(Bloomberg) -- Oak Hill Advisors, after more than doubling its assets in six years, is laying the groundwork for further growth as falling bond prices and volatile stocks enhance the allure of credit investments.
This year, Oak Hill has recruited a top banker, Eric Muller, from Goldman Sachs Group Inc., promoted three of its staff to partner and brokered the sale of a roughly 25 percent stake in the business to a unit of Kuwait's social-security system, a person with direct knowledge of the moves said, asking not to be identified because the matter is private.
Oak Hill invests across the risk spectrum, in everything from mortgage-backed securities to collateralized loan obligations. It was among a handful of large alternative-asset managers that benefited as historically low interest rates drove pension plans, endowments and sovereign-wealth funds to credit in search of higher returns. Oak Hill's assets under management surged to $32 billion from $12 billion in 2011.
Now, as stocks stutter and yields on Treasuries and corporate bonds rise, Oak Hill's investments in floating-rate loans and secured debt may prove additionally attractive.
The firm is starting to raise new funds, the person said, an effort that may boost assets even more. Oak Hill's most recent pool, a $2.7 billion distressed-credit fund, was raised in 2016.
A spokeswoman for New York-based Oak Hill declined to comment.
New Partners
Muller, 45, was head of North American private credit in Goldman Sachs's merchant-banking division and a partner at the firm. He'll join Oak Hill, also as a partner, in August after a mandatory non-compete term, the person familiar with the matter said.
The other three new partners are Eitan Arbeter, Justin Tasso and Declan Tiernan.
Over the course of 2018, one partner, Chief Investment Officer Robert Okun, will become a senior adviser, stepping back in advance of his eventual retirement, the person said.
A majority of Oak Hill is owned by its 13 current partners, led by founder and Chief Executive Officer Glenn August and President Bill Bohnsack. Billionaire Robert Bass owns one of two minority stakes in the firm. The other, of about 25 percent, was purchased by Kuwait's Wafra Investment Advisory Group Inc.
Wafra, run from New York, is owned by the Public Institution for Social Security of Kuwait and has about $20 billion in assets. It acquired the stake in Oak Hill from General Atlantic, the private equity firm best known for its savvy investments in technology companies. Wafra already owns stakes in TowerBrook Capital Partners and Stone Point Capital.
A spokesman for Wafra declined to comment.
Stake Trades
Sales of such interests have been gaining momentum for several years, and Oak Hill engaged with a number of interested parties in addition to Wafra, the person familiar with the situation said. Blackstone Group LP, Neuberger Berman Group and Goldman Sachs have all acquired such stakes. Hycroft Capital and Carlyle Group LP, among others, have launched efforts to do so.
Firms sell stakes for a variety of reasons. Some use the proceeds to build new business lines or commit more money to their funds. Others use the cash to pay out aging founders. Sometimes it's a mixture of both.
General Atlantic initially bought into Oak Hill in 2011 as part of a recapitalization with Bass. In addition to growing its assets, Oak Hill has since opened offices in Los Angeles, Hong Kong and Luxembourg.
New York-based General Atlantic made a profit on its investment, the person familiar with the details said, declining to be more specific. A spokeswoman for the firm declined to comment.
Wafra also acquired General Atlantic's limited-partner interests in several of Oak Hill's credit vehicles and is expected to invest in the new funds now being raised, the person said.
To contact the reporters on this story: Erik Schatzker in New York at eschatzker@bloomberg.net, Melissa Mittelman in New York at mmittelman@bloomberg.net.
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Devin Banerjee, Michael Hytha
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