Spire Capital and Oaktree launch special situations fund

Spire Capital and Oaktree Capital Management have developed a solution for wholesale investors to access credit and special situation investments.

The Spire Oaktree Special Opportunities fund will focus on bargain hunting resulting from investor disillusionment and is designed to capitalise on a ‘sea change’ in markets. The investment strategy combines Oaktree’s flagship ‘good business, bad balance sheet’ approach with a special situations strategy targeted at operational turnarounds.

It has already received a Superior rating from SQM Research and is available directly or via a range of platforms including Netwealth, HUB24 and Macquarie Wrap.

It builds on a successful partnership formed in 2020 with Spire committing in excess of $340 million into Oaktree opportunistic credit strategies on behalf of Australian private investors and their advisers.

Oaktree founder, Howard Marks, said: “I’m personally excited that Oaktree and Spire are extending their very constructive relationship through the creation of the Spire Oaktree Special Opportunities Fund.” 

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“The fund is focused on bargain hunting, the outlook for which is much improved. Bargains generally result from investor disillusionment, and the potential for this – like the level of interest rates – is more in the investor’s favour than was the case in recent history.”

Stuart Haigh, director and head of investments at Spire, said, “We are delighted to be expanding the partnership with Oaktree at a time when the opportunity set is expanding rapidly. In monitoring credit markets alongside Oaktree, we have observed a clear pattern for over-levered companies:

• The company borrowed too much low-quality, floating-rate debt
• The company failed to hedge its floating-rate exposure
• The company made overly aggressive EBITDA (earnings) adjustments
• The company now has razor-thin interest coverage ratios
• The company needs to address an imminent debt maturity at a significantly higher interest rate
• The company is faced with fewer financing options

“With a global network, deep restructuring expertise and a wide range of flexible lending solutions, Oaktree has proven to generate strong returns through the cycle, particularly in times of distress. Spire is proud to be supporting local private investors and their advisors to diversify into asymmetric sources of returns.”

Spire Capital was founded in 2009 as an independent, privately owned global private markets firm and has committed $2 billion on behalf of Australian investors seeking access to private markets.