Oaktree Capital Criticizes Private Equity Rivals Over Thrasio Bankruptcy While Closing Banca Progetto Deal

In a rare public rebuke, Oaktree Capital Management has criticized private equity giants Advent and Silver Lake for their role in the bankruptcy of Thrasio, an ecommerce start-up that once boasted a valuation of $6 billion. The sharp critique, delivered in a letter to investors and obtained by the Financial Times, highlights the tensions behind a failed investment that left Oaktree’s $114 million stake in the company worthless.

Oaktree, co-founded by Bruce Karsh and Howard Marks in 1995, accused Advent and Silver Lake of mismanaging Thrasio and failing to act in time to save the business. “We believed that Advent and Silver Lake, experienced PE firms with whom we have partnered numerous times, would be steady hands at the helm and able to professionalize the business,” Oaktree wrote. “This proved to be incorrect.”

The critique followed Thrasio’s rapid rise and fall. Launched in 2018, the company was a pioneer in acquiring small Amazon marketplace sellers, quickly amassing billions in valuation by 2021 as pandemic-fueled ecommerce surged. However, when consumer habits normalized post-pandemic, Thrasio’s earnings plunged, leading to its bankruptcy in February 2024. Oaktree expressed regret over trusting their private equity partners too much and not enforcing tighter oversight over the company’s operations.

The letter’s blunt tone contrasts with the typically guarded communications between major investment managers. One investor in Oaktree’s 11th opportunities fund was not entirely sympathetic to the firm’s self-reflection, stating, “I appreciate their candor, but at the same time, a $16 billion fund shouldn’t be learning the lesson not to outsource oversight to other partners.”

A Strategic Exit: Oaktree Sells Banca Progetto to Centerbridge

Meanwhile, Oaktree Capital made headlines for a different reason this week, announcing the sale of Italian specialty finance bank Banca Progetto to funds managed by private equity firm Centerbridge Partners. Oaktree’s exit from Banca Progetto marks the culmination of a nearly decade-long investment in the lender, which has grown dramatically since Oaktree first backed the company in 2015, when it was still known as Banca Popolare Lecchese.

Under Oaktree’s stewardship, Banca Progetto expanded its focus on loans to small and medium-sized Italian businesses, bolstering its loan book from just €50 million to €7.6 billion by the end of 2023. With the Italian bank posting a return on equity (ROE) of 28%—more than double the industry average—Banca Progetto became a coveted asset in the European financial sector. Though financial details of the sale were not disclosed, sources familiar with the deal valued the bank at nearly €300 million.

Oaktree had explored a potential stock market listing for Banca Progetto in recent years but ultimately opted for the sale to Centerbridge, a decision made against the backdrop of rising interest rates that have boosted the profitability of Italian lenders.

Howard Marks’ Outlook: Fed Rate Cuts and a New Economic “Normal”

At a conference in Melbourne this week, Oaktree co-chairman Howard Marks offered his perspective on the broader macroeconomic environment, signaling that the Federal Reserve’s emergency rate hikes in response to inflation were nearing an end. Marks predicted that US interest rates would settle between 3% and 4% after anticipated cuts by the Fed. “We’re not going back to zero or a half or one,” Marks said, suggesting that the ultra-low rate environment of the past few decades is unlikely to return.

The Federal Reserve is expected to begin its easing cycle at its upcoming meeting in mid-September, with most traders predicting a quarter- or half-point reduction. Marks believes the economic emergency is over but warned of slower growth and shrinking profit margins in the years ahead, ushering in what he described as a “new normal.”

Oaktree, which manages $193 billion across various asset classes, continues to be a key player in global investment, balancing its sharp criticism of past missteps with the strategic realignment of its portfolio.

David Thompson
Financial Desk