of a broader phenomenon: the opportunistic space within private debt is receiving greater attention from investors, and from fund managers responding to those investors. Pure distressed debt seems to have lost its appeal, and attention is shifting to not-quite-so-distressed assets. In an article sponsored by Monroe Capital in PDI more than three years ago, the authors suggested that “pure-play distressed and deep-value funds” had a paucity of targets, but “opportunistic lenders – with an affinity for complexity rather than distress” may have an opening.

Now, on the other side of a pandemic and post-pandemic recovery, this situation may have recurred.

A spokeswoman from VRS told PDI: “The credit strategies programme generates returns through income and capital appreciation. The objective of the programme is to provide an attractive risk/return profile relative to the custom credit strategies benchmark.”

Days before the Bloomberg story, Oaktree’s parent company, Brookfield Asset Management, held a call discussing the company’s Q2 2023 performance. Managing director and chief financial officer Bahir Manios spoke about Oaktree in ways that flesh out the question of the target size of Fund XII.

Manios said: “[Our] early 150-person team dedicated to Brookfield Oaktree Wealth Solutions continues to make good progress on a number of fronts as our capabilities, especially in real estate, infrastructure and private credit, continue to resonate with wealth investors across all regions.”

He added that BAM has a strong liquidity position. The balance sheet as of 30 June “contained no debt and approximately $3 billion of cash and equivalents that we will utilise for strategic purposes when appropriate”.

Manios said the 12th vintage of their opportunistic credit fund, “along with our newly launched private lending strategy, have collectively raised $7 billion of capital to date, and we expect to raise an additional $20 billion over the next 12 months”.