PE HUB Wire Highlights, 2.13.19

Oaktree joins ranks of high-profile managers exploring secondaries options, NJ raises concerns about denominator effect

Happy Wednesday!

This is Chris, on for Luisa, who is exhibiting flu-like symptoms.

Big deals: Earlier this week, I reported about what could become the largest-ever secondary transaction yet. Energy & Minerals Group, an energy-focused private equity firm, is considering moving some midstream assets out of older funds into a continuation vehicle that would give the manager more time to manage the assets.

The deal also would enable existing LPs in those older funds to cash out. The value of the deal could be somewhere between $4 billion and $5 billion, sources told me. If the deal closes at that level, it would be the largest secondary transaction yet in this growing, frenetic, formerly niche market. Park Hill Group is secondary adviser on the deal.

Today we have a story that another high-profile manager, Oaktree Capital Group, isrunning a secondary process on one of its older funds. This deal, on its 2009 special situations fund, which raised about $2.8 billion, would enable LPs to cash out. The transaction would give Oaktree more time to manage the assets. Evercore is working on this one.

Some sources said Oaktree could use this process as a test case. If it goes well, the firm could bring other funds to the market for the secondaries treatment. If you haven’t noticed, Oaktree has a huge portfolio of funds. But another source played that idea down, saying Oaktree and probably most other managers are at the very least thinking about secondaries options.

There’s much more to come in this market. Which other secondaries have you seen out there or have you heard are planned? Let’s chat atcwitkowsky@buyoutsinsider.com.

Fiduciary: Did you see the ILPA letter published yesterday from a group of the largest LPs in the market? These investors have been asking the SEC to strengthen its focus on fiduciary-duty standards, which they say have been eroding in the private markets.

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