Oaktree Capital, the Los Angeles-headquartered alternative assets manager which has more than $86 billion under management, has entered a definitive agreement to acquire infrastructure fund manager Highstar Capital for an undisclosed sum.
Ian Schapiro, an Oaktree managing director and portfolio manager, will be responsible for the integration of the Highstar team into Oaktree.
Oaktree believes that Highstar will be a good fit with its Power Opportunities team, led by Schapiro. Whereas Power Opportunities has since 1995 been investing in companies providing products and services that support energy and utility infrastructure, Highstar has been investing in the physical infrastructure itself.
“Highstar is a pioneer in infrastructure investing and a leader in US energy infrastructure, waste management and transportation public-private partnerships – a skillset that is highly complementary to Oaktree’s Power Opportunities strategy,” said John Frank, Oaktree managing principal, in a statement.
The statement added that the transaction is expected to complete – subject to customary regulatory and other approvals – in the third quarter of this year. At that point, Oaktree will become manager of Highstar Fund IV, which had $2.3 billion of assets under management at the end of December last year.
New York-based Highstar’s first fund, in partnership with insurance and financial services giant AIG, closed on $407 million in November 2000. It went on to raise three further funds: AIG Highstar Capital II, which closed on $800 million in July 2005; AIG Highstar Capital III, which collected $3.5 billion; and Highstar Capital IV, the first raised since Highstar’s independence from AIG in 2010, which closed on $2 billion in May 2012.
Highstar’s investments have included US energy firms Kinder Morgan and Caiman Energy, environmental solutions firm Advanced Disposal Services, terminal operator Ports America and the UK’s London City Airport.
In today’s statement, Highstar founder and managing partner Christopher Lee said: “We couldn’t have hoped for a better new home for our team…We are very excited to become a part of the Oaktree family and believe that together we will be able to continue to provide our investors with a first-rate infrastructure investing platform.”
Highstar was positioned 25th in last year’s Infrastructure Investor 30, our ranking of the world’s largest infrastructure investment firms, having reached a highest position of 15 the previous year.
Oaktree, meanwhile, was ranked 17th in the PEI 300, our equivalent ranking of the world’s 300 largest private equity investment firms. The firm has over 800 employees in 16 cities globally
Power Opportunities is part of Oaktree’s “control investing” strategy. It also focuses on corporate debt, convertible securities, distressed debt, real estate and listed equities.