AlpInvest to back Oaktree special situations restructuring – exclusive

The Carlyle Group unit is understood to be among buyers involved in the GP-led process on Oaktree Principal Fund V.

AlpInvest Partners is set to back a brand-name fund restructuring that could be worth more than $1 billion.

Investors in Oaktree Capital Management‘s 2009-vintage Principal Fund V are being given the option to roll into a new vehicle along with the fund’s assets, or to sell to secondaries buyers including the Amsterdam-headquartered Carlyle Group unit, according to three sources familiar with the deal. It is not clear how many buyers there are in total.

Evercore is advising on the process, Secondaries Investor understands.

Oaktree Principal Fund V raised $2.8 billion against a target of $5 billion by final close in 2009, according to PEI data. Investors include Los Angeles Water & Power Employees Retirement PlanMassachusetts Pension Reserves Investment Management Board and Maryland State Retirement and Pension System.

The vehicle takes control debt and equity positions in mid-market companies that have an element of distress, dislocation or dysfunction that Oaktree deems to be undervalued.

The fund had $1.3 billion of net asset value as of the end of December, according to Oaktree’s 2018 annual report. It delivered a net internal rate of return of 3.2 percent and a gross multiple of 1.3x as of the same date.

Oaktree is the latest in a series of brand-name general partners to embark upon secondaries processes this year. On Tuesday, Secondaries Investor reported that Ares Management has been exploring the restructuring of Ares Corporate Opportunities Fund III, a 2008-vintage $3.5 billion buyout fund.

Asset sales accounted for 56 percent of the $25 billion in GP-led transactions recorded in 2018, according to UBS’s Secondary Market Survey and Outlook for 2019. Tender offers accounted for the remaining 44 percent.

Oaktree, Evercore and AlpInvest declined to comment.