Oaktree Capital Management launched its private credit-focused Oaktree Lending Partners and its related vehicles (OLP). OLP is targeting $10 billion in equity commitments from institutional investors.
OLP will seek to originate senior secured loans of $500 million or more to private equity-owned U.S. companies, typically with more than $100 million in EBITDA. Oaktree believes this market is especially attractive now, given the limited availability of debt capital to finance large leveraged buyouts (LBOs) and the record-high levels of committed private equity capital yet to be deployed, requiring financing. In Oaktree’s view, this imbalance has been driven by the retreat of banks from this form of lending and the constrained capacity of nonbank lenders that are fully invested and/or managing issues with prior investments.
“We’re very excited to announce the launch of OLP. The need for this type of lending is significant, but we anticipate limited competition given the retreat of banks from this area and the dearth of nonbank lenders with the requisite scale, flexibility and credit expertise. We feel this creates opportunities to lend at attractive rates for deals with strong covenants and low leverage ratios,” Howard Marks, co-chairman of Oaktree, said. “Our approach to direct lending has always been grounded in the first tenet of Oaktree’s investment philosophy: the primacy of risk control. We believe this to be one of the most attractive opportunities we’ve ever seen in direct lending.”
“Oaktree’s broad experience across the credit spectrum in structuring, underwriting, and diligence enhances our ability to evaluate and execute large sponsor-backed financings while mitigating risk. We believe this positions our investors well to potentially earn attractive risk-adjusted returns,” Armen Panossian, head of performing credit at Oaktree, said. “Additionally, our partnership with 17Capital differentiates us among lenders by augmenting our NAV-based lending capabilities. We believe these strengths, combined with our deep sponsor relationships developed over 20 years in the business of direct lending, enable us to consistently source high-quality, proprietary investment opportunities. We look forward to working with our investors and borrowers to deliver mutually beneficial financing solutions.”
