Oaktree Capital Group LLC (OAK), the world’s largest distressed-debt investor, said first-quarter profit more than tripled as it realized higher gains on investments and collected more fees.
Net income rose to $57.6 million, or $1.91 a share, from $18.6 million, or 82 cents, a year earlier, Los Angeles-based Oaktree said in a statement today. The shares rose as much as 6.9 percent, the most since Oaktree’s April 2012 initial public offering.
Oaktree is hunting for returns in Europe, where the firm is raising a fund to take advantage of a pullback in lending, and the emerging markets, where Oaktree is targeting debt held by troubled issuers or those in danger of default. The firm is also raising $3 billion for its sixth fund that seeks to take control of mid-sized companies that are distressed. Assets under management rose to $78.8 billion from $77.1 billion at the end of 2012 as the firm attracted $2.6 billion of new money.
“It’s a great time to sell debt and it’s even a great time to sell stocks, so that’s what we’re doing,” John Frank, Oaktree’s managing principal, said on a conference call today with investors and analysts. “As long as the markets remain strong, as they have been, I would imagine you will continue to see significant realizations.”
Oaktree rose 5.5 percent to $57.24 at 1:46 p.m. in New York trading, after earlier surging to $57.99. The shares gained 26 percent this year and 33 percent since the firm’s public offering last year. Oaktree raised $380 million in the IPO, selling 8.84 million shares for $43 each, the bottom of the proposed range.
Oaktree profited from several investments in the first quarter, completing its sale of Jackson Square Aviation LLC in January and selling shares of Charter Communications Inc. (CHTR) and property-services company Savills Plc. (SVS)
Adjusted net income, a measure of profit excluding some costs including noncash equity compensation and income taxes, rose 93 percent to $335.8 million, or a record $1.95 a share, from $173.6 million, or 90 cents, a year earlier. Oaktree’s distributable earnings also reached a quarterly record, more than doubling to $295 million, or $1.79 a share. The firm said it will pay a dividend of $1.41 per unit on May 21.
Oaktree said it finished raising its so-called Enhanced Income Fund, which invests in senior loans, with $1.8 billion. The firm expects that the fund, which targeted $1.5 billion, will surpass $2 billion when invested and leveraged and can deliver “high single-digit” returns net of fees, Frank said today.
Oaktree also said it has collected $750 million for its sixth real estate opportunities fund, which is targeting $1.5 billion. Frank said by year-end he expects to attract $1 billion of new commitments to the firm’s strategic credit segment, which has raised $900 million to invest in stressed companies typically ignored by the distressed-debt team because they offered lower-than-targeted returns.
To contact the editor responsible for this story: Christian Baumgaertel at firstname.lastname@example.org