Oaktree Capital Group LLC (OAK:US), the distressed-debt investor that went public last month, reported a first-quarter profit after a loss a year earlier as it realized more gains on investments.
Net income rose to $18.6 million, or 82 cents, from a loss of $10.1 million, or 45 cents, a year earlier, Los Angeles-based Oaktree said in a statement today. Assets under management rose to $77.9 billion from $74.9 billion on Dec. 31 as the value of holdings rose and the firm attracted $1.7 billion in new capital commitments.
Oaktree is seeking to take advantage of Europe’s sovereign debt crisis by buying distressed assets in the region. The firm two months ago finished raising a 3 billion euro ($3.9 billion) fund to buy controlling stakes in troubled European companies, according to two people familiar with the results.
“Our diverse investment strategies and the large proportion of our assets that consists of liquid securities enabled us to capitalize on opportunities both to invest, as we did in real estate, and to sell in strong markets, as our distressed debt funds did,” Howard Marks, the firm’s chairman and co-founder, said in the statement.
Oaktree fell 0.9 percent to $41.08 at the close of trading in New York. The stock has fallen 4.5 percent from its initial public offering price of $43.
Oaktree raised $380 million in the offering, selling 8.84 million shares for $43 each, the bottom of the proposed range. Marks has called the firm’s pitch to public investors “very challenging.”
Adjusted net income, a measure of profit excluding some costs, fell to $173.6 million, or 90 cents a share, from $207.4 million, or $1.15, a year earlier, Oaktree said, attributing the decline to lower tax-related distributions. Adjusted net income excludes some expenses, including noncash equity compensation and income taxes.
Management fees during the quarter fell 17 percent to $32 million, and incentive income declined 13 percent to $5.05 million. The net realized gain on investments increased 41 percent from a year earlier to $1.07 billion.
The firm will pay a distribution of 55 cents a unit to shareholders on May 25, it said.
Oaktree expects to close on at least $4 billion this month for its next distressed-debt fund, according to three prospective investors. The fund had $1.2 billion in commitments as of March 31, Oaktree said today. Oaktree will be able to invest as much as half of the fund outside the U.S. and Canada, according to marketing materials from October.
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