Oaktree Capital has raised $1.1 billion for its Transportation Infrastructure Fund in a first close, according to the firm’s second quarter earnings conference call transcript.
The fund has started to invest some of its capital.
During the conference call with analysts, CEO Jay Wintrob described the under-performance of Highstar Fund IV, which was managed by Highstar Capital's infrastructure team. Oaktree Capital acquired Highstar Capital in 2014.
Wintrob described the fund to be an “area of under-performance in the quarter … which we inherited when adding the infrastructure team back in 2014. That fund began its investment period in 2010 and has performed below expectations, especially recently, based on the returns of its energy holdings and now has a gross IRR of 6 percent. While the performance of Highstar Fund IV has not met our expectations, we believe we are moving in the right direction for Oaktree’s infrastructure business, with a strong first close” for its transportation infrastructure fund.
In addition, Wintrob said the firm has decided to change its strategy by no longer pursuing commingled energy infrastructure investments.
The firm said “We've recently made some changes to the team, creating a more appropriate structure for the opportunities we see in the transportation sector. … Turning to open-end funds. Investment performance versus benchmarks was mixed in the second quarter. As lower-quality high-yield bonds continue to outperform B and BB issuers, our high-yield strategies have not fully participated in these benchmark performance drivers.”
Correction: On July 27 it was reported the Highstar Fund IV raised $1.1 billion.
