* Prices at $43, bottom of range -underwriter
* Raises $380.3 million
* Sets tone for IPO of Carlyle Group
By Olivia Oran and Greg Roumeliotis
NEW YORK, April 11 Oaktree Capital Management
, a private equity firm focused on debt investments,
sold fewer shares than expected in an initial public offering
that priced at the bottom of an expected range on Wednesday, an
The tepid response to the IPO raised concerns that investors
have become wary of private equity manager flotations, including
the upcoming offering from Carlyle Group LP, which boasts $147
billion in assets under management.
Alternative asset managers have two main income streams --
management fees and performance fees they generate from their
funds. While management fees are steady and predictable, making
them easy to value, performance fees are volatile, making
overall valuations challenging.
Oaktree, which had $75 billion of assets under management as
of the end of 2011, priced 8.84 million shares at $43, raising
$380.3 million, the source said. It had intended to sell 11.3
million shares at between $43 and $46 each.
The offering represented about 6 percent of all the shares
outstanding in the firm, giving it a valuation of $6.5 billion.
Oaktree's IPO is viewed by some investors as a litmus test
for Carlyle's public offering. That firm is kicking off a road
show next week, according to sources familiar with the
situation, seeking a valuation of $7.5 billion to $8 billion.
Private equity firms have faced a rocky road, with public
market investors struggling to value performance fees in their
funds. Blackstone Group LP, the world's largest private
equity firm, has lost around half its market value since its IPO
Oaktree first sold about 13 percent of itself to clients in
2004 and then sold 16 percent of itself for net proceeds of
$944.2 million to outside institutional investors in 2007 in a
Proceeds from Oaktree's IPO will be used to buy back
so-called OCGH units, which represent economic interests in the
Oaktree Operating Group. Oaktree co-founders Howard Marks and
Bruce Karsh each own 15.6 percent of the total OCGH units.
Marks and Karsh are to be paid $101.9 million each from the
next proceeds, according to an earlier regulatory filing by
Oaktree. This will see them cut their ownership of OCGH units
from 15.6 percent to 14 percent.
Marks, 65, and Karsh, 57, founded Los Angeles,
California-based Oaktree in 1995 with four other partners, all
coming from asset manager TCW Group Inc. Marks and Karsh each
had a net worth of $1.5 billion as of March 2012, according to
IPOs can be a lucrative way for founders to cash out on some
on their ownership of their private equity firms. Blackstone's
co-founders, Stephen Schwarzman and Peter Peterson, earned a
huge windfall from the firm's IPO in 2007, pocketing more than
$2.4 billion between them.
Carlyle has said its founders will not directly receive any
of the proceeds. Shares of alternative asset managers have
generally performed poorly since their listing, though they have
been buoyed by the recent stock market rally.
Carlyle will join a handful of other major private equity
firms that have gone public in recent years. KKR & Co LP
transferred its listing from Amsterdam to New York in 2010.
About 30 percent of its shares were listed in New York.
Apollo Global Management LLC, which has about 15
percent of its shares listed on the stock market, raised $382.4
million by issuing new shares in its IPO last year.
Oaktree's IPO underwriters include Goldman Sachs and Morgan
Stanley. Oaktree will begin trading on the New York Stock
Exchange on Thursday under the ticker "OAK."