Brookfield to buy control of Oaktree

Brookfield Asset Management agreed to buy a majority stake in Oaktree Capital, a combination that would create one of the world’s largest alternative money managers.

The Canadian firm will acquire a 62% stake in Oaktree in a cash-and-stock deal worth roughly $4.7 billion, the companies said Wednesday.

As the private equity industry gathers near-record sums of assets, institutional investors aim to make big allocations to fewer firms with a wide range of products. The Brookfield-Oaktree deal creates such a one-stop shop: It bolsters the credit business of Brookfield, which has traditionally focused on real estate, and provides Oaktree, a Los Angeles specialist in distressed debt, exposure to assets that thrive outside turbulent economic times.

“We had difficulty, up until now, meeting the strict terms of some of those mandates,” Brookfield Chief Executive Bruce Flatt said in a telephone interview. “Very few firms in the world are able to do that.”

Oaktree co-Chairman Howard Marks said in the interview that the two firms mesh “culturally and in terms of product lines without competing and overlapping.”

Brookfield, which approached Oaktree in October, will acquire shares of the firm for $49 in cash or 1.077 Brookfield shares, a 12.4% premium as of Tuesday.

Oaktree shares fell 1% to $48.75 on Thursday. Brookfield’s shares slid 2.4% to $45.33.

The firms together will have about $475 billion of assets under management, according to Wednesday’s announcement.