Other Oaktree executives stand to benefit from its IPO. John Frank, a managing principal, will receive $4.8 million; Caleb Kramer, a managing director, will get $4.3 million; and Stephen Kaplan, a principal, will be paid $3.7 million, the firm said in government filings.
As at competing firms, the IPO may help Oaktree ease a transition to new managers. It's already transferring some responsibilities, the firm said in an April 6 filing. The firm will no longer pay Kaplan a direct share of management fees, it said, instead paying him fixed quarterly payments that represent about 75 percent of the amount he would otherwise have received.
Buyout firms also have used stock gained through a public listing as currency to make acquisitions. Blackstone in 2008 agreed to buy GSO Capital Partners, which like Oaktree pursues credit investments, for about $900 million in cash and stock. New York-based Blackstone has turned GSO into the centerpiece of its credit strategy. Assets under management in that business have more than quadrupled to $46 billion.
Goldman Sachs Group Inc. and Morgan Stanley are leading the offering for Oaktree, which will trade on the NYSE under the ticker symbol OAK. Blackstone, Apollo and KKR are also on the NYSE. Carlyle has filed to be listed on the Nasdaq market using the symbol CG.
Blackstone, the world's biggest buyout firm, went public in June 2007. KKR filed for its own IPO on July 3, 2007. Stalled by the global financial crisis, KKR eventually gained a New York listing by combining with its publicly traded European fund and moving the listing to the NYSE from Amsterdam in 2010.
Clients' Gains
Apollo and Oaktree first sold shares through a private exchange managed by Goldman Sachs. The New York-based firm transferred the listing to the New York Stock Exchange via an IPO in March 2011.
Oaktree, like its private-equity rivals that preceded it to the public markets, is offering prospective shareholders a slice of profits gained in a business that generates high returns for its private investors, a group of pensions, university endowments and sovereign-wealth funds. Those limited partners have seen Oaktree deliver average annual returns of 19 percent a year on more than $52 billion of drawn capital, according to Oaktree's IPO filings.
Whether public investors and limited partners both can benefit from private-equity firms remains unclear, said Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth College's Tuck School of Business in Hanover, New Hampshire.
"Being public means being more transparent and that's where the limited partners get uneasy," Blaydon said. "Does the magic sauce of being a private investor get diluted in a way that it will be a drag on the performance of the funds? That's an unanswered question."