One of L.A.’s largest financial institutions is trying to go public during one of the most violent market maelstroms in recent memory, but analysts say there isn’t reason to panic – yet.
Oaktree Capital Management LLC, a downtown L.A. investment firm known for navigating market downturns, filed papers in June for an upcoming $100 million initial public offering.
While it hasn’t yet announced a date for the IPO and the firm did not return calls requesting comment, IPO expert John Fitzgibbon said Oaktree may get a reprieve from the calendar. Though financial firm IPOs have struggled, Fitzgibbon believes the firm may benefit from an annual Labor Day-related slowdown – when Wall Street executives head out to the Hamptons – which can serve as a cooling-off period for the markets.
“The IPO market goes into an annual slowdown from mid-August to mid-September,” said Fitzgibbon, owner and publisher of research site IPOScoop.com. “Hopefully with this sharp volatility we’ve been having lately, it might be an indication of a bottoming of the market.”
Founded in 1995, Oaktree gave outsiders a rare look at the firm’s finances recently when it filed a prospectus related to the offering. Oaktree, which has more than $82 billion under management and 600 global employees, revealed it had adjusted net income last year of $764 million and has been profitable in 60 of the last 61 quarters, only losing money at the end of 2008. The majority of its income comes from fees charged for managing others’ money, while investment returns typically account for the smallest portion of revenue.
The document, filed with the Securities and Exchange Commission, also gave new insight into upper management, including co-founders Howard Marks and Bruce Karsh. The pair, who each hold 15.9 percent ownership stakes, and several other top executives receive no salary or bonus, instead receiving compensation through equity grants or profit sharing.
The filing also noted that Karsh bought the company-owned private jet from the firm in January 2010 for about $12 million and subsequently leased it back to Oaktree. Through the first quarter of this year, the firm has paid Karsh a net of $1.4 million for use of the aircraft.
Regional Reshuffling
With the sluggish economy weighing on many financial institutions, Wells Fargo & Co. last week took steps to save costs by restructuring its local operations.
The San Francisco-based national banking giant, among the market leaders in Los Angeles, merged its operations in L.A. and Orange counties under the leadership of regional President John Sotoodeh.
Among the changes, the bank consolidated several business lines with the launch of regionwide business banking and retail private banking teams. About a dozen employees were laid off as part of the reshuffling.
“We are going to drive some efficiencies and have some cost savings, and that’s important in this environment,” Sotoodeh said.
Cash Concerns
Just because they have money doesn’t mean they aren’t worried about health care costs.
More than three-quarters of affluent Angelenos are concerned about the rising cost of health care, outpacing the national average, according to a new Merrill Lynch survey of locals with at least $250,000 in investable assets.
Health care represented respondents’ biggest worry, while 51 percent also said they were concerned about their ability to afford their desired lifestyle in retirement. The numbers represented a sharp rise from January.
Lower on the list of worries were college costs, which concerns 44 percent of respondents, and caring for aging parents, which is an issue for 31 percent of affluent Angelenos.
C-Suite News
California Bank & Trust, a regional institution in San Diego, has brought in several financial professionals to lead its expansion in the greater L.A. market. The bank hired Carlos Huerta as first vice president and manager of its new regional office in Pasadena, which opened last week. Additionally, Lars Hens and Alex Kim were hired as vice presidents in charge of commercial banking. … Marcus & Millichap Capital Corp. has named Anita Paryani vice president of its capital markets business in Los Angeles.
Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.
