A market for private stock sales
Goldman Sachs Group this month plans to launch a market that would allow private investment firms to offer stock in themselves to well-heeled investors -- without going public.
The first firm stepping up to try the brokerage’s market: Oaktree Capital Management, one of the largest private investment outfits in Southern California.
Los Angeles-based Oaktree is best known as an investor in “distressed” assets, including bonds of struggling companies. The firm, founded by Howard Marks, Bruce Karsh and others who split from L.A.-based Trust Co. of the West in 1995, has mushroomed to about $40 billion in assets under management.
Oaktree’s clients include major pension funds, foundations and insurance companies.
Amid the boom in private equity and hedge fund investing, some of the major players in those industries have been looking for ways to cash out some of their partners’ wealth and to raise capital for expansion. One way is to sell minority stakes in the firms to outside investors.
One firm, Fortress Investment Group, made a public offering of stock in February. The deal was a big hit on Wall Street, soaring from $18.50 a share at the offering to $31 on its first trading day. The stock, traded on the New York Stock Exchange, closed at $29.50 on Thursday.
But going public can tear away the shroud of secrecy that is a hallmark of private investment firms’ operations.
The new Goldman market would allow the firms to sell shares to a limited number of institutional investors, a person familiar with the plans said. The investors could then trade the shares among themselves.
“It’s a device to have only significant investors as shareholders,” said Oguzhan Ozbas, a professor of finance at USC.
Goldman’s plans for the market were disclosed in a story in the Wall Street Journal on Thursday.
Oaktree is 85% owned by its nine principal partners and about 70 key employees, according to the firm. The balance is owned by a group of longtime Oaktree clients, the firm says on its website.
Oaktree’s stock offering is expected to debut on the Goldman market around May 21.
Oaktree did not returns calls seeking comment. A Goldman spokesman in New York declined to comment.
