Oaktree, Partners Group invest $240m in NGL

The two fund managers have jointly acquired a total of 19.9m convertible preferred units of the Oklahoma-based energy company that offer a yield of 10.75%.

Oaktree Capital Management and Partners Group have invested $240 million of convertible preferred equity in NGL Energy Partners, a vertically integrated energy company based in Tulsa, Oklahoma.

NGL had initially planned to issue $200 million of 10.75 percent Class A Convertible Preferred Units, but the purchase agreement was amended last week increasing the aggregate amount to $240 million, NGL said in a statement.

The number of units issued totalled 19.9 million with a conversion price of $12.035 per unit, a spokesperson for NGL told Infrastructure Investor. Three years after closing, but subject to a floor of $5.00 per unit, Oaktree and Partners Group will have the option of converting one convertible preferred unit to one common share.

Oaktree, an alternative assets manager based in California, and Partners Group, a private markets investment firm headquartered in Zug, Switzerland, did not disclose the amount of their respective investment. However, a source familiar with the deal told Infrastructure Investor that Partners Group had funded “a substantial” part of the investment – but less than Oaktree.

The same source said the vehicle used by Partners Group to make the investment was specially set up for this transaction.

It is unclear how Oaktree is financing the investment, but last October Infrastructure Investor reported that the California firm was raising its first infrastructure fund, targeting a total of $2 billion. Oaktree launched its infrastructure platform in 2014, after acquiring specialist firm Highstar Capital. According to Oaktree's website, its infrastructure platform has $2.7 billion in assets under management.

NGL will use the proceeds to pay down debt on its revolving credit facility, “which may be re-borrowed in the future to fund capital expenditures and for other general partnerships”, the firms said.

According to the statement, the company has also entered into a strategic partnership with Oaktree to pursue future opportunities within NGL’s current business segments, which include crude oil logistics, water solutions, liquids, retail propane and refined products and renewables.