Oaktree eyes Chilean pensions for fundraising

Chile’s ‘sophisticated’ pensions may be LPs in Oaktree Capital Managements next round of funds, says managing partner John Frank.

Oaktree Capital Management may expand its limited partner base to include Chilean public pensions in its next round of fundraising, managing partner John Frank told Private Equity International

“One area we are beginning to market to that we didn’t do historically is Latin America,” Frank said, adding that Chilean pension funds, considered among the “most sophisticated” in Latin America, were being considered.

Oaktree would not be the first international GP to tap Chilean pensions for commitments; both The Blackstone Group and Kohlberg Kravis Roberts have partnered with local Chilean brokers to funnel commitments to their flagship buyout vehicles in the past. 

The firm began marketing its $3 billion Oaktree Principal Fund VI in January, according to a year-end financial

We'll have a first closing in the next couple months.

John Frank

results statement released Thursday. 

“It will probably take roughly a year to raise the fund. We’ll have a first closing in the next couple months,” Frank said. 

Oaktree Principal Fund V, a 2009 vintage, was generating a 1.1x total value multiple and 6.2 percent internal rate of return as of 30 September, according to Oregon Public Employees Retirement Fund documents. 

Oaktree’s various closed-end funds – which include vehicles in several asset classes – distributed $5.7 billion to investors in the fourth quarter and $12.7 billion over the course of the year, both of which are records for Oaktree, according to the firm’s year-end financial results. Those distributions outpaced the $11 billion in capital the firm raised in 2012; the sixth straight year Oaktree has collected more than $9.8 billion in commitments. 

It's not as simple as we give them a check and they give us a check.

John Frank

However, Frank cautioned that Oaktree’s strong distributions do not equate “one-to-one” with its fundraising efforts, adding that distressed debt investments made in the wake of the financial crisis generated a significant portion of the 2012 distributions.  

“That helps facilitate our raising of new funds. But it’s not as simple as; we give them a check and they give us a check,” he said. 

Year-end results

Oaktree’s adjusted net income – which excludes unrealised gains and losses – rose by 187 percent to $220.4 million in the fourth quarter, compared to $76.7 million in Q4 of 2011. The Q4 results helped propel the firm to an annual ANI of $717.3 million, a 67 percent increase over 2011. 

The firm also posted a 236 percent annual increase in economic net income – which takes into unrealised gains and losses – though its quarterly ENI of $221.7 million was a 7 percent decline from Q4 2011’s total of $237.2 million. 

Oaktree’s total assets under management fell by $3.9 billion to $77.1 billion over the fourth quarter, which the firm attributed to distributions from closed-end funds. The firm ended the year with $66.8 billion in management fee generating assets under management, only slightly more than 2011’s year-end total of $67 billion.