(Bloomberg News) Oaktree Capital Group LLC, the world's largest distressed-debt investor, is seeking to sell as much as $517.5 million in an initial public offering this week that will test investor appetite for private-equity firms before Carlyle Group LP's planned IPO later this year.

Oaktree and some of its existing stakeholders are offering 11.3 million shares at $43 to $46 each, the Los Angeles-based firm said in a filing last month. Underwriters have the option to purchase an additional 1.69 million shares, which would bring the total raised to $595 million. Carlyle Group, the second- biggest U.S. private-equity firm, indicated in a filing this month that it may sell a 10 percent stake in its own IPO.

In seeking to allow their owners to sell some of their stakes, both firms face a legacy of poorly performing stock deals by private-equity firms starting in 2007, when Blackstone Group LP became the first big buyout manager to go public. Blackstone is trading at about half its IPO price, while Fortress Investment Group LLC is down 80 percent and Apollo Global Management LLC has lost a fourth of its value. KKR & Co. has gained 35 percent since the New York firm listed its shares in the U.S. in July 2010.

"Oaktree will be a test for alternative-asset firms entering the public market, and I think ultimately public investors are going to view both Carlyle and Oaktree in a similar fashion," Douglas Kelly, a Santa Monica, California- based analyst at IBISWorld Inc., said in a telephone interview. "It will be a difficult test because hedge funds and alternative assets, relative to their fees, have not performed well over the last two to three years."

Chairman Howard Marks and President Bruce Karsh, two of Oaktree's co-founders, are set to get almost 40 percent of the proceeds from the firm's share sale, which may come as early as April 11. Marks and six partners from TCW Group Inc. started Oaktree in 1995. He and Karsh will each be paid about $101.9 million from the IPO, according to the March 30 filing.

Carlyle, which has contemplated an IPO since at least 2007, signaled in an April 3 filing with the U.S. Securities and Exchange Commission, that it may sell a 10 percent stake in the IPO, saying existing owners would retain 90 percent of a Carlyle holding entity. Carlyle's founders don't plan to sell shares in the IPO, according to a person briefed on their plans who asked not to be named because the information is private.

Carlyle, based in Washington, manages about $147 billion. Oaktree oversaw $74.9 billion as of Dec. 31, including $24.1 billion in distressed debt.

'Want to Liquefy'

"When you create value, ultimately you want to liquefy and get the benefit of that," Carlyle co-founder David Rubenstein said in February.

In Blackstone's case, co-founder Peter G. Peterson sold most of his stake to fund his philanthropic efforts and his foundation; his partner, Stephen Schwarzman, sold some shares. Henry Kravis and George Roberts, the cousins who are KKR co- founders and managing partners, have yet to sell stock in their firm, according to KKR's annual reports.