Los Angeles-based Oaktree Capital Management intends to raise $700 million (€515 million) with an offering on a private stock market created by Goldman Sachs, the Wall Street Journal reported.
The alternative investment manager plans to sell a 13 percent stake of itself at $40 to $44 per unit on GSTrUE, or GS Tradable Unregistered Equity OTC Market. GSTrUE will only be accessible to institutions and “highly sophisticated” investors.
Floating itself on the private market gives Oaktree the “benefit of liquidity without subjecting us to the full panopoly of regulations applicable to publicly traded companies in the US”, a placement memorandum reads, according to the report.
Numerous private equity firms and hedge funds are considering ways of unlocking the franchise values of management companies, as well as of creating pools of permanent capital.
“We expect that many of our most significant competitors will soon become public,” Oaktree’s founders wrote in the firm’s offer memo. “Whether we like it or not, we must respond to this trend. Choosing not to do likewise would put as at a major disadvantage.”
The Carlyle Group co-founder David Rubenstein recently made similar remarks, arguing that in order to remain competitive and attract talent, firms will have to go public. Rubenstein wouldn’t be surprised to see all major firms go public within the next five years, he said.
Fortress Investment Group became the first firm with a significant private equity business to go public in the US, when it sold a 10 percent stake in its management last year. Since its successful float, The Blackstone Group has filed for an initial public offering and other firms including Apollo Management and TPG have said they are considering various schemes including private placements.
Oaktree was founded by former TCW Group executive Howard Marks. The firm manages multiple debt investment programmes, as well as control-oriented private investment funds targeting the US, Europe and Asia. Over the past five years, Oaktree Capital has raised roughly $3.93 billion for these control programmes, according to the PEI 50, a ranking methodology from sister magazine Private Equity International.