Oaktree Capital Management has closed on OCM Opportunities Fund IVb, a $1.339 billion distressed debt fund, and will be shopping for names over the next several months in a market awash with distressed paper. The completion of the new fund comes hard on the heels of its $2.1 billion OCM Opportunity Fund IV, which closed last December. "Fund IV closed quickly in 2001 with Oaktree's existing client base. Fund IVb, intended mostly for new clients, followed in 2002," said Howard Marks, chairman of the Los Angeles-based firm.
Marks declined to comment on how much of the fund is already invested or what names the distressed player has accumulated, but he confirmed that the fund still has buying power. "The remaining capital of Fund IVb will likely be invested over the next several months," he said. Discussing the tactics and timeframe for holding the investments, Marks explained it is more a matter of process than time. "Oaktree participates in or leads restructurings, looking to receive new securities in exchange for old debt, and holds on until fair value can be realized," he said.
Certainly the opportunities for distressed investing are there. Through the third quarter of 2002, the size of the distressed and defaulted public and private debt markets has rocketed to its highest level ever--$885 billion in face value and $488 billion in market value, according to data compiled by the Altman Salomon Center (LMW, 10/21). Oaktree is considered by many in the market as the granddaddy of distressed investors. "It's hard to compare numbers on assets under management, but we have managed more distressed assets than any other manager," Marks said.