Firms & Funds

Oaktree to split new infrastructure fund into vehicles for transportation, energy

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South Carolina Retirement System Investment Commission, private equity, Providence
Vistitors check out the sights around the Angel Oak tree in Charleston, South Carolina September 24, 2013. Massive canopy shades stretching more than 17,000 square feet and a trunk wider than 25 feet in circumference have drawn generations of visitors to the centuries-old live oak tree on an island near historic Charleston. A group aiming to preserve the majestic tree for decades to come is racing against a fall deadline to raise the $1.2 million needed to protect surrounding land from development that environmentalists say would harm the oak's health. REUTERS/Randall Hill (UNITED STATES - Tags: ENVIRONMENT POLITICS) - RTR3FG1E
  • Oaktree marketing fund since 2015
  • Combined vehicle targets $3 bln, $4 bln hard cap
  • Fund receives $100 mln pledge from Illinois Municipal in May

Oaktree Capital Management will split its new infrastructure fund into two sector-specific vehicles for investments in the transportation and energy sectors.

Oaktree Transportation and Energy Infrastructure Fund, which the firm had been marketing as a single vehicle since 2015, is targeting $3 billion with a $4 billion hard cap, according to documents obtained from Illinois Municipal Retirement Fund through an open-records request.

Although it’s been on the market for roughly two years, the vehicle had raised just $409 million through the end of the first quarter.

“Our Infrastructure Fund I fundraise is taking a little bit longer than we initially expected. In retrospect, we probably came to market a little bit early,” CEO Jay Wintrob said on a July 2016 earnings call.

On an April earnings call, Wintrob said the firm would eventually reposition the vehicle into two separate funds — one pursuing transportation-related assets and one pursuing energy-related assets. It’s unclear how the $3 billion to $4 billion being raised will be split.

“Given the transportation infrastructure team’s differentiated expertise in public-private partnerships and strong historical investment performance across the entire transport spectrum of land, sea and air, this quarter we’ll begin marketing the first and only U.S.-dedicated transportation infrastructure fund,” he said.

Illinois Municipal committed $100 million to Oaktree’s infrastructure effort in May.

Highstar Capital

Oaktree expanded its efforts in the infrastructure sector in 2014 with the acquisition of Highstar Capital. The new infrastructure funds are led by four former Highstar executives: Bret Budenbender, Andrew Nevin, Scott Litman and Emmett McCann — along with Ian Schapiro and Josh Connor.

Connor, formerly of Barclays Plc and Morgan Stanley, joined Oaktree in April.

The infrastructure fund’s presentation notes Highstar’s realized track record of 15 deals across its four independent funds had grossed a 23 percent internal rate of return and 2.1x multiple as of Dec. 31, 2016. Highstar’s co-investment program for limited partners grossed a 34 percent IRR and and 2.4x multiple.

Oaktree is headquartered in Los Angeles and maintains 20 offices worldwide. The firm manages roughly $100 billion of assets.

Action Item: More on Oaktree: www.oaktreecapital.com/

Vistitors check out the sights around the Angel Oak tree in Charleston, South Carolina, on Sept. 24, 2013.  Photo courtesy Reuters/Randall Hill