April 11, 2012 / 11:35 PM / 6 years ago

UPDATE 1-Oaktree Capital IPO receives cool response

NEW YORK, April 11 (Reuters) - Oaktree Capital Management sold fewer shares than expected in an initial public offering that priced at the bottom of an expected range on Wednesday, a market source said.

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.

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. It had intended to sell 11.3 million shares at between $43 and $46 each.

Oaktree’s IPO is viewed by some investors as a litmus test for Carlyle’s IPO. 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, the world’s largest private equity firm, has lost around half its market value since its IPO in 2007.

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 founded Oaktree in 1995. The two each had a net worth of $1.5 billion as of March 2012, according to Forbes.

Oaktree’s IPO underwriters include Goldman Sachs and Morgan Stanley. Los Angeles-based Oaktree will begin trading on the New York Stock Exchange on Thursday under the ticker “OAK.”

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