Oaktree Capital Management has raised $2bn for its first dedicated asset-backed finance fund, targeting lending opportunities outside the typical investment parameters of insurers, according to a report by Bloomberg.
The fund attracted commitments from investors including US public pension plans and sovereign wealth funds and will provide capital across sectors including equipment leasing, transportation, consumer finance, real estate and infrastructure.
The launch comes as banks continue to reduce their exposure to asset-backed finance, creating opportunities for private credit managers to provide capital in areas traditionally served by bank lenders.
While insurers have also moved into the market, Oaktree is targeting transactions that fall outside their investment requirements, particularly financings that do not carry formal investment-grade ratings.
Jennifer Marques, head of strategy and structuring at Oaktree, reportedly said the firm sees an opportunity to generate premium returns from unrated assets where investors are compensated for complexity rather than necessarily taking greater credit risk.
Oaktree portfolio manager Brendan Beer reportedly said the strategy is not focused on a particular sector, with the firm seeing a sizeable opportunity across the broader asset-backed finance market.
Financings can remain unrated because their structures or underlying collateral do not fit rating-agency methodologies, which often favour standardised pools of assets with extensive performance histories.
Oaktree, which is owned by Brookfield Asset Management, will also draw on Brookfield’s sourcing and underwriting capabilities.
The strategy is complementary to Brookfield’s more than $60bn asset-based finance platform, which invests across areas including specialty finance, non-qualified mortgages, aviation lending, music royalties, fund finance and digital infrastructure leases.
