Oaktree raises historic $16bn for Fund XI

Oaktree Capital Management held the final close for its Oaktree Opportunities Fund XI with capital commitments of $15.9 billion, making it the largest fund close in the Los Angeles firm’s history.

Fundraising began as the lockdown took hold across the U.S. with officials targeting $15 billion in assets. So far, the fund has invested or committed to invest roughly 70% of its capital across geographies, sectors and asset classes.

“Oaktree has a long track record of navigating and investing through economic cycles. This latest oversubscribed fund is further validation of our investors’ confidence in our team,” said Bruce Karsh, co-chairman and chief investment officer of Oaktree and portfolio manager of the Global Opportunities strategy. “We’re grateful to our investors who believe in the value and potential of this investment strategy at Oaktree.”

Karsh, a pioneer within distressed investing, was instrumental in Oaktree’s main investment mantra of investing in “good companies with bad balance sheets” that began in the mid-1980s.

The $158 billion firm is legendary in the distressed debt world. Formerly known as “Distressed Opportunities,” the Global Opportunities strategy officially changed its name to better reflect how its investment style has evolved and expanded over almost three decades, officials said. Its mandate has broadened to include more geographies, and its approach has become increasingly flexible.

Officials added that the strategy’s most recent vintages sought to capitalize on opportunities in markets that look very different from those present 25 years ago.

“Distressed investing has evolved and expanded during the last four decades as market realities — and potential opportunities — have changed,” wrote the investment team in a recent market commentary. “We believe the right move has been to broaden one’s mandate, eschewing boundaries — including those around countries, investment areas, sectors and forms of ownership.”

 The firm’s deployment activity over the last 16 months demonstrates Oaktree’s ability to quickly execute and to provide solutions across the capital structure, according to Robert O’Leary, co-portfolio manager and head of North America for the Global Opportunities strategy

Truly global in scope, the strategy is also run by Pedro Urquidi, who relocated to Hong Kong in early 2019 to focus on opportunities in Asia. “We’re proud to have built a truly global team that is well positioned to capitalize on a wide array of investment opportunities in the most important economic regions around the world,” he said.

Institutional investors in the fund include New Mexico State Investment Council and the Washington State Investment Board.

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