Brookfield Asset Management has agreed to acquire a stake of around 62% in US-based alternative investment management firm Oaktree Capital Group in a deal worth about $4.8bn.
Oaktree, which was formed in 1995, manages assets on behalf of several institutional investors across the world, through more than 950 employees. Its investor base includes pension plans, insurance firms, endowments, foundations and sovereign wealth funds.
As per the terms of the transaction, the Canada-based Brookfield will acquire shares corresponding to the stake in Oaktree for either $49.00 per share in cash or will exchange 1.0770 of its shares for a share of the US firm.
The remaining stake of around 38% in the American company will be held by its founders, some of its management members, employees and others.
Brookfield is aiming to own 100% in the Oaktree business by 2029. The company said that from 2022 onwards the remaining shareholders will be able to sell their remaining shares in Oaktree to it.
According to the Canadian firm, the transaction will enable the two companies to provide global investors with comprehensive offerings of alternative investment products.
The companies, put together, will have nearly $475bn of assets under management and $2.5bn of annual fee-related revenues.
Brookfield CEO Bruce Flatt said: “As we continue to strategically grow Brookfield, we are thrilled to be partnering with Oaktree and with its exceptional management team whose credit business is second to none.
“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.”
Post-transaction, the companies will continue to independently operate their respective businesses while partnering to leverage their strengths. Each of the companies will remain under their respective current brands and led by their existing management and investment teams.
Oaktree co-chairman Howard Marks said: “The opportunity to join forces with Brookfield is ideal. Our firms share a culture that emphasizes both investing excellence and integrity, and our businesses mesh without overlapping or conflicting.
“The rest of Oaktree management and I are excited about the combination of support and independence we expect. We look forward to having Brookfield’s contribution to our ability to serve our clients, and to doing the same for them.”
The deal is likely to be completed in the third quarter of 2019, subject to approval of Oaktree’s shareholders, regulatory approvals and other customary closing conditions.