Oregon commits $125m to Oaktree’s Fund VIII

The Oregon Investment Council has committed $125 million to Oaktree’s eighth opportunity fund, which is targeting $5 billion and has collected at least $2.9 billion.

Oaktree is splitting its eighth fund into a Fund A and Fund B structure, similar to what it did with its seventh fund. Fund A will likely be capped at $4 billion, the pension said in documents, and invested first.

Fund B would serve as an “overflow” reservoir of capital, would not be capped, and would not incur management fees unless and until capital is drawn, pension investment staff said in public documents.

It’s not clear how Oregon’s commitment will be split up. The Washington State Investment Board earlier this year chose to transfer $125 million of its $250 million commitment to Oaktree’s eighth fund into the Fund B sidecar.

“[We have the opportunity] to move some of that money into Fund VIIIb due to uncertainty about the future distressed debt market opportunities,” a spokesperson for WSIB told PEO in February. “If debt supply picks up in the near term, Fund VIIIb will invest alongside Fund VIII.”

Oaktree split its seventh fund into an A and B structure. Fund VII closed on $3.5 billion in 2006, but the sidecar vehicle, Fund VIIb, ultimately collected $10.9 billion, making it the largest ever distressed debt fund.

At the time, Oaktree said the two-fund structure gave the firm “sufficient flexibility to address the issues of fund size, supply in the distressed debt marketplace and other timing considerations.

“By assembling capital commitments for Fund VIIb on an anticipatory basis, investors will have a guaranteed position in the fund and eliminate two separate committee approvals,” the firm said.