Oaktree closes first mezzanine fund on $800m

The Los Angeles-based private equity firm Oaktree Capital Management has closed one of the year’s largest mezzanine funds on $800m.

(PrivateEquityCentral.net) Oaktree Capital Management the LA-based firm with offices in Japan, Singapore and the UK, has raised one of the largest mezzanine funds raised in 2002, totalling $808m, over $100m above the original target.


The fund has a four-year investment term and will focus on providing mezzanine debt to deals with portfolio companies with market capitalisations of $100m to $500m.


It is the first mezzanine vehicle raised by Oaktree, which concentrates on distressed acquisitions. Managing directors William Sacher and Gary Trabka lead the fund, which has already invested about $190m over the past year, including deals with equity sponsors such as Bain Capital, Brera Capital Partners and Harvest Partners.


Other mezzanine funds closed this year include Audax Group’s $440m fund, which closed in June about $90m above its original target. GSC Partners also closed a European mezzanine fund in June on E1.06bn ($1bn), making it the largest mezzanine fund ever raised in Europe.


“Oaktree specializes in taking advantage of inefficient markets, and this is a classic inefficient market,” Sacher said in the report. “The investment community’s positive response to this new fund clearly demonstrates confidence in the attractiveness of the market opportunity for mezzanine investing as well as the strength of the Oaktree platform.” The fund’s limited partners include pension funds, endowments, insurance companies and individuals.


Oaktree’s distressed investment business has been active lately as well. In June, the firm joined forces with Toronto-based Onex Corp on the acquisition of Grupo Cinemex, the largest theatre exhibitor in Mexico City, in a $286.9m deal. The two have completed three other theatre deals, the largest being February 2001’s of Loews Cineplex Entertainment in a deal worth $1.3bn. Pacific Capital Group also took part of that acquisition.


Oaktree Capital Management has approximately $23bn in bond and privately held assets under management, including over $6.7bn in distressed debt assets. Sacher joined the firm in 2001 after three years at JP Morgan co-leading the team responsible for mezzanine and high-yield debt. Trabka joined the firm in 2000 after 22 years at Prudential Capital Group, where he led the firm’s mezzanine finance department, as well as private placements and corporate lending.