Oaktree dry powder mounts to $20bn

Oaktree Capital Management raised $2.7 billion in capital in the third quarter, pushing its amount of dry powder up to a previous record total of $20.1 billion.

Oaktree chief investment officer Bruce Karsh said in a conference call with investors that “we want to see the dry powder work down a bit more.”

The asset management firm’s assets under management for the quarter was $100.2 billion, down 2.8 per cent from the second quarter’s $103.06 billion resulting from aggregate market-value declines, distributions to closed-end fund investors and net outflows from open-end funds.

The AUM inched up 8 percent from the same quarter last year when AUM totaled $93.22 billion, thanks to new capital commitments to closed-end funds.

“We do have a desire to grow but want to do so consistently with our philosophy of investing and our business principles,” Oaktree chief executive Jay Wintrob said on the call. “It’s a balancing act between all the opportunities that are out there and sticking with what we’re comfortable with.”

The firm posted a GAAP net income of $1.9 million for the third quarter, down 90 percent from the $18.9 million net income for the third quarter last year.

Oaktree’s adjusted net income fell to $20.6 million from $85.3 million in the second quarter and from $95.1 million in the third quarter last year due to lower investment income.

The firm’s distributable earnings also tumbled to $90.6 million from $111.2 million in the second quarter and from $137.2 million in Q3 2014 due to lower incentive income and fee-related earnings.

Fee-related earnings for the quarter also dropped to $48.5 million from $53.7 million in the second quarter and from $63.5 million in Q3 2014 because the firm had decided to delay the commencement of its investment periods.

The economic net income, which measures incentive income derived from market values of funds’ holdings, was a loss of -$94.9 million, down from a gain of $17.7 million in the second quarter and up from a bigger loss of -$117.3 million in Q3 2014.

However, the firm beat analysts’ expectations of 8-cent earnings per share by posting 11 cents.

“[w]e are well positioned to capitalise on global investment opportunities and to grow our management fee revenues and fee-related earnings in the quarters ahead,” Wintrob said in a statement.

At press time, Oaktree’s stock price was listed on the New York Stock Exchange as $49.86 per share, up 59 cents, or 1.2 percent, from the previous close, giving the firm a market capitalisation of $7.59 billion.