Oaktree raises $2bn for debut asset-backed finance fund

Oaktree Capital Management has successfully raised $2 billion for its inaugural asset-backed finance fund, as per Bloomberg's report. With commitments from a range of investors, including US public pension plans and sovereign wealth funds, the fund will serve various sectors such as equipment leasing, transportation, consumer finance, real estate, and infrastructure.

This move comes at a time when banks are reducing their involvement in asset-backed finance, presenting new opportunities for private credit managers to provide capital in traditionally bank-dominated areas.

While other insurers have also entered the market, Oaktree aims to target financing transactions that don't meet the requirements of traditional insurers, particularly those without formal investment-grade ratings. Jennifer Marques, Oaktree's head of strategy and structuring, explained that the firm sees potential to generate higher returns from unrated assets, where investors are rewarded for complexity rather than facing greater credit risk.

Oaktree portfolio manager Brendan Beer emphasized that the strategy is not sector-specific and sees significant opportunities across the broader asset-backed finance market. These financings may remain unrated due to unique structures or underlying collateral that do not align with rating-agency methodologies, which typically favor standardized asset pools with extensive performance histories.

Oaktree, owned by Brookfield Asset Management, will leverage Brookfield's sourcing and underwriting expertise. The new strategy complements Brookfield's existing $60 billion asset-based finance platform, which covers areas like specialty finance, non-qualified mortgages, aviation lending, music royalties, fund finance, and digital infrastructure leases.