Oaktree eyes $15bn for new distressed fund

Howard Marks' Oaktree Capital is plotting a new distressed fund and has set its sights on raising $15 billion, according to Bloomberg. The fund would come close to Oaktree’s overall assets in the distressed space, according to media reports, but word of it its launch comes as no surprise given the interest the firm’s famous founder has expressed recently in debt assets that have become a large opportunity set for the firm. “One of the greatest uncertainties we face today surrounds the outlook for the economy,” he wrote of the current global coronavirus pandemic. “The optimists expect a V-shaped recovery, and a great deal is riding on the question of whether it’ll materialize. It depends on when America will go back to work, and that, in turn, depends to a great extent on the trend in infections.” At the height of the financial crisis, Oaktree put in nearly $2 billion to work in the market. The new fund, Oaktree Opportunities Fund XI, would be the largest distressed debt fund ever raised. Buying struggling companies’ debt the fund would in some instances control those businesses restructurings. Meanwhile, billions has already been raised in distressed debt strategies in recent weeks. Pimco reportedly is raising up to $3 billion in a distressed assets, but is one of a long line of firms that have emerged from March’s market rout with cash in hand. A back of the envelop tally shows initially roughly $9 billion being gathered by an elite group of private debt players ready to be put to work in the space in the last few weeks. Highbridge Capital Management is said to be launching two funds for a total of $2.5 billion. The latest high-profile launch was for former Halcyon Capital Management shop Bardin Hill, which has raised $300 million so far for an opportunistic credit fund, which is slated to focus on distressed, stressed and special situations. The target size for the fund has not been disclosed. Pennant Park, Greywolf Capital Management, Sculptor Capital Management, Varde Partners, Knightshead Capital and Silverback Asset Management have each begun raising money, as previously reported by Alternatives Watch.

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