New York credit shop Oak Hill Advisors raised $2.3 billion in equity commitments for its third distressed debt fund, with the majority of capital coming from its existing investors.
Investors in OHA Strategic Credit Fund III include the Louisiana Teachers’ Retirement System and the New York State Common Retirement Fund. Its predecessor fund held its close in 2016 and began investing in 2017, with capital deployment accelerating through the COVID dislocation. Fund II entered its harvest period in April 2021 and has invested $3.8 billion of capital.
The third fund in the franchise will focus on opportunities in North American and Western Europe. The investments will span the capital structure from senior secured debt to equity. The fund is expected to use market-based trigger to optimize the commencement of the investment period, officials at the $61 billion firm said.
“We believe that the distressed opportunity set is growing significantly as companies in the leveraged finance market are increasingly affected by higher interest rates, a more challenging macroeconomic environment, geopolitical uncertainty and other factors, including reduced liquidity and upcoming maturities,” said Glenn August, founder and chief executive officer of OHA, who has led the distressed investment strategy since the firm’s inception.
OHA has more than thirty years of distressed investment experience across multiple economic cycles, seeking to seize on periods of dislocation and capitalize on idiosyncratic investment opportunities across various market environments. OHA has successfully invested over $20 billion of capital within its distressed strategy since 1990.
With investments in private lending, distressed credit, structured credit, real assets, special situations, leveraged loans and high yield bonds, OHA is the private markets platform of T. Rowe Price Group. Recently, the firms teamed up to establish a BDC offering geared toward retail investors.