Oaktree Capital Group LLC (OAK:US), the world’s largest distressed-debt investor, will seek capital for its first fund dedicated to emerging-market distressed and dislocated debt, according to an investor letter.
Oaktree Emerging Market Opportunities Fund LP is designed to take advantage of the growing prevalence of corporate and sovereign credit in developing nations. Outstanding corporate debt in emerging markets totals almost $1 trillion, Los Angeles- based Oaktree wrote in the letter, a copy of which was obtained by Bloomberg News.
The firm previously invested in such debt in an “opportunistic and sporadic” way after the regions’ financial crisis in the late 1990s, according to the letter. The fund will be managed by Julio Herrera, who joined the firm in July to lead the new strategy after 15 years as president of Fintech Advisory Inc., a Latin American family office.
Andrea Williams, a spokeswoman for Oaktree Capital, declined to comment.
The firm, in a separate marketing document, doesn’t specify a target size for the fund, which is expected to hold an initial close in the first quarter of 2013. The general partner commitment must be at least $20 million, or 2.5 percent of the total capital pledged, according to a summary of terms. That would indicate a minimum size of about $800 million.
The new fund may invest in performing stressed and distressed secondary corporate debt, defaulted or nonperforming securities, direct lending to corporate borrowers and rescue financings, according to the summary of terms.
Areas of focus also include debt-for-equity transactions, event-driven deals, recapitalizations, deeply discounted equity and real estate. Oaktree, which can actively participate in a company’s reorganization, typically avoids taking part in day- to-day management.
Oaktree may also seek to raise capital via separate accounts to invest alongside the main vehicle, the summary of terms indicates. The fund will charge a 1.75 percent annual management fee, with discounts possible for investors making large commitments.
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