In its latest move into asset-backed finance, Brentwood-based alternative investment firm Oaktree Capital Management has committed up to $300 million in financing for a Canadian equipment lender.
Oaktree’s revolving credit facility will help Calgary-based Northbase Finance Inc. grow its portfolio of operators in the energy industry leasing machinery or refinancing equipment they own.
“We’re lending to the lender,” said Jennifer Marques, head of strategy and structuring for Oaktree’s structured credit and asset-backed finance strategies. “We’re providing them with financing for them to be able to provide financing to the end customers.”
The deal comes months after Oaktree launched its first credit-interval fund focused on unrated opportunities in ABF after decades of investing in the sector. The $224-billion firm’s new step-out strategy is a response to the surge in deal flow it saw after banks retreated from ABF to de-risk their balance sheets following the 2023 regional banking crisis.
“A lot of the excitement around this segment of the market right now is being driven really by a changing of the financing providers, much like what we saw with corporate direct lending over a decade ago, where banks pulled back from lending to the breadth of the market, and that gave a gap for private alternative capital to come in,” Marques said.
‘Flexible’ financing
As banks were “very active” in equipment finance before the shift, their withdrawal left a gap for specialty finance platforms in the space, Marques said. “If you can provide that flexible, non-rated sensitive financing that can grow organically with the portfolio, like the banks did before they pulled back, then you can access premium returns because this non-rated segment of the market is significantly undersupplied right now.”
Oaktree looks for certainty and predictability of payment for ABF deals, which made Northbase an attractive partner. “Oaktree’s partnership is a powerful validation of the Northbase platform and materially expands our ability to finance the critical assets that keep the North American economy running,” said John Forgeron, executive chairman of Northbase.
