Hedge Funds and Alternatives
October 16, 2012
Oaktree and Other Alternative-investment Managers Fill Void in Special Situations
To lower their risk and comply with new regulations, global investment banks are moving out of so-called special situations — investing in distressed and undervalued corporate and sovereign debt. One of several big alternative-investment firms taking their place is Oaktree Capital Management, which plans to focus on opportunities in emerging markets such as Asia and Latin America.
By Imogen Rose-Smith
Oaktree Capital Management knows an opportunity when it sees one. In July the storied $78.7 billion investment manager and distressed-debt specialist hired Julio Herrera to head a new business line that will focus on distressed and undervalued corporate and sovereign debt in emerging markets.
Los Angelesbased Oaktree isnt the only asset manager to embrace so-called special-situations investing beaten-down and often complex opportunities in everything from Argentinean sovereign debt to Spanish real estate. Other large alternative-investment shops, most notably New Yorkbased Blackstone Group and KKR & Co., are building capacity in this area too. Meanwhile, firms such as New Yorks Fortress Investment Group, which has worked in special situations for more than a decade, have been raising assets and launching new funds.
Investment managers see great promise in special situations for two main reasons. The first is the global economic meltdown and ongoing credit dislocation. The second is the predicament of....