Billionaire investor Howard Marks wants to raise a record-setting $15 billion distressed-debt fund designed to profit from coronavirus wreckage, new report says
- Howard Marks's Oaktree Capital plans to raise $15 billion for the biggest ever distressed-debt fund, Bloomberg reported Wednesday, citing an investor presentation.
- The vehicle will buy up debt from companies hit hardest by the coronavirus, and Oaktree could even take controlling stakes in the event of a restructuring.
- Firms had been taking on large amounts of debt leading up to the coronavirus outbreak, creating "firewood" for the pandemic to set alight, the presentation reportedly said.
- The fund is nearly the size of the $19.4 billion Oaktree already allocates to distressed-debt investing.
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Oaktree Capital aims to raise $15 billion for the biggest distressed-debt fund in history as the coronavirus rocks once-stable companies, Bloomberg reported Wednesday.
The firm founded by billionaire investor Howard Marks will buy debt from ailing businesses and could assume controlling stakes in the event of a restructuring, according to the report. The Opportunities Fund XI will expand on the strategy already employed at Oaktree, and its size nears the $19.4 billion already being deployed by the firm in distressed-debt markets.
Companies around the world were racking up massive debt piles before the coronavirus pandemic tanked major economies. The potential for a slew of defaults is greater than during the 2008 recession, Oaktree said in a presentation seen by Bloomberg.
Distressed debt in the US alone quadrupled to nearly $1 trillion in less than a week amid the violent financial market sell-off through March.
"The firewood had been stacked" and the pandemic sparked flames, the firm said in the investor presentation.
The firm raised $14.5 billion to invest in the wake of the financial crisis, but "unprecedented" opportunity in debt throughout Asia contributed to the new fund's record size, according to the presentation. The region holds more than $2.1 trillion in soured loans, Bloomberg reported.
Oaktree clients will be asked to invest at least $10 million for 10 years in the new fund, the presentation said. The firm will take in a fee as large as 1.6%.
Marks's firm isn't the only one wading into the debt market in the coronavirus's wake. PIMCO is raising $3 billion for its biggest ever distressed-debt vehicle, Bloomberg reported, and Cerberus aims to quadruple its new fund of the same strategy to $750 million.
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