Our Special Situations strategy makes control-oriented debt and equity investments in middle-market companies that have an element of distress, dislocation or dysfunction and that we perceive to be undervalued. It seeks situations in which we can gain control of, or significant influence over, companies exhibiting such characteristics and then actively manages those businesses in an effort to deliver value as a private equity-like sponsor. The cornerstone of the Special Situations strategy is its flexibility to invest across capital structures, whether by purchasing secondary market debt (distress-for-control) or making direct equity investments in distressed businesses. Importantly, the strategy does not require a distressed macro environment to invest successfully, relying instead on “situational” distress that can be uncovered in any industry, sector or individual company at any point in the economic cycle.
“Our flexible, opportunistic approach to investing gives us what we believe to be a pronounced strategic advantage,” says Jordon Kruse, the strategy’s co-portfolio manager. “Leveraging Oaktree’s superior access to deal flow, we aim to give our limited partners consistent access to situational distressed opportunities, in significant blocks or whole companies, while taking advantage of systemic distress when market conditions allow for it.”
“Our strategy also benefits from our in-house resources and external industry advisers with which we partner with management teams to make strategic and operational improvements in our portfolio companies, helping to drive shareholder value,” adds co-portfolio manager Matt Wilson.