Oaktree Said to Consider First Investment Into India

Nov 9 2016 | 6:26pm ET

Distressed debt giant Oaktree Capital Group is considering making an inaugural investment into India through direct lending on real estate.

Oaktree has experience investing in distressed assets in emerging markets, being heavily active in Chinese non-performing loans, Japanese stocks and Australian assets. India has been considered in the past, according to a Reuters article citing Oaktree co-portfolio manager Rajath Shourie, but the potential returns did not justify risks that included a shaky legal system and a volatile local currency.

However, that may be changing. On the same day as Americans went to the polls to elect celebrity businessman Donald Trump as President, India scrapped its currency’s two highest denominations in an effort to curb graft and drive black capital into the open for tax purposes. The move caught the country completely off guard and resulted in a run on banks and a rush into gold by India’s citizens.

The move is only part of new reforms being instituted by Indian Prime Minister Narendra Modi. Others include improved regulations for buyers of bad loans, which has attracted global distressed debt managers like J.C. Flowers & Co LLC, Apollo Global and Brookfield Asset Management to the country. The country has an estimated $120 billion of bad and troubled loans, noted Reuters.

Closer to home, Oaktree has buying the distressed debt of oil and gas companies in the U.S. since the start of the year, hoping to take advantage of the severe dislocation in debt pricing for smaller and more leveraged firms in that market. 

Headquartered in Los Angeles, Oaktree manages more than $100 billion in worldwide strategies including corporate debt, convertible securities, distressed debt, buyouts, real estate, equities and multi-strategy solutions.

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