Brookfield to acquire remaining Oaktree stake for US$3 billion

[NEW YORK] Brookfield will acquire the remaining parts of distressed-debt specialist Oaktree Capital Management it does not already own, adding further heft to its credit business that’s emerged as a key driver of growth in recent years.

New York-based Brookfield Asset Management and parent company Brookfield will acquire the outstanding 26 per cent stake in Oaktree for about US$3 billion, according to a statement on Monday (Oct 13), which confirmed an earlier Bloomberg News report.

The transaction implies a valuation of around US$11.5 billion for the whole of Oaktree, which has seen assets under management surge by 75 per cent since Brookfield bought a stake six years ago. As part of that earlier deal, co-founders Howard Marks and Bruce Karsh along with some executives and staff held on to some of their shares in the company.

“With this closer alignment, Oaktree will remain central to Brookfield’s credit strategy, and we see significant opportunities to grow the franchise and expand what we can offer our clients together,” Marks said in the statement.

The move is the latest example of asset managers beefing up in the alternatives space. Last year, BlackRock snapped up Adebayo Ogunlesi’s Global Infrastructure Partners for about US$12.5 billion, and later agreed to buy HPS Investment Partners for about US$12 billion – among the two biggest-ever acquisitions of alternative asset managers.

Brookfield has traditionally focused on real estate and infrastructure, and its partnership with Oaktree helped bolster the firm’s credit business. Brookfield Asset Management will fund about US$1.6 billion of the price for the latest deal, with the rest coming from Brookfield, reflecting their proportional ownership of the firm.

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“Taking this next step will allow us to broaden our credit franchise, enhance collaboration across our businesses and strengthen our ability to continue delivering long-term value for our investors,” Brookfield chief executive officer Bruce Flatt said in the statement.

The deal is expected to close early next year and add to earnings. Marks will remain on Brookfield’s board, while Karsh is set to join the board of the asset management arm. As part of the agreement, Oaktree co-Chief executive officers Robert O’Leary and Armen Panossian will become co-CEOs of Brookfield’s credit business.

For Brookfield Asset Management, the deal will solidify the US as its largest market, with more than US$550 billion of assets and services. On completion, the country will account for more than 50 per cent of its employees, and about half its revenue. BLOOMBERG