Brookfield Asset Management has struck a deal to buy a 62% stake in Oaktree Capital Management in a $4.8bn deal that will create a $475bn asset management colossus.
The deal could see the emergence of a new name at the top of the list of the world’s largest alternative fund managers, with Blackstone having $472bn of assets under management at the end of 2018.
The deal will strengthen the growing credit part of Brookfield’s predominantly real estate equity-focused business and the combined businesses will generate $2.5bn of annual fee-related revenue. Global investors are increasingly focusing on real estate debt as a defensive sub-sector with the property market perceived by many to be “late cycle”. Investors are also looking more and more for “one-stop shop” solutions to investing and Brookfield and Oaktree will be able to benefit from economies of scale in terms of distribution and dealing with regulation.
For now the two companies will continue to be independent, although co-chairman of Oaktree, Howard Marks, will join Brookfield’s board.
The remaining 38% of the company will be owned predominantly by its founder, management and employees. Under the terms of the deal, Brookfield could take over full ownership of Oaktree by 2029.
Bruce Flatt, Brookfield chief executive, said: “This transaction enables us to broaden our product offering to include one of the finest credit platforms in the world, which has a value-driven, contrarian investment style, consistent with ours.”
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