Private-equity firm Oaktree Capital Management kicks off an estimated $2.2 billion of U.S. initial public offerings next week, the busiest flurry of offerings this year.
The most significant debut is Oaktree Capital Management, which is considered a gauge for the highly anticipated IPO from Washington D.C.-based private-equity company Carlyle Group later this quarter.
"Oaktree is going to be a litmus test for other such offerings, most notably Carlyle," said David Menlow, president of research firm IPO Financial. "If market sentiment is not up to snuff and the deal falters, it will have been the sacrificial lamb and will cause other offerings in the space to reconfigure their deals."
Oaktree, which had roughly $75 billion in assets under management at the end of 2011, expects an offering of 11.3 million Class A shares to be priced between $43 and $46 a piece.
Tha pricing would raise between $450 million and $500 million for Oaktree, which sold nearly a third of the firm in two private placements, the first in 2004 and the second in 2007.
The Carlyle Group purports to raise a mere $100 million in its IPO. In 2001 Carlyle sold a 5.5% equity stake to CalPERS, a huge pension fund, for $175 million. It later did two deals with Mubadala Development Corporation, a United Arab Emirates sovereign wealth fund. In 2007 Carlyle sold a 7.5% stake to an affiliate of Mubadala Development Co. for $1.35 billion in cash.
Carlyle's latest S-1/A implied Carlyle might sell 10% of the firm. That's well above $100 million based on prior CalPERS and Mubadala deals. Carlyle's co-founders want to liquefy, i.e. cash in.
Oaktree's looming IPO puts Carlyle in a good position:
"If market sentiment is not up to snuff and the deal falters, it will have been the sacrificial lamb and will cause other offerings in the space to reconfigure their deals."Will Carlyle have to reconfigure? Only twenty-one investment banks know for sure.