In two exclusive interviews, Howard Marks of Oaktree Capital Management – see HERE – and Bruce Flatt of Brookfield Asset Management – see HERE – reflect on the announcement of the groundbreaking tie-up between the two firms. It transpired that the industry luminaries had somewhat different views on the relevance of timing to the deal.
Marks, Oaktree’s co-chairman, categorically denied that the selling of the firm he founded had anything to do with timing, telling us that it is a “fundamental transaction” that “would have been right a year ago” or a “year from now”.
Flatt, Brookfield’s chief executive, views it differently though. He told us that there was indeed a timing element to it, even if the transaction would have been a worthwhile, transformative deal at any point in the credit cycle.
“Our view is that [Oaktree] is a great firm that can thrive in any environment,” he said. “Despite that, obviously when stress in credit is robust, they excel even more.
“Our view is we should prepare for the future. At this point in the cycle, having Oaktree’s business and Brookfield’s muscle behind it will, I think, see us prepared for when the time comes in the future for their franchise to excel.”
Flatt approached Oaktree’s Bruce Karsh, the firm’s co-chairman and chief investment officer, Marks told us. The distressed debt pioneer knew Flatt had made him a deal he couldn’t refuse. “We decided deals like this don’t grow on trees,” Marks explained. “There aren’t many Brookfields in the world.”
However relevant the timing, this is one deal that could certainly reshape the landscape for alternative assets.