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AlpInvest, HarbourVest lead Oaktree fund revamp

  • Restructuring currently in its election period
  • Deal valued at more than $1 bln
  • Principal Fund V raised in 2007

AlpInvest Partners and HarbourVest Partners are co-leading a secondary process of Oaktree Capital Group’s 2009 special situations fund, two sources told Buyouts.

The deal gives investors in Oaktree Principal Fund V the option to cash out or roll their interests with the manager into a newly created vehicle that will house the assets. Oaktree is working with Evercore on the process, Buyouts previously reported.

LPs in Principal Fund V, which closed on about $2.8 billion, are current deciding whether to sell their stakes or stick with the GP, one of the sources said.

Fund V deployed about 91 percent of its capital as of March 31, 2019, according to Oaktree’s first-quarter earnings report. The fund has distributed about $1.7 billion since inception and has a net asset value of about $1.2 billion, the report said.

Fund V generated a 2.7 percent net internal rate of return and a 1.3x multiple as of March 31, 2019, the report said.

Fund V was raised to pursue a so-called debt-for-control strategy, buying discounted debt with the intention of converting it to a controlling equity stake through financial restructurings, Buyouts previously reported.

Oaktree’s special-situations business was rebranded from Principal funds to Oaktree Special Situations in 2016. The platform is led by Jordon Kruse and Matt Wilson.

Oaktree declined to comment.

The Oaktree deal is one of the larger processes in the market. Other big firms working on deals include Thomas H. Lee Partners, which has been working on a restructuring of its sixth fund, which closed on $8.1 billion in 2007.

Action Item: Evercore contact info can be found here: https://www.evercore.com/contact-us/.