Oaktree raises half a billion for its Asian acorns

Alternative investment firm Oaktree Capital Management has closed its first Asia-specific private equity fund. Named as the OCM Asia Principal Opportunities, it has raised $577 million.

The fund has a 10-year life. Oaktree does not disclose target IRRs or fees, but says fees are at standard market levels. Investors in the fund are mostly North American-based, such as state pension funds and university endowments.

Three commitments have already been made. Macau Studio City comprises of three 5-star hotels, a casino and shopping mall. In July 2007, a deal was struck between Oaktree and Fusheng in Taiwan, the worldÆs biggest golf-club manufacturer. This was the first US led private equity buy-out in the Taiwanese market.

In mainland China, Oaktree is buying into a company servicing the petrochemicals industry. The name of that company has not yet been revealed.

ôThe public market is our biggest competitor in China,ö says Bill Kerins, managing director of Oaktree in Hong Kong. ôThatÆs because sellers benchmark themselves against prices being paid in the public markets.ö

Beyond North Asia, Oaktree is looking at opportunities in Thailand in value themes such as agrobusiness, natural resources and financial services, either on a controlling or minority basis, accessing via direct stakes or by convertibles.

ôThe effects of the liquidity crunch are less likely to affect Asia directly, as there is a smaller level of bank commitments outstanding than in the rest of the world,ö Kerins told AsianInvestor. ôHowever, it will affect Asia indirectly, as bond spreads widen and that impacts momentum-driven markets. WeÆre okay with it though as weÆre not momentum investors, but rather value investors.ö

Oaktree arrived in Asia in 1998 and earlier this year won a major coup when it appointed the ever-youthful M&A guru Ralph Parks from JPMorgan as its Asia chairman. Oaktree manages over $33 billion globally. The company was founded in 1995 and is based in Los Angeles.