US distressed-investor Oaktree Capital raises US$16 billion with its biggest fund ever
- Distressed debt investor sees opportunities in China as high-yield, real estate defaults are on the rise
- Oaktree is first foreign distressed debt investor to open wholly-owned unit in China in 2020
US distressed-investing expert Oaktree Capital Management has raised nearly US$16 billion with its biggest fund ever, as it hunts opportunities in China’s embattled property development market and other parts of Asia.
The Oaktree Opportunities Fund XI, which began operations in July 2020, has committed about 70 per cent of its capital raised to a mix of opportunities in both public and private investments across a mix of geographies and sectors, including investments in out-of-favour industries and capital solutions to companies with limited funding options, the company said.
“Oaktree has a long track record of navigating and investing through economic cycles. This latest oversubscribed fund is further validation of our investors’ confidence in our team,” said Bruce Karsh, Oaktree’s co-chairman and chief investment officer.
Just over a year ago, the Los Angeles-based asset manager became the first foreign distressed debt manager to set up a wholly-owned unit in China.
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The Evergrande theme park left derelict in China’s Jiangsu province
The company said it expects more global distressed-investment opportunities in the aftermath of the coronavirus pandemic, as companies navigate an uncertain environment with heavy debt loads, including in China.
“The opportunity set in China may continue to grow, as default rates in 2021 for Chinese high-yield bonds and the debts of the country’s real estate sector are expected to top 13 per cent and 20 per cent, respectively,” Oaktree said in its latest insights publication this month. “Additionally, complex and idiosyncratic situations not involving bankruptcies may arise that require creative, well-structured financing solutions.”