Oaktree Capital Group's assets under management totaled $121.6 billion as of June 30, basically flat from $121.4 billion on March 31 and $121.1 billion a year earlier, according to the alternative investment firm's earnings report released Thursday.
Oaktree attributed the slight increase in AUM in the second quarter primarily to $2.4 billion in new capital commitments to its closed-end funds, including the $1.1 billion for Oaktree Transportation Infrastructure Fund and $700 million Oaktree Special Situations Fund II. Also adding to the increase was $700 million in market value gains and $300 million from DoubleLine. These gains were largely offset by $1.9 billion of distributions to closed-end fund investors, $800 million in unfavorable foreign-currency translation and $300 million of net outflows from open-end funds including its high-yield and senior loan funds.
Over the 12-month period, Oaktree raised $4.4 billion for its closed-end funds, had $3.9 billion in market-value gains, received $2.2 billion from DoubleLine, $2.1 billion by becoming the investment adviser to two publicly traded business development companies and $400 million in favorable foreign-currency translation. These gains were offset by $8.8 billion of distributions and $3.6 billion of net outflows from open-end funds.
During a conference call with analysts, CEO Jay Wintrob noted that over the past 18 months, Oaktree had received $19 billion in proceeds but invested only $11 billion. "This was the right thing to do given the favorable selling environment," he said, adding Oaktree is continuing to pursue investments in a "disciplined and cautious manner."
He also detailed the underperformance of Highstar Fund IV, which had $2.3 billion of assets under management as of Dec. 31, 2013. Oaktree inherited the fund when it acquired Highstar Capital's infrastructure team in 2014. The Highstar fund had invested in infrastructure, including in the energy and transportation sectors. The fund began its investment period in 2010 and has underperformed because of its energy holdings, Mr. Wintrob said; its net return was 1.6% since inception. While Oaktree is busy raising a new transportation infrastructure fund, he added that Oaktree no longer will pursue raising a commingled energy infrastructure fund.
Mr. Wintrob also said Oaktree had made changes to its infrastructure team, but he did not elaborate.
Oaktree earned GAAP net income of $31.1 million, down from $52.7 million in the first quarter and from $117.3 million for the second quarter of 2017.
Management fees were $178.1 million in the second quarter, down 12% from $202.9 million in the first quarter and a 1% dip from $180 million in the year-earlier quarter. Incentive income was $35.2 million, down 85% from $235.6 million in the first quarter and down 92% from $454 million in the second quarter of 2017.
