NORTH AMERICA INSIGHT ~~
Morgan Stanley | RESEARCH
Oaktree Capital Group SOTP and Sensitivity Analysis
Exhibit 45:
SOTP for OAK
Oaktree Capital Group (OAK)
Downside Case
C-Corp Conversion
Current Price SOTP
Upside Case C- Corp Conversion
Sum-of-the-Parts Components
(OAK)
Fee Related Earnings
+
Balance Sheet oe
Accrued Carry +
Market
Implied Carry
Value
Valuation
2018e Pre-Tax Core FRE / Sh Tax Rate
2018e After-Tax Core FRE / Sh
FRE Multiple Core FRE Value
Balance Sheet Net Cash and Investments / Sh (as of 3Q17)
Net Accrued Carry / Sh (as of 3Q17)
Avg Net Carried interest / Sh (2018e-2020e)
Multiple
Market Implied Carry Value
Total Value 2018e EPS P/E
Source: Company Data, Morgan Stanley Research estimates
Exhibit 46:
$1.06 24%
$0.81
15.0x $12.11
$15.19
$5.76
$2.20
o o x<
I~ "S1
fh
$45.20 $3.55 12.7x
OAK Estimated Potential Share Price in C-corp Conversion
2.0x
Fee Related Earnings Multiple
Multiple on Future Performance Fees 3.0x 4.0x 5.0x 6.0x
Source: Thomson Reuters, Company Data, Morgan Stanley Research estimates
7.5x 8.0x
I | el al 2
-1 _
$1.06 24%
$0.81
15.0x $12.11
$15.19
$4.38
$1.68
4.0x $6.71 $38.39
$3.01 12.7x
Exhibit 47: OAK Estimated % Change in Current Share Price
Fee Related Earnings Multiple
2.0x
0% 0% 0% 0.0x 0%
0%
-24%
-24% -1.5x -45% -15%
-15% 0.0x
Multiple on Future Performance Fees
3.0x 4.0x
5.0x
$1.06 24%
$0.81
22. 5X $18.17
$15.19
$4.38
$1.68
7.5x $12.58 $50.31
$3.01 16.7x
6.0x
Source: Thomson Reuters, Company Data, Morgan Stanley Research estimates
7.5x
0% 0% 0% 7.5x 50%
0%
-24%
-24% 2.0x 4% 11%
-15% 4.0x
8.0x
HOUSE_OVERSIGHT_025577