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Alternative Market Briefing

Oaktree to assume management of two Fifth Street development companies

Monday, July 17, 2017

Benedicte Gravrand, Opalesque Geneva:

Oaktree Capital Management, L.P, which is part of Oaktree Capital Group, has signed a definitive asset purchase agreement under which Oaktree will become the new investment adviser to two business development companies (BDCs): Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR).

Oaktree will pay $320m in cash to Fifth Street Management LLC upon the close of the transaction, which should be completed in Q4-2017.

"These BDCs are a clear strategic fit with Oaktree's direct lending expertise, and the completion of this transaction will create a BDC platform with scale that leverages our deep credit expertise, loan origination capabilities and underwriting skills," said Jay Wintrob, CEO of Oaktree. "Importantly, Oaktree has the investment experience and acumen to manage these portfolios effectively and to pursue new investment opportunities to maximize value for BDC investors over time."

Oaktree portfolio manager Edgar Lee is expected to serve as CEO of both BDCs, which together have approximately $2.5bn of assets under management across first lien, second lien, uni-tranche and mezzanine credits.

Following the closing of the transaction, Oaktree will replace Fifth Street as the investment adviser to the BDCs. FSC will change its name to Oaktree Specialty Lending Corporation, and will trade under the ticker symbol OCSL; FSFR will change its name to Oaktree Strategic Income Corporation, ......................

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