10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 10-Q

________________  

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2019

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                      to                     .

Commission File Number 001-35500

________________

Oaktree Capital Group, LLC

(Exact name of registrant as specified in its charter)

_______________________________

Delaware	26-0174894
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

333 South Grand Avenue, 28th Floor

Los Angeles, CA 90071

Telephone: (213) 830-6300

(Address, zip code, and telephone number, including

area code, of registrant’s principal executive offices)

_______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A units representing limited liability company interests	N/A	New York Stock Exchange
6.625% Series A preferred units	OAK-A	New York Stock Exchange
6.550% Series B preferred units	OAK-B	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒

As of November 1, 2019, there were 97,967,255 Class A units and 62,163,389 Class B units of the registrant outstanding.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Financial Condition	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	4
	Condensed Consolidated Statements of Changes in Unitholders’ Capital for the Three and Nine Months Ended September 30, 2019 and 2018	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	92
Item 4.	Controls and Procedures	94
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	95
Item 1A.	Risk Factors	95
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	95
Item 3.	Defaults Upon Senior Securities	95
Item 4.	Mine Safety Disclosures	95
Item 5.	Other Information	95
Item 6.	Exhibits	101
Signature

1

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), which reflect our current views with respect to, among other things, our future results of operations and financial performance. In some cases, you can identify forward-looking statements by words such as “anticipate,” “approximately,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “seek,” “should,” “will” and “would” or the negative version of these words or other comparable or similar words. These statements identify prospective information. Important factors could cause actual results to differ, possibly materially, from those indicated in these statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity.

In addition to factors previously disclosed in Oaktree Capital Group, LLC’s (“OCG”) reports filed with securities regulators in the United States and those identified elsewhere in this quarterly report, the following factors, among others, could cause actual results to differ materially from forward-looking statements and information or historical performance: the outcome of any legal proceedings that may be instituted against OCG or its unitholders or directors in connection with the merger between an affiliate of Brookfield Asset Management Inc. and OCG that closed on September 30, 2019; business disruptions resulting from the completion of the merger that will harm OCG’s business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the completion of the merger; certain legal or regulatory restrictions resulting from the completion of the merger that may impact OCG’s ability to pursue certain business opportunities or strategic transactions; the ability of OCG to retain and hire key personnel; the continued availability of capital and financing following the merger; the business, economic and political conditions in the markets in which OCG operates; changes in OCG’s anticipated revenue and income, which are inherently volatile; changes in the value of OCG’s investments; the pace of OCG’s raising of new funds; changes in assets under management; the timing and receipt of, and impact of taxes on, carried interest; distributions from and liquidation of OCG’s existing funds; the amount and timing of distributions on OCG’s preferred units; changes in OCG’s operating or other expenses; the degree to which OCG encounters competition; and general political, economic and market conditions.

Any forward-looking statements and information speak only as of the date of this quarterly report or as of the date they were made, and except as required by law, OCG does not undertake any obligation to update forward-looking statements and information. For a more detailed discussion of these factors, also see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in OCG’s most recent report on Form 10-K for the year ended December 31, 2018, and in each case any material updates to these factors contained in any of OCG’s future filings.

As for the forward-looking statements and information that relate to future financial results and other projections, actual results will be different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worse than projected and such differences could be material. Given these uncertainties, you should not place any reliance on these forward-looking statements and information.

This quarterly report and its contents do not constitute and should not be construed as (a) a recommendation to buy, (b) an offer to buy or solicitation of an offer to buy, (c) an offer to sell or (d) advice in relation to, any securities of OCG or securities of any Oaktree investment fund.

In this quarterly report, unless the context otherwise requires:

“Oaktree,” “OCG,” “we,” “us,” “our” or “our company” refers to Oaktree Capital Group, LLC and, where applicable, its subsidiaries and affiliates.

“Oaktree Operating Group,” or “Operating Group,” refers collectively to the entities in which we have a minority economic interest and indirect control that either (i) act as or control the general partners and investment advisers of our funds or (ii) hold interests in other entities or investments generating income for us.

“OCGH” refers to Oaktree Capital Group Holdings, L.P., a Delaware limited partnership, which holds an interest in the Oaktree Operating Group and all of our Class B units.

“OCGH unitholders” refers collectively to our senior executives, current and former employees and certain other investors who hold interests in the Oaktree Operating Group through OCGH.

“assets under management,” or “AUM,” generally refers to the assets we manage and equals the NAV (as defined below) of the assets we manage, the leverage on which management fees are charged, the undrawn capital that we are entitled to call from investors in our funds pursuant to their capital commitments, investment proceeds held in trust for use in investment activities and our pro-rata portion of AUM managed by DoubleLine (as defined below) in which we hold a minority ownership interest. For our collateralized loan obligation vehicles (“CLOs”), AUM represents the aggregate par value of collateral assets and principal cash, for our publicly-traded BDCs, gross assets (including assets acquired with leverage), net of cash, for our special purpose acquisition companies, the proceeds of any initial public offering held in trust for use in a business combination, and for DoubleLine funds, NAV. Our AUM amounts include AUM for which we charge no management fees. Our definition of AUM is not based on any definition contained in our operating agreement or the agreements governing the funds, accounts or companies that we manage or sponsor. Our calculation of AUM and the two AUM-related metrics described below may not be directly comparable to the AUM metrics of other investment managers.

• “management fee-generating assets under management,” or “management fee-generating AUM,” is a forward-looking metric and generally reflects the beginning AUM on which we will earn management fees in the following quarter, as more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures—Assets Under Management—Management Fee-generating Assets Under Management.”

• “incentive-creating assets under management,” or “incentive-creating AUM,” refers to the AUM that may eventually produce incentive income, as more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures—Assets Under Management—Incentive-creating Assets Under Management.”

“Class A units” refer to the common units of OCG designated as Class A units.

“common units” or “common unitholders” refer to the Class A common units of OCG or Class A common unitholders, respectively, unless otherwise specified.

“consolidated funds” refers to the funds and CLOs that Oaktree is required to consolidate as of the applicable reporting date.

“DoubleLine” refers to DoubleLine Capital LP and its affiliates.

“funds” refers to investment funds and, where applicable, CLOs and separate accounts that are managed by us or our subsidiaries.

“initial public offering” refers to the listing of our Class A units on the New York Stock Exchange on April 12, 2012 whereby Oaktree sold 7,888,864 Class A units and selling unitholders sold 954,159 Class A units.

“Intermediate Holding Companies” collectively refers to the subsidiaries wholly owned by us.

“net asset value,” or “NAV,” refers to the value of all the assets of a fund (including cash and accrued interest and dividends) less all liabilities of the fund (including accrued expenses and any reserves established by us, in our discretion, for contingent liabilities) without reduction for accrued incentives (fund level) because they are reflected in the partners’ capital of the fund.  

“preferred units” or “preferred unitholders” refer to the Series A and Series B preferred units of OCG or Series A and Series B preferred unitholders, respectively, unless otherwise specified.

“Relevant Benchmark” refers, with respect to:

• our U.S. High Yield Bond strategy, to the FTSE US High-Yield Cash-Pay Capped Index;

• our Global High Yield Bond strategy, to an Oaktree custom global high yield index that represents 60% ICE BofAML High Yield Master II Constrained Index and 40% ICE BofAML Global Non-Financial High Yield European Issuers 3% Constrained, ex-Russia Index – USD Hedged from inception through December 31, 2012, and the ICE BofAML Non-Financial Developed Markets High Yield Constrained Index – USD Hedged thereafter;

• our European High Yield Bond strategy, to the ICE BofAML Global Non-Financial High Yield European Issuers excluding Russia 3% Constrained Index (USD Hedged);

• our U.S. Senior Loan strategy (with the exception of the closed-end funds), to the Credit Suisse Leveraged Loan Index;

• our European Senior Loan strategy, to the Credit Suisse Western European Leveraged Loan Index (EUR Hedged);

• our U.S. Convertible Securities strategy, to an Oaktree custom convertible index that represents the Credit Suisse Convertible Securities Index from inception through December 31, 1999, the Goldman Sachs/Bloomberg Convertible 100 Index from January 1, 2000 through June 30, 2004, and the ICE BofAML All U.S. Convertibles Index thereafter;

• our non-U.S. Convertible Securities strategy, to an Oaktree custom non-U.S. convertible index that represents the JACI Global ex-U.S. (Local) Index from inception through December 31, 2014 and the Thomson Reuters Global Focus ex-U.S. (USD hedged) Index thereafter;

• our High Income Convertible Securities strategy, to the FTSE US High-Yield Market Index; and

• our Emerging Markets Equities strategy, to the Morgan Stanley Capital International Emerging Markets Index (Net).

“senior executives” refers collectively to Howard S. Marks, Bruce A. Karsh, Jay S. Wintrob, John B. Frank and Sheldon M. Stone.

“Sharpe Ratio” refers to a metric used to calculate risk-adjusted return. The Sharpe Ratio is the ratio of excess return to volatility, with excess return defined as the return above that of a riskless asset (based on the three-month U.S. Treasury bill, or for our European Senior Loan strategy, the Euro Overnight Index Average) divided by the standard deviation of such return. A higher Sharpe Ratio indicates a return that is higher than would be expected for the level of risk compared to the risk-free rate.

This quarterly report and its contents do not constitute and should not be construed as an offer of securities of any Oaktree funds.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

1

Oaktree Capital Group, LLC

Condensed Consolidated Statements of Financial Condition (Unaudited)

($ in thousands)

	As of
	September 30, 2019			December 31, 2018
Assets
Cash and cash-equivalents	$	356,431		$	460,937
U.S. Treasury and other securities	24,025			546,531
Corporate investments (includes $50,461 and $74,899 measured at fair value as of September 30, 2019 and December 31, 2018, respectively)	1,141,232			1,209,764
Due from affiliates	152,232			442,912
Deferred tax assets	441,322			229,100
Operating lease assets	102,608			—
Other assets	523,816			533,044
Assets of consolidated funds:
Cash and cash-equivalents	615,567			370,790
Investments, at fair value	8,266,799			6,531,385
Dividends and interest receivable	29,206			26,792
Due from brokers	123			11,599
Receivable for securities sold	75,928			65,884
Other assets	9,906			3,440
Total assets	$	11,739,195		$	10,432,178
Liabilities and Unitholders’ Capital
Liabilities:
Accrued compensation expense	$	245,178		$	437,966
Accounts payable, accrued expenses and other liabilities	156,698			128,729
Due to affiliates	179,478			188,367
Debt obligations	746,343			745,945
Operating lease liabilities	131,282			—
Liabilities of consolidated funds:
Accounts payable, accrued expenses and other liabilities	76,378			31,643
Payables for securities purchased	467,389			450,172
Securities sold short, at fair value	—			2,609
Distributions payable	233			4,885
Borrowings under credit facilities	971,854			864,529
Debt obligations of CLOs	5,553,144			4,127,994
Total liabilities	8,527,977			6,982,839
Commitments and contingencies (Note 17)
Non-controlling redeemable interests in consolidated funds	1,081,462			961,622
Unitholders’ capital:
Series A preferred units, 7,200,000 units issued and outstanding as of September 30, 2019 and December 31, 2018	173,669			173,669
Series B preferred units, 9,400,000 units issued and outstanding as of September 30, 2019 and December 31, 2018	226,915			226,915
Class A units, no par value, unlimited units authorized, 97,967,255 and 71,661,623 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	—			—
Class B units, no par value, unlimited units authorized, 62,145,608 and 85,471,937 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	—			—
Paid-in capital	1,166,609			893,043
Retained earnings	—			100,683
Accumulated other comprehensive income	(1,522		)	1,053
Unitholders’ capital attributable to Oaktree Capital Group, LLC	1,565,671			1,395,363
Non-controlling interests in consolidated subsidiaries	564,085			1,092,354
Total unitholders’ capital	2,129,756			2,487,717
Total liabilities and unitholders’ capital	$	11,739,195		$	10,432,178

Please see accompanying notes to condensed consolidated financial statements.

1

Oaktree Capital Group, LLC

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per unit amounts)

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Revenues:
Management fees	$	179,761		$	175,195		$	524,798		$	538,706
Incentive income	25,429			66,032			260,290			253,125
Total revenues	205,190			241,227			785,088			791,831
Expenses:
Compensation and benefits	(111,281		)	(101,787		)	(334,919		)	(315,614		)
Equity-based compensation	(22,779		)	(14,747		)	(59,756		)	(44,614		)
Incentive income compensation	(11,427		)	(27,294		)	(136,849		)	(127,327		)
Total compensation and benefits expense	(145,487		)	(143,828		)	(531,524		)	(487,555		)
General and administrative	(86,851		)	(38,051		)	(184,592		)	(110,459		)
Depreciation and amortization	(6,602		)	(6,459		)	(19,732		)	(19,412		)
Consolidated fund expenses	(6,540		)	(2,829		)	(12,994		)	(9,383		)
Total expenses	(245,480		)	(191,167		)	(748,842		)	(626,809		)
Other income (loss):
Interest expense	(59,883		)	(39,456		)	(149,643		)	(115,504		)
Interest and dividend income	101,882			74,490			278,782			205,089
Net realized gain (loss) on consolidated funds’ investments	(3,664		)	(9,812		)	(9,036		)	(12,509		)
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments	(40,964		)	10,552			17,967			(34,939		)
Investment income	26,819			58,196			121,804			149,682
Other income, net	—			5,629			58			7,240
Total other income	24,190			99,599			259,932			199,059
Income (loss) before income taxes	(16,100		)	149,659			296,178			364,081
Income taxes	(4,798		)	(6,568		)	(11,148		)	(17,832		)
Net income (loss)	(20,898		)	143,091			285,030			346,249
Less:
Net (income) loss attributable to non-controlling interests in consolidated funds	4,208			(14,427		)	(82,234		)	(17,792		)
Net (income) loss attributable to non-controlling interests in consolidated subsidiaries	6,871			(72,005		)	(109,259		)	(187,945		)
Net income (loss) attributable to Oaktree Capital Group, LLC	(9,819		)	56,659			93,537			140,512
Net income attributable to preferred unitholders	(6,829		)	(3,909		)	(20,487		)	(3,909		)
Net income (loss) attributable to Oaktree Capital Group, LLC Class A unitholders	$	(16,648	)	$	52,750		$	73,050		$	136,603
Distributions declared per Class A unit	$	3.13		$	0.55		$	4.93		$	2.27
Net income per Class A unit (basic and diluted):
Net income per Class A unit	$	(0.22	)	$	0.74		$	0.99		$	1.95
Weighted average number of Class A units outstanding	75,995			71,369			74,005			70,167

Please see accompanying notes to condensed consolidated financial statements.

2

Oaktree Capital Group, LLC

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	(20,898	)	$	143,091		$	285,030		$	346,249
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(5,780		)	773			(2,411		)	683
Other comprehensive income (loss), net of tax	(5,780		)	773			(2,411		)	683
Total comprehensive income	(26,678		)	143,864			282,619			346,932
Less:
Comprehensive (income) loss attributable to non-controlling interests in consolidated funds	4,208			(14,427		)	(82,234		)	(17,792		)
Comprehensive (income) loss attributable to non-controlling interests in consolidated subsidiaries	8,725			(72,434		)	(109,423		)	(188,307		)
Comprehensive income attributable to OCG	(13,745		)	57,003			90,962			140,833
Comprehensive income attributable to preferred unitholders	(6,829		)	(3,909		)	(20,487		)	(3,909		)
Comprehensive income (loss) attributable to OCG Class A unitholders	$	(20,574	)	$	53,094		$	70,475		$	136,924

Please see accompanying notes to condensed consolidated financial statements.

3

Oaktree Capital Group, LLC

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Nine months ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	285,030		$	346,249
Adjustments to reconcile net income to net cash used in operating activities:
Adoption of revenue recognition standard	—			48,709
Investment income	(121,804		)	(149,682		)
Depreciation and amortization	19,732			19,412
Equity-based compensation	59,756			44,614
Net realized and unrealized (gain) loss from consolidated funds’ investments	(8,931		)	47,448
Amortization (accretion) of original issue and market discount of consolidated funds’ investments, net	(4,305		)	(3,488		)
Income distributions from corporate investments in funds and companies	123,911			177,864
Other non-cash items	3,295			1,468
Cash flows due to changes in operating assets and liabilities:
(Increase) decrease in other assets	(3,883		)	28,353
Decrease in net due from affiliates	281,791			53,430
Decrease in accrued compensation expense	(191,859		)	(47,365		)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	65,325			(14,873		)
Cash flows due to changes in operating assets and liabilities of consolidated funds:
Increase in dividends and interest receivable	(8,437		)	(2,030		)
Decrease in due from brokers	11,476			37,010
(Increase) decrease in receivables for securities sold	(27,609		)	72,118
Increase in other assets	(7,074		)	(724		)
Increase in accounts payable, accrued expenses and other liabilities	26,111			9,619
Increase (decrease) in payables for securities purchased	123,853			(212,499		)
Purchases of securities	(5,571,689		)	(3,443,337		)
Proceeds from maturities and sales of securities	2,149,132			2,849,135
Net cash used in operating activities	(2,796,179		)	(138,569		)
Cash flows from investing activities:
Purchases of U.S. Treasury and other securities	(602,600		)	(791,401		)
Proceeds from maturities and sales of U.S. Treasury and other securities	1,124,951			498,104
Corporate investments in funds and companies	(254,478		)	(212,427		)
Distributions and proceeds from corporate investments in funds and companies	373,916			245,801
Purchases of fixed assets	(6,366		)	(3,527		)
Net cash provided by (used in) investing activities	635,423			(263,450		)

(continued)

Please see accompanying notes to condensed consolidated financial statements.

4

Oaktree Capital Group, LLC

Condensed Consolidated Statements of Cash Flows (Unaudited) — (Continued)

(in thousands)

	Nine months ended September 30,
	2019			2018
Cash flows from financing activities:
Net proceeds from issuance of Class A units	$	—		$	219,750
Purchase of OCGH units	—			(219,525		)
Repurchase and cancellation of units	(12,191		)	(12,195		)
Distributions to Class A unitholders	(436,494		)	(160,883		)
Distributions to preferred unitholders	(20,487		)	(3,909		)
Distributions to OCGH unitholders	(358,455		)	(218,575		)
Distributions to non-controlling interests	(3,421		)	(3,700		)
Net proceeds from issuance of preferred units	—			400,584
Payment of debt issuance costs	—			(2,235		)
Cash flows from financing activities of consolidated funds:
Contributions from non-controlling interests	519,684			107,962
Distributions to non-controlling interests	(107,071		)	(236,929		)
Proceeds from debt obligations issued by CLOs	3,892,380			1,170,317
Payment of debt issuance costs	(3,070		)	(1,771		)
Repayment on debt obligations issued by CLOs	(1,188,452		)	(729,458		)
Borrowings on credit facilities	505,521			—
Repayments on credit facilities	(372,000		)	—
Net cash provided by financing activities	2,415,944			309,433
Effect of exchange rate changes on cash	(12,078		)	1,497
Net increase (decrease) in cash and cash-equivalents	243,110			(91,089		)
Deconsolidation of funds	(102,839		)	(12,315		)
Cash and cash-equivalents, beginning balance	831,727			959,465
Cash and cash-equivalents, ending balance	$	971,998		$	856,061
Reconciliation of cash and cash-equivalents
Cash and cash-equivalents – Oaktree	$	356,431		$	543,229
Cash and cash-equivalents – Consolidated Funds	615,567			312,832
Total cash and cash-equivalents	$	971,998		$	856,061

Please see accompanying notes to condensed consolidated financial statements.

5

Oaktree Capital Group, LLC Condensed Consolidated Statements of Changes in Unitholders’ Capital (Unaudited) (in thousands)
	Oaktree Capital Group, LLC																			Non-controlling Interests in Consolidated Subsidiaries			Total Unitholders’ Capital
	Class A Units		Class B Units		Series A Preferred Units			Series B Preferred Units			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
Unitholders’ capital as of June 30, 2019	75,649		84,001		$	173,669		$	226,915		$	937,880		$	60,056		$	2,404		$	1,022,739		$	2,423,663
Activity for the three months ended:
Issuance of units	25,529		3,675		—			—			—			—			—			—			—
Cancellation of units	(3,122	)	(200	)	—			—			—			—			—			—			—
Repurchase and cancellation of units	(89	)	(25,330	)	—			—			(941		)	—			—			(1,298		)	(2,239		)
Deferred tax effect resulting from the purchase of units in connection with the Merger	—		—		—			—			212,017			—			—			—			212,017
Equity reallocation between controlling and non-controlling interests	—		—		—			—			267,715			—			—			(267,715		)	—
Capital increase related to equity-based compensation	—		—		—			—			12,699			—			—			13,981			26,680
Distributions declared	—		—		(2,981		)	(3,848		)	(262,761		)	(43,408		)	—			(194,897		)	(507,895		)
Net income	—		—		2,981			3,848			—			(16,648		)	—			(6,871		)	(16,690		)
Foreign currency translation adjustment, net of tax	—		—		—			—			—			—			(3,926		)	(1,854		)	(5,780		)
Unitholders’ capital as of September 30, 2019	97,967		62,146		$	173,669		$	226,915		$	1,166,609		$	—		$	(1,522	)	$	564,085		$	2,129,756
	Oaktree Capital Group, LLC																			Non-controlling Interests in Consolidated Subsidiaries			Total Unitholders’ Capital
	Class A Units		Class B Units		Series A Preferred Units			Series B Preferred Units			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
Unitholders’ capital as of December 31, 2018	71,662		85,472		$	173,669		$	226,915		$	893,043		$	100,683		$	1,053		$	1,092,354		$	2,487,717
Activity for the nine months ended:
Issuance of units	29,713		5,113		—			—			—			—			—			—			—
Cancellation of units	(3,149	)	(3,036	)	—			—			—			—			—			—			—
Repurchase and cancellation of units	(259	)	(25,403	)	—			—			(8,378		)	—			—			(3,813		)	(12,191		)
Deferred tax effect resulting from the purchase of units in connection with the Merger	—		—		—			—			212,017			—			—			—			212,017
Equity reallocation between controlling and non-controlling interests	—		—		—			—			304,280			—			—			(304,280		)	—
Capital increase related to equity-based compensation	—		—		—			—			28,408			—			—			32,277			60,685
Distributions declared	—		—		(8,943		)	(11,544		)	(262,761		)	(173,733		)	—			(361,876		)	(818,857		)
Net income	—		—		8,943			11,544			—			73,050			—			109,259			202,796
Foreign currency translation adjustment, net of tax	—		—		—			—			—			—			(2,575		)	164			(2,411		)
Unitholders’ capital as of September 30, 2019	97,967		62,146		$	173,669		$	226,915		$	1,166,609		$	—		$	(1,522	)	$	564,085		$	2,129,756

Please see accompanying notes to condensed consolidated financial statements.

6

Oaktree Capital Group, LLC Condensed Consolidated Statements of Changes in Unitholders’ Capital (Unaudited) (in thousands)
	Oaktree Capital Group, LLC																	Non-controlling Interests in Consolidated Subsidiaries			Non-controlling Interests in Consolidated Funds			Total Unitholders’ Capital
	Class A Units		Class B Units		Series A Preferred Units			Series B Preferred Units		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
Unitholders’ capital as of June 30, 2018	71,175		86,007		$	173,669		$	—	$	871,776		$	62,579		$	420	$	1,035,253		$	6,719		$	2,150,416
Activity for the three months ended:
Issuance of units	384		68		—			226,915		—			—			—		—			—			226,915
Cancellation of units	(27	)	(428	)	—			—		—			—			—		—			—			—
Repurchase and cancellation of units	(21	)	(21	)	—			—		(962		)	—			—		(400		)	—			(1,362		)
Purchase of non-controlling interests in subsidiary	—		—		—			—		—			—			—		—			—			—
Equity reallocation between controlling and non-controlling interests	—		—		—			—		4,514			—			—		(4,514		)	—			—
Capital increase related to equity-based compensation	—		—		—			—		6,654			—			—		7,997			—			14,651
Distributions declared	—		—		(3,909		)	—		—			(39,126		)	—		(54,456		)				(97,491		)
Net income	—		—		3,909			—		—			52,750			—		72,005			237			128,901
Foreign currency translation adjustment, net of tax	—		—		—			—		—			—			344		429			—			773
Unitholders’ capital as of September 30, 2018	71,511		85,626		$	173,669		$	226,915	$	881,982		$	76,203		$	764	$	1,056,314		$	6,956		$	2,422,803
	Oaktree Capital Group, LLC																	Non-controlling Interests in Consolidated Subsidiaries			Non-controlling Interests in Consolidated Funds			Total Unitholders’ Capital
	Class A Units		Class B Units		Series A Preferred Units			Series B Preferred Units		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
Unitholders’ capital as of December 31, 2017	65,310		90,976		$	—		$	—	$	788,413		$	80,128		$	443	$	1,121,237		$	30,396		$	2,020,617
Activity for the nine months ended:
Cumulative-effect adjustment from adoption of accounting guidance	—		—		—			—		—			20,355			—		28,354			—			48,709
Issuance of units	6,534		182		173,669			226,915		219,750			—			—		—			—			620,334
Cancellation of units	(112	)	(428	)	—			—		—			—			—		—			—			—
Repurchase and cancellation of units	(221	)	(5,104	)	—			—		(228,469		)	—			—		(3,251		)	—			(231,720		)
Purchase of non-controlling interests in subsidiary	—		—		—			—		(1,320		)	—			—		(1,596		)	—			(2,916		)
Deferred tax effect resulting from the purchase of OCGH units	—		—		—			—		6,051			—			—		—			—			6,051
Equity reallocation between controlling and non-controlling interests	—		—		—			—		78,269			—			—		(78,269		)	—			—
Capital increase related to equity-based compensation	—		—		—			—		19,288			—			—		23,807			—			43,095
Distributions declared	—		—		(3,909		)	—		—			(160,883		)	—		(222,275		)	(22,833		)	(409,900		)
Net income	—		—		3,909			—		—			136,603			—		187,945			(607		)	327,850
Foreign currency translation adjustment, net of tax	—		—		—			—		—			—			321		362			—			683
Unitholders’ capital as of September 30, 2018	71,511		85,626		$	173,669		$	226,915	$	881,982		$	76,203		$	764	$	1,056,314		$	6,956		$	2,422,803

Please see accompanying notes to condensed consolidated financial statements.

7

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2019

($ in thousands, except where noted)

1. ORGANIZATION AND BASIS OF PRESENTATION

Oaktree Capital Group, LLC (“OCG”, together with its subsidiaries, “Oaktree” or the “Company”) is a leader among global investment managers specializing in alternative investments. Oaktree emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. Funds managed by Oaktree (the “Oaktree funds”) include commingled funds, separate accounts, collateralized loan obligation vehicles (“CLOs”) and publicly-traded business development companies (“BDCs”). Commingled funds include open-end and closed-end limited partnerships in which the Company makes an investment and for which it serves as the general partner. CLOs are structured finance vehicles in which the Company typically makes an investment and for which it serves as collateral manager.

Oaktree Capital Group, LLC is a Delaware limited liability company that was formed on April 13, 2007. The Company is owned by its Class A and Class B unitholders and its preferred unitholders. As of September 30, 2019, Oaktree Capital Group Holdings GP, LLC acts as the Company’s manager and is the general partner of Oaktree Capital Group Holdings, L.P. (“OCGH”), which owns 100% of the Company’s outstanding Class B units. OCGH is owned by the Company’s senior executives, current and former employees and certain other investors (collectively, the “OCGH unitholders”). The Company’s operations are conducted through a group of operating entities collectively referred to as the “Oaktree Operating Group.” OCGH has a direct economic interest in the Oaktree Operating Group and the Company has an indirect economic interest in the Oaktree Operating Group. The interests in the Oaktree Operating Group are referred to as the “Oaktree Operating Group units.” An Oaktree Operating Group unit is not a separate legal interest but represents one limited partnership interest in each of the Oaktree Operating Group entities. Class A units are entitled to one vote per unit. Class B units are entitled to ten votes per unit and do not represent an economic interest in the Company. The number of Class B units held by OCGH increases or decreases in response to corresponding changes in OCGH’s economic interest in the Oaktree Operating Group; consequently, the OCGH unitholders’ economic interest in the Oaktree Operating Group is reflected within non-controlling interests in consolidated subsidiaries in the accompanying condensed consolidated financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) such that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The condensed consolidated financial statements include the accounts of the Company, its wholly-owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. Certain of the Oaktree funds consolidated by the Company are investment companies that follow a specialized basis of accounting established by GAAP. All intercompany transactions and balances have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on February 22, 2019.

8

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Brookfield Merger

On March 13, 2019, Oaktree, Brookfield Asset Management Inc., a corporation incorporated under the laws of the Province of Ontario (“Brookfield”), Berlin Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”) and a wholly-owned subsidiary of Brookfield, Oslo Holdings LLC, a Delaware limited liability company (“SellerCo”) and a wholly-owned subsidiary of OCGH, and Oslo Holdings Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Oaktree (“Seller MergerCo”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Brookfield would acquire 61.2% of Oaktree’s business in a stock and cash transaction. Pursuant to the terms and conditions set forth in the Merger Agreement, on September 30, 2019, (i) Merger Sub merged with and into Oaktree (the “Merger”), with Oaktree continuing as the surviving entity, and (ii) immediately following the Merger, SellerCo merged with and into Seller MergerCo (the “Subsequent Merger” and together with the Merger, the “Mergers”), with Seller MergerCo continuing as the surviving entity. Following the closing of the Mergers on September 30, 2019, the remaining 38.8% of the business continues to be owned by OCGH, whose unitholders consist primarily of Oaktree’s founders and certain other members of management and current and former employees.

At the effective time of the Merger (the “Effective Time”) on September 30, 2019, each Class A Unit of Oaktree (“Class A Unit”) (other than unvested Class A Units), issued and outstanding immediately prior to the Effective Time, at the election (or deemed election) of the holder, was converted (subject to pro-rations as described below) into the right to receive either $49.00 in cash (the “Cash Consideration”) or 1.0770 Class A Limited Voting Shares of Brookfield (“Brookfield Class A Shares”), together with any dividends or distributions thereon payable in accordance with the Merger Agreement (the “Share Consideration” and together with the Cash Consideration, the “Merger Consideration”), without interest. Oaktree Class A unitholders’ and OCGH unitholders’ elections were made on a per unit basis and subject to pro-ration such that the total consideration paid by Brookfield was 50% cash and 50% Brookfield Class A Shares. At the effective time of the Subsequent Merger (the “Subsequent Effective Time”) on September 30, 2019, each unit of equity interest in SellerCo (a “SellerCo Unit”), at the election (or deemed election) of the holder, was converted into the right to receive either Cash Consideration or Share Consideration. Based on the elections made (or deemed to have been made), the Share Consideration was oversubscribed and former holders of Class A Units and participating OCGH units who elected (or were deemed to have elected) to receive Share Consideration with respect to all or a portion of their units instead received approximately 0.6173 Limited Voting Shares of Brookfield and $20.92 in cash with respect to each such unit.

The aggregate amount of cash payable to Oaktree Class A unitholders and OCGH unitholders in the transaction was approximately $2.4 billion and approximately 52.8 million Brookfield Class A shares were issued in the Mergers. In connection with the closing of the Merger, Oaktree Class A units were delisted from the New York Stock Exchange.

At the Effective Time, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted Class A Unit”) and will thereafter be subject to the terms and conditions of the OCGH limited partnership agreement. The Converted Class A Units will (i) be subject to the same vesting terms that were applicable to such units prior to the Effective Time, (ii) be entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. No unvested Class A Units or Converted Class A Units vested in connection with the Mergers. Please see note 15 for more information.

9

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Policies of the Company

Consolidation

The Company consolidates entities in which it has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. A limited partnership or similar entity is a variable interest entity (“VIE”) if the unaffiliated limited partners do not have substantive kick-out or participating rights. Most of the Oaktree funds are VIEs because they have not granted unaffiliated limited partners substantive kick-out or participating rights. The Company consolidates those VIEs in which it is the primary beneficiary. An entity is deemed to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (e.g., management and performance-based fees), would give it a controlling financial interest. A decision maker’s fee arrangement is not considered a variable interest if (a) it is compensation for services provided, commensurate with the level of effort required to provide those services, and part of a compensation arrangement that includes only terms, conditions or amounts that are customarily present in arrangements for similar services negotiated at arm’s length (“at-market”), and (b) the decision maker does not hold any other variable interests that absorb more than an insignificant amount of the potential VIE’s expected residual returns.

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective Oaktree funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. The Company does not consolidate most of the Oaktree funds because it is not the primary beneficiary of those funds due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in those funds that are considered to be more than insignificant. Please see note 4 for more information regarding both consolidated and unconsolidated VIEs. For entities that are not VIEs, consolidation is evaluated through a majority voting interest model.

“Consolidated funds” refers to Oaktree-managed funds and CLOs that the Company is required to consolidate. When funds or CLOs are consolidated, the Company reflects the assets, liabilities, revenues, expenses and cash flows of the funds or CLOs on a gross basis, and the majority of the economic interests in those funds or CLOs, which are held by third-party investors, are reflected as non-controlling interests in consolidated funds or debt obligations of CLOs in the condensed consolidated financial statements. All of the revenues earned by the Company as investment manager of the consolidated funds are eliminated in consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the consolidation of a fund does not impact net income or loss attributable to the Company.

Certain entities in which the Company has the ability to exert significant influence, including unconsolidated Oaktree funds for which the Company acts as general partner, are accounted for under the equity method of accounting.

Non-controlling Redeemable Interests in Consolidated Funds

The Company records non-controlling interests to reflect the economic interests of the unaffiliated limited partners. These interests are presented as non-controlling redeemable interests in consolidated funds within the condensed consolidated statements of financial condition, outside of the permanent capital section. Limited

10

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

partners in open-end and evergreen funds generally have the right to withdraw their capital, subject to the terms of the respective limited partnership agreements, over periods ranging from one month to three years. While limited partners in consolidated closed-end funds generally have not been granted redemption rights, these limited partners do have withdrawal or redemption rights in certain limited circumstances that are beyond the control of the Company, such as instances in which retaining the limited partnership interest could cause the limited partner to violate a law, regulation or rule.

The allocation of net income or loss to non-controlling redeemable interests in consolidated funds is based on the relative ownership interests of the unaffiliated limited partners after the consideration of contractual arrangements that govern allocations of income or loss. At the consolidated level, potential incentives are allocated to non-controlling redeemable interests in consolidated funds until such incentives become allocable to the Company under the substantive contractual terms of the limited partnership agreements of the funds.

Non-controlling Interests in Consolidated Funds

Non-controlling interests in consolidated funds represent the equity interests held by third-party investors in CLOs that had not yet priced as of the respective period end. All non-controlling interests in those CLOs are attributed a share of income or loss arising from the respective CLO based on the relative ownership interests of third-party investors after consideration of contractual arrangements that govern allocations of income or loss.

Non-controlling Interests in Consolidated Subsidiaries

Non-controlling interests in consolidated subsidiaries reflect the portion of unitholders’ capital attributable to OCGH unitholders (“OCGH non-controlling interest”) and third parties. All non-controlling interests in consolidated subsidiaries are attributed a share of income or loss in the respective consolidated subsidiary based on the relative economic interests of the OCGH unitholders or third parties after consideration of contractual arrangements that govern allocations of income or loss. Please see note 13 for more information.

Leases

The Company determines whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. Operating leases are recorded in the statements of financial condition as separate line items: operating lease right-of-use assets (“ROU assets”) and operating lease liabilities. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities and lease incentives. The Company’s lease arrangements generally do not provide an implicit rate. As a result, in such situations the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company may also include options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement of its ROU assets and liabilities. Lease expense for operating leases is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. Please see note 11 for more information.

Revenue Recognition

The Company earns management fees and incentive income from the investment advisory services it provides to its customers. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company typically enters into contracts with investment funds to provide investment management and administrative services. These services are generally capable of being distinct and each is accounted for as separate performance obligations comprised of distinct service periods because the services are performed over time. The Company determined that for accounting purposes the investment funds are generally considered to be the customers with respect to commingled funds, while the individual investors are the customers with respect to separate account and fund-of-one vehicles. The Company receives management fees and/or incentive income with

11

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

respect to its investment management services, and it is reimbursed by the funds for expenses incurred or paid on behalf of the funds with respect to its investment advisory services and its administrative services. The Company evaluates whether it is the principal (i.e., report as management fees on a gross basis) or agent (i.e., report as management fees on a net basis) with respect to each performance obligation and associated reimbursement arrangements. The Company has elected to apply the variable consideration exemption for its fee arrangements with its customers. Please see note 3 for more information on revenues.

Management Fees

Management fees are recognized over the period in which the investment management services are performed because customers simultaneously consume and receive benefits that are satisfied over time. The contractual terms of management fees generally vary by fund structure. For most closed-end funds, the management fee rate is applied against committed capital during the fund’s investment period and the lesser of total funded capital or cost basis of assets in the liquidation period. Certain closed-end funds pay management fees during the investment period based on drawn capital or cost basis. Additionally, for closed-end funds that pay management fees based on committed capital, the Company may elect to delay the start of the fund’s investment period and thus its full management fees, in which case it earns management fees based on drawn capital, and in certain cases outstanding borrowings under a fund-level credit facility made in lieu of drawing capital, until the Company elects to start the fund’s investment period. The Company’s right to receive management fees typically ends after 10 or 11 years from either the initial closing date or the start of the investment period, even if assets remain in the fund. In the case of CLOs, the management fee is based on the aggregate par value of collateral assets and principal cash, as defined in the applicable CLO indentures, and a portion of the management fees is dependent on the sufficiency of the particular vehicle’s cash flow. For open-end and evergreen funds, the management fee is generally based on the NAV of the fund. For the publicly-traded BDCs, the management fee is based on gross assets (including assets acquired with leverage), net of cash. In the case of certain open-end fund accounts, the Company has the potential to earn performance-based fees, typically in reference to a relevant benchmark index or hurdle rate, which are classified as management fees. The Company also earns quarterly incentive fees on the investment income from certain evergreen funds, such as the publicly-traded BDCs and other fund accounts, which are generally recurring in nature and reflected as management fees.

The ultimate amount of management fees that will be earned over the life of the contract is subject to a large number and broad range of possible outcomes due to market volatility and other factors outside of the Company’s control. As a result, the amount of revenue earned in any given period is generally determined at the end of each reporting period and relates to services performed during that period.

Incentive Income

Incentive income generally represents 20% of each closed-end fund’s profits, subject to the return of contributed capital and a preferred return of typically 8% per annum, and up to 20% of certain evergreen fund’s annual profits, subject to high-water marks or hurdle rates. Incentive income is recognized when it is probable that a significant reversal will not occur. Revenue recognition is typically met (a) for closed-end funds, after all contributed capital and the preferred return on that capital have been distributed to the fund’s investors, and (b) for certain evergreen funds, at the conclusion of each annual measurement period. Potential incentive income is highly susceptible to market volatility, the judgment and actions of third parties, and other factors outside of the Company’s control. The Company’s experience has demonstrated little predictive value in the amount of potential incentive income ultimately earned due to the highly uncertain nature of returns inherent in the markets and contingencies associated with many realization events. As a result, the amount of incentive income recognized in any given period is generally determined after giving consideration to a number of factors, including whether the fund is in its investment or liquidation period, and the nature and level of risk associated with changes in fair value of the remaining assets in the fund. In general, it would be unlikely that any amount of potential incentive income would be recognized until (a) the uncertainty is resolved or (b) the fund is near final liquidation, assets are under contract for sale or are of low risk of significant fluctuation in fair value, and the assets are significantly in excess of the threshold at which incentive income would be earned.

Incentives received by Oaktree before the revenue recognition criteria have been met are deferred and recorded as a deferred incentive income liability within accounts payable, accrued expenses and other liabilities in

12

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

the consolidated statements of financial condition. The Company may receive tax distributions related to taxable income allocated by funds, which are treated as an advance of incentive income and subject to the same recognition criteria. Tax distributions are contractually not subject to clawback.

Fair Value of Financial Instruments

GAAP establishes a hierarchical disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, such as the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I – Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement. The types of investments in Level I include exchange-traded equities, debt and derivatives with quoted prices.

• Level II – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are directly or indirectly observable. Level II inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. The types of investments in Level II generally include corporate bonds and loans, government and agency securities, less liquid and restricted equity investments, over-the-counter traded derivatives, debt obligations of consolidated CLOs, and other investments where the fair value is based on observable inputs.

• Level III – Valuations for which one or more significant inputs are unobservable. These inputs reflect the Company’s assessment of the assumptions that market participants use to value the investment based on the best available information. Level III inputs include prices of quoted securities in markets for which there are few transactions, less public information exists or prices vary among brokered market makers. The types of investments in Level III include non-publicly traded equity, debt, real estate and derivatives.

In some instances, the inputs used to value an instrument may fall into multiple levels of the fair-value hierarchy. In such instances, the instrument’s level within the fair-value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair-value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. Transfers of assets into or out of each fair value hierarchy level as a result of changes in the observability of the inputs used in measuring fair value are accounted for as of the beginning of the reporting period. Transfers resulting from a specific event, such as a reorganization or restructuring, are accounted for as of the date of the event that caused the transfer.

In the absence of observable market prices, the Company values Level III investments using valuation methodologies applied on a consistent basis. The quarterly valuation process for Level III investments begins with each portfolio company, property or security being valued by the investment and/or valuation teams. With the exception of open-end funds, all unquoted Level III investment values are reviewed and approved by (i) the Company’s valuation officer, who is independent of the investment teams, (ii) a designated investment professional of each strategy and (iii) for a substantial majority of unquoted Level III holdings as measured by market value, a valuation committee of the respective strategy.  For open-end funds, unquoted Level III investment values are reviewed and approved by the Company’s valuation officer. For certain investments, the valuation process also includes a review by independent valuation parties, at least annually, to determine whether the fair values determined by management are reasonable. Results of the valuation process are evaluated each quarter, including an assessment of whether the underlying calculations should be adjusted or recalibrated. In connection with this process, the Company periodically evaluates changes in fair-value measurements for reasonableness, considering items such as industry trends, general economic and market conditions, and factors specific to the investment.

13

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Certain assets are valued using prices obtained from pricing vendors or brokers. The Company seeks to obtain prices from at least two pricing vendors for the subject or similar securities. In cases where vendor pricing is not reflective of fair value, a secondary vendor is unavailable, or no vendor pricing is available, a comparison value made up of quotes for the subject or similar securities received from broker dealers may be used. These investments may be classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions. The Company evaluates the prices obtained from brokers or pricing vendors based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. The Company also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, the Company performs due diligence procedures surrounding pricing vendors to understand their methodology and controls to support their use in the valuation process.

Fair Value Option

The Company has elected the fair value option for certain corporate investments that otherwise would not have reflected unrealized gains and losses in current-period earnings. Such election is irrevocable and is applied on an investment-by-investment basis at initial recognition. Unrealized gains and losses resulting from changes in fair value are reflected as a component of investment income in the condensed consolidated statements of operations. The Company’s accounting for these investments is similar to its accounting for investments held by the consolidated funds at fair value and the valuation methods are consistent with those used to determine the fair value of the consolidated funds’ investments.

The Company has elected the fair value option for the financial assets and financial liabilities of its consolidated CLOs. The assets and liabilities of CLOs are primarily reflected within the investments, at fair value and within the debt obligations of CLOs line items in the condensed consolidated statements of financial condition. The Company’s accounting for CLO assets is similar to its accounting for its funds with respect to both carrying investments held by CLOs at fair value and the valuation methods used to determine the fair value of those investments. The fair value of CLO liabilities are measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Realized gains or losses and changes in the fair value of CLO assets, respectively, are included in net realized gain on consolidated funds’ investments and net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Interest income of CLOs is included in interest and dividend income, and interest expense and other expenses, respectively, are included in interest expense and consolidated fund expenses in the condensed consolidated statements of operations. Changes in the fair value of a CLO’s financial liabilities in accordance with the CLO measurement guidance are included in net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Please see notes 6 and 10 for more information.

Accounting Policies of Consolidated Funds

Investments, at Fair Value

The consolidated funds include investment limited partnerships and CLOs that reflect their investments, including majority-owned and controlled investments, at fair value. The Company has retained the specialized investment company accounting guidance under GAAP for investment limited partnerships with respect to consolidated investments and has elected the fair value option for the financial assets of CLOs. Thus, the consolidated investments are reflected in the condensed consolidated statements of financial condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

Non-publicly traded debt and equity securities and other securities or instruments for which reliable market quotations are not available are valued by management using valuation methodologies applied on a consistent basis. These securities may initially be valued at the acquisition price as the best indicator of fair value. The

14

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Company reviews the significant unobservable inputs, valuations of comparable investments and other similar transactions for investments valued at acquisition price to determine whether another valuation methodology should be utilized. Subsequent valuations will depend on the facts and circumstances known as of the valuation date and the application of valuation methodologies as further described below under “—Non-publicly Traded Equity and Real Estate Investments.” The fair value may also be based on a pending transaction expected to close after the valuation date.

Exchange-traded Investments

Securities listed on one or more national securities exchanges are valued at their last reported sales price on the date of valuation. If no sale occurred on the valuation date, the security is valued at the mean of the last “bid” and “ask” prices on the valuation date. Securities that are not readily marketable due to legal restrictions that may limit or restrict transferability are generally valued at a discount from quoted market prices. The discount would reflect the amount market participants would require due to the risk relating to the inability to access a public market for the security for the specified period and would vary depending on the nature and duration of the restriction and the perceived risk and volatility of the underlying securities. Securities with longer duration restrictions or higher volatility are generally valued at a higher discount. Such discounts are generally estimated based on put option models or an analysis of market studies. Instances where the Company has applied discounts to quoted prices of restricted listed securities have been infrequent. The impact of such discounts is not material to the Company’s condensed consolidated statements of financial condition and results of operations for all periods presented.

Credit-oriented Investments (including Real Estate Loan Portfolios)

Investments in corporate and government debt which are not listed or admitted to trading on any securities exchange are valued at the mean of the last bid and ask prices on the valuation date based on quotations supplied by recognized quotation services or by reputable broker-dealers.

The market-yield approach is considered in the valuation of non-publicly traded debt securities, utilizing expected future cash flows and discounted using estimated current market rates. Discounted cash-flow calculations may be adjusted to reflect current market conditions and/or the perceived credit risk of the borrower. Consideration is also given to a borrower’s ability to meet principal and interest obligations; this may include an evaluation of collateral and/or the underlying value of the borrower utilizing techniques described below under “—Non-publicly Traded Equity and Real Estate Investments.”

Non-publicly Traded Equity and Real Estate Investments

The fair value of equity and real estate investments is determined using a cost, market or income approach. The cost approach is based on the current cost of reproducing a real estate investment less deterioration and functional and economic obsolescence. The market approach utilizes valuations of comparable public companies and transactions, and generally seeks to establish the enterprise value of the portfolio company or investment property using a market-multiple methodology. This approach takes into account the financial measure (such as EBITDA, adjusted EBITDA, free cash flow, net operating income, net income, book value or net asset value) believed to be most relevant for the given company or investment property. Consideration also may be given to factors such as acquisition price of the security or investment property, historical and projected operational and financial results for the portfolio company, the strengths and weaknesses of the portfolio company or investment property relative to its comparable companies or properties, industry trends, general economic and market conditions, and others deemed relevant. The income approach is typically a discounted cash-flow method that incorporates expected timing and level of cash flows. It incorporates assumptions in determining growth rates, income and expense projections, discount and capitalization rates, capital structure, terminal values, and other factors. The applicability and weight assigned to market and income approaches are determined based on the availability of reliable projections and comparable companies and transactions.

The valuation of securities may be impacted by expectations of investors’ receptiveness to a public offering of the securities, the size of the holding of the securities and any associated control, information with respect to transactions or offers for the securities (including the transaction pursuant to which the investment was made and the elapsed time from the date of the investment to the valuation date), and applicable restrictions on the transferability of the securities.

15

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

These valuation methodologies involve a significant degree of management judgment. Accordingly, valuations by the Company do not necessarily represent the amounts that eventually may be realized from sales or other dispositions of investments. Fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the condensed consolidated financial statements.

Recent Accounting Developments

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance that changes the fair value measurement disclosure requirements. The amendments remove or modify certain disclosures, while adding others. The Company adopted the guidance in the first quarter of 2019. The adoption did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairments by eliminating step 2 of the goodwill impairment test. This step currently requires an entity to perform a hypothetical purchase price allocation to derive the implied fair value of goodwill. Under the new guidance, an impairment loss is recognized if the carrying value of a reporting unit exceeds its fair value. The impairment loss would equal the amount of that excess, limited to the total amount of goodwill. All other goodwill impairment guidance remains largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The guidance is effective for the Company in the first quarter of 2020 on a prospective basis, with early adoption permitted. The Company expects that adoption of this guidance will not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued guidance that requires a lessee to recognize a lease asset and a lease liability for most of its operating leases. Under legacy GAAP, operating leases were not recognized by a lessee in its statements of financial position. In general, the asset and liability each equal the present value of lease payments. The guidance does not significantly change the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee. The Company adopted the guidance in the first quarter of 2019 under the simplified transition method, which allows companies to forgo the comparative reporting requirements initially required under the modified retrospective transition approach and apply the new guidance prospectively. The adoption did not have an impact on the consolidated statements of operations because all of the Company’s leases are currently classified as operating leases, which under the guidance will continue to be recognized as expense on a straight-line basis. The adoption, however, resulted in a significant gross-up in total assets and total liabilities on the consolidated statements of financial position. The amount of the liability represents the aggregate discounted amount of the Company’s minimum lease obligations as of the reporting date. The difference between the asset and liability amounts represents deferred rent liabilities and lease incentives as of the reporting date that are netted against the asset amount.

16

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

3. REVENUES

Revenues disaggregated by fund structure is set forth below. Revenues are affected by economic factors related to the asset class composition of the holdings and the contractual terms such as the basis for calculating the management fees and investors’ ability to redeem.

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Management Fees
Closed-end	$	120,462	$	112,415	$	345,091	$	353,225
Open-end	29,990		34,942		90,480		109,051
Evergreen	29,309		27,838		89,227		76,430
Total	$	179,761	$	175,195	$	524,798	$	538,706
Incentive Income
Closed-end	$	25,335	$	65,661	$	257,778	$	249,447
Evergreen	94		371		2,512		3,678
Total	$	25,429	$	66,032	$	260,290	$	253,125

Contract Balances

The Company receives management fees monthly or quarterly in accordance with its contracts with customers. Incentive income is received when the fund makes a distribution. Contract assets relate to the Company’s conditional right to receive payment for its performance completed under the contract. Receivables are recorded when the right to consideration becomes unconditional (i.e., only requires the passage of time). Contract liabilities (i.e., deferred revenues) relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenues when the Company provides investment management services.

The table below sets forth contract balances for the periods indicated:

	As of
	September 30, 2019			December 31, 2018
Receivables (1)	$	76,106		$	74,795
Contract assets (1)	—			288,176
Contract liabilities (2)	(26,383		)	(26,549		)

(1) The changes in the balances primarily related to accruals, net of payments received.

(2) Revenue recognized in the three months and nine months ended September 30, 2019 from amounts included in the contract liability balance were $5.4 million and $17.1 million.

17

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

4. VARIABLE INTEREST ENTITIES

The Company consolidates VIEs for which it is the primary beneficiary. VIEs include funds managed by Oaktree and CLOs for which Oaktree acts as collateral manager. The purpose of these VIEs is to provide investment opportunities for investors in exchange for management fees and, in certain cases, performance-based fees. While the investment strategies of the funds and CLOs differ by product, in general the fundamental risks of the funds and CLOs have similar characteristics, including loss of invested capital and reduction or absence of management and performance-based fees. As general partner or collateral manager, respectively, Oaktree generally considers itself the sponsor of the applicable fund or CLO. The Company does not provide performance guarantees and, other than capital commitments, has no financial obligation to provide funding to VIEs.

Consolidated VIEs

As of September 30, 2019, the Company consolidated 23 VIEs for which it was the primary beneficiary, including 10 funds managed by Oaktree, 12 CLOs for which Oaktree serves as collateral manager, and Oaktree AIF Holdings, Inc., which was formed to hold certain assets for regulatory and other purposes. Two of the consolidated funds, Oaktree Enhanced Income Retention Holdings III, LLC and Oaktree CLO RR Holder, LLC, were formed to satisfy risk retention requirements under Section 15G of the Exchange Act. As of December 31, 2018, the Company consolidated 23 VIEs.

As of September 30, 2019, the assets and liabilities of the 22 consolidated VIEs representing funds and CLOs amounted to $8.2 billion and $6.9 billion, respectively. The assets of these consolidated VIEs primarily consisted of investments in debt and equity securities, while their liabilities primarily represented debt obligations issued by CLOs. The assets of these VIEs may be used only to settle obligations of the same VIE. In addition, there is no recourse to the Company for the VIEs’ liabilities. In exchange for managing either the funds’ or CLOs’ collateral, the Company typically earns management fees and may earn performance fees, all of which are eliminated in consolidation. As of September 30, 2019, the Company’s investments in consolidated VIEs had a carrying value of $606.5 million, which represented its maximum risk of loss as of that date. The Company’s investments in CLOs are generally subordinated to other interests in the CLOs and entitle the Company to receive a pro-rata portion of the residual cash flows, if any, from the CLOs. Please see note 10 for more information on CLO debt obligations.

Unconsolidated VIEs

The Company holds variable interests in certain VIEs in the form of direct equity interests that are not consolidated because it is not the primary beneficiary, inasmuch as its fee arrangements are considered at-market and it does not hold interests in those entities that are considered more than insignificant.

The carrying value of the Company’s investments in VIEs that were not consolidated are shown below.

	Carrying Value as of
	September 30, 2019		December 31, 2018
Corporate investments	$	1,077,595	$	1,093,294
Due from affiliates	89,682		384,225
Maximum exposure to loss	$	1,167,277	$	1,477,519

18

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

5. INVESTMENTS

Corporate Investments

Corporate investments consist of investments in funds and companies in which the Company does not have a controlling financial interest. Investments for which the Company is deemed to exert significant influence are accounted for under the equity method of accounting and reflect Oaktree’s ownership interest in each fund or company. In the case of investments for which the Company is not deemed to exert significant influence or control, the fair value option of accounting has been elected. Investment income represents the Company’s pro-rata share of income or loss from these funds or companies, or the change in fair value of the investment, as applicable. Oaktree’s general partnership interests are substantially illiquid. While investments in funds reflect each respective fund’s holdings at fair value, equity-method investments in DoubleLine Capital LP and its affiliates (collectively, “DoubleLine”) and other companies are not adjusted to reflect the fair value of the underlying company. The fair value of the underlying investments in Oaktree funds is based on the Company’s assessment, which takes into account expected cash flows, earnings multiples and/or comparisons to similar market transactions, among other factors. Valuation adjustments reflecting consideration of credit quality, concentration risk, sales restrictions and other liquidity factors are integral to valuing these instruments.

Corporate investments consisted of the following:

	As of
Corporate Investments	September 30, 2019		December 31, 2018
Equity-method investments:
Funds	$	1,063,668	$	1,089,068
Companies	27,103		45,797
Other investments, at fair value	50,461		74,899
Total corporate investments	$	1,141,232	$	1,209,764

The components of investment income are set forth below:

	Three months ended September 30,					Nine months ended September 30,
Investment Income (Loss)	2019			2018		2019		2018
Equity-method investments:
Funds	$	(12,106	)	$	39,041	$	45,211	$	92,105
Companies	20,108			18,870		56,919		54,438
Other investments, at fair value	18,817			285		19,674		3,139
Total investment income	$	26,819		$	58,196	$	121,804	$	149,682

Equity-method Investments

The Company’s equity-method investments include its investments in Oaktree funds for which it serves as general partner and other third-party funds and companies that are not consolidated but for which the Company is deemed to exert significant influence. The Company’s share of income or loss generated by these investments is recorded within investment income in the condensed consolidated statements of operations. The Company’s equity-method investments in Oaktree funds principally reflect the Company’s general partner interests in those funds, which typically does not exceed 2.5% in each fund. The Oaktree funds are investment companies that follow a specialized basis of accounting established by GAAP. Equity-method investments in companies include the Company’s one-fifth equity stake in DoubleLine.

19

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Each reporting period, the Company evaluates each of its equity-method investments to determine if any are considered significant, as defined by the SEC. For the nine months ended September 30, 2019, no individual equity-method investment met the significance criteria.

Summarized financial information of the Company’s equity-method investments is set forth below.

	Three months ended September 30,						Nine months ended September 30,
Statements of Operations	2019			2018			2019			2018
Revenues / investment income	$	353,289		$	489,240		$	1,584,552		$	1,423,993
Interest expense	(54,329		)	(70,803		)	(185,227		)	(203,418		)
Other expenses	(157,878		)	(210,752		)	(639,180		)	(628,109		)
Net realized and unrealized gain (loss) on investments	(204,820		)	832,725			916,097			2,178,524
Net income (loss)	$	(63,738	)	$	1,040,410		$	1,676,242		$	2,770,990

Other Investments, at Fair Value

Other investments, at fair value primarily consist of (a) investments in certain Oaktree and non-Oaktree funds for which the fair value option of accounting has been elected and (b) derivatives utilized to hedge the Company’s exposure to investment income earned from its funds.

The following table summarizes net gains (losses) attributable to the Company’s other investments:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Realized gain (loss)	$	1,345	$	104	$	7,656	$	1,072
Net change in unrealized gain (loss)	17,472		181		12,018		2,067
Total gain (loss)	$	18,817	$	285	$	19,674	$	3,139

20

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Investments of Consolidated Funds

Investments, at Fair Value

Investments held and securities sold short by the consolidated funds are summarized below:

	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
United States:
Debt securities:
Communication services	$	753,331	$	543,948	9.3	%	8.4	%
Consumer discretionary	623,147		506,551		7.5		7.8
Consumer staples	100,798		112,197		1.2		1.7
Energy	317,161		204,568		3.8		3.1
Financials	431,216		332,240		5.2		5.1
Health care	672,716		537,592		8.1		8.2
Industrials	735,539		443,406		8.9		6.8
Information technology	610,557		536,000		7.4		8.2
Materials	368,129		289,499		4.5		4.4
Real estate	198,649		217,633		2.4		3.3
Utilities	255,356		137,031		3.1		2.1
Total debt securities (cost: $5,124,603 and $4,019,823 as of September 30, 2019 and December 31, 2018, respectively)	5,066,599		3,860,665		61.4		59.1
Equity securities:
Communication services	24		—		0.0		—
Consumer discretionary	1,950		1,915		0.0		0.1
Energy	169		131		0.0		0.0
Financials	528		837		0.0		0.0
Health care	1,461		1,348		0.0		0.0
Industrials	93		88		0.0		0.0
Utilities	130,354		1,107		1.6		0.0
Total equity securities (cost: $138,533 and $6,117 as of September 30, 2019 and December 31, 2018, respectively)	134,579		5,426		1.6		0.1
Real estate:
Real estate	210,942		—		2.6		—
Total real estate securities (cost: $213,228 and $0 as of September 30, 2019 and December 31, 2018, respectively)	210,942		—		2.6		—

21

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Europe:
Debt securities:
Communication services	$	503,543	$	530,337	6.1	%	8.1	%
Consumer discretionary	591,975		545,324		7.2		8.3
Consumer staples	165,928		160,406		2.0		2.5
Energy	18,040		15,260		0.2		0.2
Financials	79,423		48,545		1.0		0.7
Health care	514,946		418,516		6.2		6.4
Industrials	267,975		246,640		3.2		3.8
Information technology	168,473		194,988		2.0		3.0
Materials	273,045		221,660		3.3		3.4
Real estate	27,735		30,045		0.3		0.5
Utilities	8,712		1,559		0.1		0.0
Total debt securities (cost: $2,618,439 and $2,477,821 as of September 30, 2019 and December 31, 2018, respectively)	2,619,795		2,413,280		31.6		36.9
Equity securities:
Consumer discretionary	38,498		—		0.5		—
Consumer staples	—		38		—		0.0
Health care	696		948		0.0		0.1
Real estate	25,783		—		0.3		—
Total equity securities (cost: $58,869 and $320 as of September 30, 2019 and December 31, 2018, respectively)	64,977		986		0.8		0.1
Asia and other:
Debt securities:
Communication services	14,653		12,069		0.2		0.2
Consumer discretionary	39,453		36,822		0.5		0.6
Consumer staples	8,663		11,867		0.1		0.2
Energy	14,782		20,594		0.2		0.3
Financials	10,359		13,995		0.1		0.2
Government	1,010		12,155		0.0		0.2
Health care	6,465		9,633		0.1		0.1
Industrials	52,434		40,468		0.6		0.7
Information technology	—		1,887		—		0.0
Materials	10,628		15,516		0.1		0.2
Real estate	1,475		38,592		0.0		0.6
Utilities	8,166		14,870		0.1		0.2
Total debt securities (cost: $169,761 and $233,603 as of September 30, 2019 and December 31, 2018, respectively)	168,088		228,468		2.0		3.5

22

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

	Fair Value as of					Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018			September 30, 2019		December 31, 2018
Asia and other:
Equity securities:
Consumer discretionary	$	—	$	874		—	%	0.0	%
Consumer staples	1		997			0.0		0.0
Energy	323		382			0.0		0.0
Financials	—		2,935			—		0.0
Industrials	—		11,265			—		0.2
Information technology	—		1,725			—		0.0
Materials	1,495		4,382			0.0		0.1
Total equity securities (cost: $3,880 and $22,977 as of September 30, 2019 and December 31, 2018, respectively)	1,819		22,560			0.0		0.3
Total debt securities	7,854,482		6,502,413			95.0		99.5
Total equity securities	201,375		28,972			2.4		0.5
Total real estate	210,942		—			2.6		—
Total investments, at fair value	$	8,266,799	$	6,531,385		100.0	%	100.0	%
Securities Sold Short
Equity securities (proceeds: $0 and $2,644 as of September 30, 2019 and December 31, 2018, respectively)	$	—	$	(2,609	)

As of September 30, 2019 and December 31, 2018, no single issuer or investment had a fair value that exceeded 5% of Oaktree’s total consolidated net assets.

23

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Net Gains (Losses) From Investment Activities of Consolidated Funds

Net gains (losses) from investment activities in the condensed consolidated statements of operations consist primarily of realized and unrealized gains and losses on the consolidated funds’ investments (including foreign-exchange gains and losses attributable to foreign-denominated investments and related activities) and other financial instruments. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments. Upon disposition of an investment, unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.

The following table summarizes net gains (losses) from investment activities:

	Three months ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments
Investments and other financial instruments	$	636		$	(14,910	)	$	(11,493	)	$	51,969
CLO liabilities (1)	—			(25,778		)	—			(42,458		)
Foreign-currency forward contracts (2)	(4,300		)	(276		)	1,496			1,193
Options and futures (2)	—			—			185			(152		)
Total	$	(3,664	)	$	(40,964	)	$	(9,812	)	$	10,552

	Nine Months Ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments
Investments and other financial instruments	$	(7,076	)	$	137,322		$	(14,027	)	$	(25,119	)
CLO liabilities (1)	—			(119,767		)	—			(9,601		)
Foreign-currency forward contracts (2)	(1,960		)	412			428			17
Total-return and interest-rate swaps (2)	—			—			858			29
Options and futures (2)	—			—			232			(265		)
Total	$	(9,036	)	$	17,967		$	(12,509	)	$	(34,939	)

(1) Represents the net change in the fair value of CLO liabilities based on the more observable fair value of CLO assets, as measured under the CLO measurement guidance. Please see note 2 for more information.

(2) Please see note 7 for additional information.

24

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

6. FAIR VALUE

Fair Value of Financial Assets and Liabilities

The short-term nature of cash and cash-equivalents, receivables and accounts payable causes each of their carrying values to approximate fair value. The fair value of short-term investments included in cash and cash-equivalents is a Level I valuation. The Company’s other financial assets and financial liabilities by fair-value hierarchy level are set forth below. Please see notes 10 and 18 for the fair value of the Company’s outstanding debt obligations and amounts due from/to affiliates, respectively.

	As of September 30, 2019											As of December 31, 2018
	Level I		Level II			Level III			Total			Level I		Level II			Level III			Total
Assets
U.S. Treasury and other securities (1)	$	24,025	$	—		$	—		$	24,025		$	546,531	$	—		$	—		$	546,531
Corporate investments	—		4,663			45,636			50,299			—		29,476			45,426			74,902
Foreign-currency forward contracts (2)	—		3,856			—			3,856			—		1,654			—			1,654
Cross-currency swap (2)	—		13,074			—			13,074			—		2,384			—			2,384
Total assets	$	24,025	$	21,593		$	45,636		$	91,254		$	546,531	$	33,514		$	45,426		$	625,471
Liabilities
Contingent liability (3)	$	—	$	—		$	(4,518	)	$	(4,518	)	$	—	$	—		$	(6,657	)	$	(6,657	)
Foreign-currency forward contracts (4)	—		(2,071		)	—			(2,071		)	—		(2,318		)	—			(2,318		)
Total liabilities	$	—	$	(2,071	)	$	(4,518	)	$	(6,589	)	$	—	$	(2,318	)	$	(6,657	)	$	(8,975	)

(1) Carrying value approximates fair value due to the short-term nature.

(2) Amounts are included in other assets in the condensed consolidated statements of financial condition, except for $162 as of September 30, 2019 which is included within corporate investments in the condensed consolidated statements of financial condition.

(3) Amounts are included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition.

(4) Amounts are included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition, except for $3 as of December 31, 2018, which is included within corporate investments in the condensed consolidated statements of financial condition.

25

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

The table below sets forth a summary of changes in the fair value of Level III financial instruments:

	Three months ended September 30,
	2019					2018
	Corporate Investments		Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	42,234	$	(6,737	)	$	31,084		$	(9,129	)
Contributions or additions	883		—			10,258			—
Distributions	—		—			(290		)	—
Net gain (loss) included in earnings	2,519		2,219			(453		)	2,538
Ending balance	$	45,636	$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	2,519	$	2,219		$	(557	)	$	2,538

	Nine months ended September 30,
	2019						2018
	Corporate Investments			Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	45,426		$	(6,657	)	$	50,902		$	(18,778	)
Contributions or additions	937			—			16,668			—
Distributions	(7,181		)	—			(31,145		)	—
Net gain (loss) included in earnings	6,454			2,139			4,174			12,187
Ending balance	$	45,636		$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	6,454		$	2,139		$	3,102		$	12,187

The table below sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the Company’s Level III financial instruments:

	Fair Value as of							Significant Unobservable Input
Financial Instrument	September 30, 2019			December 31, 2018			Valuation Technique		Range	Weighted Average
Corporate investment – Limited partnership interests	$	45,636		$	45,426		Market approach (value of underlying assets)	Not applicable	Not applicable	Not applicable
Contingent liability	(4,518		)	(6,657		)	Discounted cash flow	Assumed % of total potential contingent payments	0% – 100%	24%

26

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Fair Value of Financial Instruments Held By Consolidated Funds

The short-term nature of cash and cash-equivalents held at the consolidated funds causes their carrying value to approximate fair value. The fair value of cash-equivalents is a Level I valuation. Derivatives may relate to a mix of Level I, II or III investments, and therefore their fair-value hierarchy level may not correspond to the fair-value hierarchy level of the economically hedged investment. The table below summarizes the investments and other financial instruments of the consolidated funds by fair-value hierarchy level:

	As of September 30, 2019										As of December 31, 2018
	Level I		Level II			Level III		Total			Level I			Level II			Level III		Total
Assets
Investments:
Corporate debt – bank debt	$	—	$	6,758,814		$	156,110	$	6,914,924		$	—		$	5,216,923		$	136,055	$	5,352,978
Corporate debt – all other	—		896,826			42,732		939,558			634			963,423			185,378		1,149,435
Equities – common stock	3,022		—			196,224		199,246			24,483			—			3,063		27,546
Equities – preferred stock			—			2,129		2,129			—			—			1,426		1,426
Real estate	—		49,098			161,844		210,942			—			—			—		—
Total investments	3,022		7,704,738			559,039		8,266,799			25,117			6,180,346			325,922		6,531,385
Derivatives:
Foreign-currency forward contracts	116		2,331			—		2,447			—			2,275			—		2,275
Options and futures	—		—			—		—			189			—			—		189
Total derivatives (1)	116		2,331			—		2,447			189			2,275			—		2,464
Total assets	$	3,138	$	7,707,069		$	559,039	$	8,269,246		$	25,306		$	6,182,621		$	325,922	$	6,533,849
Liabilities
CLO debt obligations:
Senior secured notes	$	—	$	(5,354,638	)	$	—	$	(5,354,638	)	$	—		$	(3,976,602	)	$	—	$	(3,976,602	)
Subordinated notes	—		(198,506		)	—		(198,506		)	—			(151,392		)	—		(151,392		)
Total CLO debt obligations (2)	—		(5,553,144		)	—		(5,553,144		)	—			(4,127,994		)	—		(4,127,994		)
Securities sold short:
Equity securities	—		—			—		—			(2,609		)	—			—		(2,609		)
Derivatives:
Foreign-currency forward contracts	—		(1,536		)	—		(1,536		)	—			(643		)	—		(643		)
Total derivatives (3)	—		(1,536		)	—		(1,536		)	—			(643		)	—		(643		)
Total liabilities	$	—	$	(5,554,680	)	$	—	$	(5,554,680	)	$	(2,609	)	$	(4,128,637	)	$	—	$	(4,131,246	)

(1) Amounts are included in other assets under “assets of consolidated funds” in the condensed consolidated statements of financial condition.

(2) The fair value of CLO liabilities is classified based on the more observable fair value of CLO assets. Please see notes 2 and 10 for more information.

(3) Amounts are included in accounts payable, accrued expenses and other liabilities under “liabilities of consolidated funds” in the condensed consolidated statements of financial condition

27

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

The following tables set forth a summary of changes in the fair value of Level III investments:

	Corporate Debt – Bank Debt			Corporate Debt – All Other			Equities – Common Stock			Equities – Preferred Stock			Real Estate			Total
Three Months Ended September 30, 2019
Beginning balance	$	101,494		$	23,209		$	42,972		$	1,934		$	57,080		$	226,689
Deconsolidation of funds	(5,441		)	(11,216		)	—			—			—			(16,657		)
Transfers into Level III	9,853			6,490			29			—			—			16,372
Transfers out of Level III	—			—			—			—			—			—
Purchases	67,093			25,102			154,446			80			107,046			353,767
Sales	(8,763		)	(71		)	(1,146		)	—			—			(9,980		)
Realized gains (losses), net	(443		)	26			587			—			—			170
Unrealized appreciation (depreciation), net	(7,683		)	(808		)	(664		)	115			(2,282		)	(11,322		)
Ending balance	$	156,110		$	42,732		$	196,224		$	2,129		$	161,844		$	559,039
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	(5,455	)	$	(389	)	$	(525	)	$	115		$	(2,282	)	$	(8,536	)
Three Months Ended September 30, 2018
Beginning balance	$	83,529		$	123,936		$	54,934		$	1,586		$	—		$	263,985
Transfers into Level III	7,698			—			—			—			—			7,698
Transfers out of Level III	(11,549		)	—			—			—			—			(11,549		)
Purchases	49,347			41,063			197			—			—			90,607
Sales	(22,253		)	(17,580		)	(76		)	—			—			(39,909		)
Realized gains (losses), net	144			65			59			—			—			268
Unrealized appreciation (depreciation), net	975			(921		)	(273		)	(171		)	—			(390		)
Ending balance	$	107,891		$	146,563		$	54,841		$	1,415		$	—		$	310,710
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	1,140		$	(508	)	$	(273	)	$	(171	)	$	—		$	188

28

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

	Corporate Debt – Bank Debt			Corporate Debt – All Other			Equities – Common Stock			Equities – Preferred Stock		Real Estate			Total
Nine months Ended September 30, 2019
Beginning balance	$	136,055		$	185,378		$	3,063		$	1,426	$	—		$	325,922
Deconsolidation of funds	(54,895		)	(108,121		)	—			—		—			(163,016		)
Transfers into Level III	32,711			89			2,379			—		—			35,179
Transfers out of Level III	(16,658		)	(51,770		)	—			—		—			(68,428		)
Purchases	94,865			27,489			194,304			322		164,126			481,106
Sales	(25,937		)	(10,452		)	(2,072		)	—		—			(38,461		)
Realized gains (losses), net	(319		)	(100		)	616			—		—			197
Unrealized appreciation (depreciation), net	(9,712		)	219			(2,066		)	381		(2,282		)	(13,460		)
Ending balance	$	156,110		$	42,732		$	196,224		$	2,129	$	161,844		$	559,039
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	21,502		$	(25	)	$	(1,528	)	$	381	$	(2,282	)	$	18,048
Nine Months Ended September 30, 2018
Beginning balance	$	86,999		$	75,388		$	3,427		$	—	$	121,588		$	287,402
Deconsolidation of funds	—			—			—			—		(121,087		)	(121,087		)
Transfers into Level III	36,627			899			490			—		—			38,016
Transfers out of Level III	(25,041		)	(490		)	(658		)	—		—			(26,189		)
Purchases	58,534			119,328			52,253			1,248		—			231,363
Sales	(51,577		)	(47,628		)	(387		)	—		(501		)	(100,093		)
Realized gains (losses), net	612			314			59			—		—			985
Unrealized appreciation (depreciation), net	1,737			(1,248		)	(343		)	167		—			313
Ending balance	$	107,891		$	146,563		$	54,841		$	1,415	$	—		$	310,710
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	1,566		$	(1,054	)	$	(343	)	$	167	$	—		$	336

Total realized and unrealized gains and losses recorded for Level III investments are included in net realized gain on consolidated funds’ investments or net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations.

Transfers out of Level III are generally attributable to certain investments that experienced a more significant level of market trading activity or completed an initial public offering during the respective period and thus were valued using observable inputs. Transfers into Level III typically reflect either investments that experienced a less significant level of market trading activity during the period or portfolio companies that undertook restructurings or bankruptcy proceedings and thus were valued in the absence of observable inputs.

29

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of September 30, 2019:

Investment Type	Fair Value		Valuation Technique	Significant Unobservable Inputs (1)(2)	Range	Weighted Average (3)
Credit-oriented investments:
Consumer discretionary:	$	26,190	Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,340		Discounted cash flow (4)	Discount rate	10% – 18%	13%
Financials:	39,099		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,415		Discounted cash flow (4)	Discount rate	8% – 12%	11%
Health care:	35,560		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	666		Discounted cash flow (4)	Discount rate	16% – 18%	17%
Real estate:	20,572		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	702		Discounted cash flow (4)	Discount rate	17% – 19%	18%
Other:	53,041		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	14,257		Discounted cash flow (4)	Discount rate	8% – 18%	13%
Equity investments:
	26,632		Recent transaction price (8)	Quoted prices	Not applicable	Not applicable
	131,778		Discounted cash flow (4)	Discount rate	8% – 15%	11%
	39,578		Market approach (comparable companies) (6)	Earnings multiple (7)	4x – 10x	6x
	365		Market approach (comparable companies) (6)	Revenue multiple (9)	2x – 4x	3x
Real estate investments:
	146,208		Recent transaction price (8)	Quoted prices	Not applicable	Not applicable
	15,636		Discounted cash flow (4)	Discount rate	5% – 7%	6%
Total Level III investments	$	559,039

30

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of December 31, 2018:

Investment Type	Fair Value		Valuation Technique	Significant Unobservable Inputs (1)(2)	Range	Weighted Average (3)
Credit-oriented investments:
Communication services:	$	20,746	Recent market information (5)	Quoted prices	Not applicable	Not applicable
	2,416		Discounted cash flow (4)	Discount rate	12% – 14%	13%
Financials:	108,277		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	3,608		Discounted cash flow (4)	Discount rate	9% – 15%	14%
Health care:	37,724		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	2,550		Discounted cash flow (4)	Discount rate	10% – 16%	14%
Real estate:	79,562		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,570		Discounted cash flow (4)	Discount rate	12% – 23%	14%
Other:	38,959		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	17,943		Discounted cash flow (4)	Discount rate	8% – 15%	13%
	5,078		Recent transaction price (8)	Not applicable	Not applicable	Not applicable
Equity investments:
	2,099		Discounted cash flow (4)	Discount rate	10% – 30%	12%
	2,390		Market approach (comparable companies) (6)	Earnings multiple (7)	4x – 10x	7x
Total Level III investments	$	325,922

(1) The discount rate is the significant unobservable input used in the fair-value measurement of performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments and real estate loan portfolios. An increase (decrease) in the discount rate would result in a lower (higher) fair-value measurement.

(2) Multiple of either earnings or underlying assets is the significant unobservable input used in the market approach for the fair-value measurement of distressed credit-oriented investments, credit-oriented investments in which the consolidated funds have a controlling interest in the underlying issuer, equity investments and certain real estate-oriented investments. An increase (decrease) in the multiple would result in a higher (lower) fair-value measurement.

(3) The weighted average is based on the fair value of the investments included in the range.

(4) A discounted cash-flow method is generally used to value performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments, real estate-oriented investments and real estate loan portfolios.

(5) Certain investments are valued using vendor prices or broker quotes for the subject or similar securities.  Generally, investments valued in this manner are classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.

(6) A market approach is generally used to value distressed investments and investments in which the consolidated funds have a controlling interest in the underlying issuer.

(7) Earnings multiples are based on comparable public companies and transactions with comparable companies. The Company typically utilizes multiples of EBITDA; however, in certain cases the Company may use other earnings multiples believed to be most relevant to the investment. The Company typically applies the multiple to trailing twelve-months’ EBITDA. However, in certain cases other earnings measures, such as pro forma EBITDA, may be utilized if deemed to be more relevant.

(8) Certain investments are valued based on recent transactions, generally defined as investments purchased or sold within six months of the valuation date. The fair value may also be based on a pending transaction expected to close after the valuation date.

(9) Revenue multiples are based on comparable public companies and transactions with comparable companies. The Company typically applies the multiple to trailing twelve-months’ revenue. However, in certain cases other revenue measures, such as pro forma revenue, may be utilized if deemed to be more relevant.

A significant amount of judgment may be required when using unobservable inputs, including assessing the accuracy of source data and the results of pricing models. The Company assesses the accuracy and reliability of the sources it uses to develop unobservable inputs. These sources may include third-party vendors that the Company believes are reliable and commonly utilized by other marketplace participants. As described in note 2, other factors beyond the unobservable inputs described above may have a significant impact on investment valuations.

31

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

During the three months ended September 30, 2019 and September 30, 2018, there were no changes in the valuation techniques for Level III securities.

7. DERIVATIVES AND HEDGING

The fair value of freestanding derivatives consisted of the following:

	Assets				Liabilities
	Notional		Fair Value		Notional			Fair Value
As of September 30, 2019
Foreign-currency forward contracts	$	184,856	$	3,856	$	(65,140	)	$	(2,071	)
Cross-currency swap	232,827		13,074		—			—
Total	$	417,683	$	16,930	$	(65,140	)	$	(2,071	)
As of December 31, 2018
Foreign-currency forward contracts	$	58,254	$	1,654	$	(77,156	)	$	(2,318	)
Cross-currency swap	242,450		2,384		—			—
Total	$	300,704	$	4,038	$	(77,156	)	$	(2,318	)

Realized and unrealized gains and losses arising from freestanding derivatives were recorded in the condensed consolidated statements of operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Investment income	$	16,206	$	419	$	11,429	$	(1,898	)
General and administrative expense (1)	5,274		929		5,287		(374		)
Total	$	21,480	$	1,348	$	16,716	$	(2,272	)

(1) To the extent that the Company’s freestanding derivatives are utilized to hedge its foreign-currency exposure to investment income and management fees earned from consolidated funds, the related hedged items are eliminated in consolidation, with the derivative impact (a positive number reflects a reduction in expenses) reflected in consolidated general and administrative expense.

There were no derivatives outstanding that were designated as hedging instruments for accounting purposes as of September 30, 2019 and December 31, 2018.

32

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Derivatives Held By Consolidated Funds

Certain consolidated funds utilize derivatives in their ongoing investment operations. These derivatives primarily consist of foreign-currency forward contracts and options utilized to manage currency risk, interest-rate swaps to hedge interest-rate risk, options and futures used to hedge certain exposures for specific securities, and total-return swaps utilized mainly to obtain exposure to leveraged loans or to participate in foreign markets not readily accessible. The primary risk exposure for options and futures is price, while the primary risk exposure for total-return swaps is credit. None of the derivative instruments are accounted for as a hedging instrument utilizing hedge accounting.

The following tables summarize net gains (losses) from derivatives held by the consolidated funds:

	Three Months Ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments
Foreign-currency forward contracts	$	(4,300	)	$	(276	)	$	1,496	$	1,193
Options and futures	—			—			185		(152		)
Total	$	(4,300	)	$	(276	)	$	1,681	$	1,041

	Nine Months Ended September 30,
	2019					2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments		Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments
Foreign-currency forward contracts	$	(1,960	)	$	412	$	428	$	17
Total-return and interest-rate swaps	—			—		858		29
Options and futures	—			—		232		(265		)
Total	$	(1,960	)	$	412	$	1,518	$	(219	)

Balance Sheet Offsetting

The Company recognizes all derivatives as assets or liabilities at fair value in its condensed consolidated statements of financial condition. In connection with its derivative activities, the Company generally enters into agreements subject to enforceable master netting arrangements that allow the Company to offset derivative assets and liabilities in the same currency by specific derivative type or, in the event of default by the counterparty, to offset derivative assets and liabilities with the same counterparty. While these derivatives are eligible to be offset in accordance with applicable accounting guidance, the Company has elected to present derivative assets and liabilities based on gross fair value in its condensed consolidated statements of financial condition. The table below sets forth the setoff rights and related arrangements associated with derivatives held by the Company. The “gross amounts not offset in statements of financial condition” columns represent derivatives that management has elected not to offset in the consolidated statements of financial condition even though they are eligible to be offset in accordance with applicable accounting guidance.

33

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of September 30, 2019				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	3,856		$	2,071		$	—	$	1,785
Cross-currency swap	13,074			—			—		13,074
Subtotal	16,930			2,071			—		14,859
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,447			—			—		2,447
Total	$	19,377		$	2,071		$	—	$	17,306
Derivative Liabilities:
Foreign-currency forward contracts	(2,071		)	(2,071		)	—		—
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(1,536		)	—			—		(1,536		)
Total	$	(3,607	)	$	(2,071	)	$	—	$	(1,536	)

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of December 31, 2018				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	1,654		$	1,497		$	—	$	157
Cross-currency swap	2,384			—			—		2,384
Subtotal	4,038			1,497			—		2,541
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,275			—			—		2,275
Options and futures	189			—			—		189
Subtotal	2,464			—			—		2,464
Total	$	6,502		$	1,497		$	—	$	5,005
Derivative Liabilities:
Foreign-currency forward contracts	$	(2,318	)	$	(1,497	)	$	—	$	(821	)
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(643		)	—			—		(643		)
Total	$	(2,961	)	$	(1,497	)	$	—	$	(1,464	)

34

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

8. FIXED ASSETS

Fixed assets, which consist of furniture and equipment, capitalized software, office leasehold improvements, and company-owned aircraft, are included in other assets in the condensed consolidated statements of financial position.

The following table sets forth the Company’s fixed assets and accumulated depreciation:

	As of
	September 30, 2019			December 31, 2018
Furniture, equipment and capitalized software	$	28,781		$	26,345
Leasehold improvements	72,724			70,270
Corporate aircraft	66,120			66,120
Other	5,302			4,859
Fixed assets	172,927			167,594
Accumulated depreciation	(68,457		)	(61,879		)
Fixed assets, net	$	104,470		$	105,715

9. GOODWILL AND INTANGIBLES

Goodwill represents the excess of cost over the fair value of identifiable net assets of acquired businesses. Goodwill has an indefinite useful life and is not amortized, but instead is tested for impairment annually in the fourth quarter of each fiscal year, or more frequently if events or circumstances indicate that impairment may have occurred. As of September 30, 2019, the Company had determined there was no goodwill impairment. The carrying value of goodwill was $69.3 million as of September 30, 2019 and December 31, 2018.

The following table summarizes the carrying value of intangible assets:

	As of
	September 30, 2019			December 31, 2018
Contractual rights	$	347,452		$	347,452
Accumulated amortization	(45,755		)	(33,173		)
Intangible assets, net	$	301,697		$	314,279

Amortization expense associated with the Company’s intangible assets was $4.2 million and $12.6 million for both the three and nine months ended September 30, 2019 and 2018, respectively. Future amortization of intangible assets held as of September 30, 2019 is set forth below:

Remainder of 2019	$	4,198
2020	16,780
2021	15,112
2022	12,777
2023	12,777
Thereafter	240,053
Total	$	301,697

Goodwill and intangible assets are included in other assets in the condensed consolidated statements of financial position.

35

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

10. DEBT OBLIGATIONS AND CREDIT FACILITIES

The Company’s debt obligations are set forth below:

	As of
	September 30, 2019			December 31, 2018
$250,000, 3.78%, issued in December 2017, payable on December 18, 2032	$	250,000		$	250,000
$250,000, variable-rate term loan, issued in March 2014, payable on March 29, 2023 (1)	150,000			150,000
$50,000, 3.91%, issued in September 2014, payable on September 3, 2024	50,000			50,000
$100,000, 4.01%, issued in September 2014, payable on September 3, 2026	100,000			100,000
$100,000, 4.21%, issued in September 2014, payable on September 3, 2029	100,000			100,000
$100,000, 3.69%, issued in July 2016, payable on July 12, 2031	100,000			100,000
Total remaining principal	750,000			750,000
Less: Debt issuance costs	(3,657		)	(4,055		)
Debt obligations	$	746,343		$	745,945

(1) The credit facility consists of a $150 million term loan and a $500 million revolving credit facility. Borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of Oaktree Capital Management, L.P., the interest rate on borrowings is LIBOR plus 1.00% per annum and the commitment fee on the unused portions of the revolving credit facility is 0.10% per annum. The credit agreement contains customary financial covenants and restrictions, including ones regarding a maximum leverage ratio and a minimum required level of assets under management (as defined in the credit agreement, as amended above). As of September 30, 2019, the Company had no outstanding borrowings under the revolving credit facility.

As of September 30, 2019, future scheduled principal payments of debt obligations were as follows:

Remainder of 2019	$	—
2020	—
2021	—
2022	—
2023	150,000
Thereafter	600,000
Total	$	750,000

The Company was in compliance with all financial maintenance covenants associated with its senior notes and bank credit facility as of September 30, 2019 and December 31, 2018.

The fair value of the Company’s debt obligations, which are carried at amortized cost, is a Level III valuation that is estimated based on a discounted cash-flow calculation using estimated rates that would be offered to Oaktree for debt of similar terms and maturities. The fair value of these debt obligations, gross of debt issuance costs, was $806.3 million and $720.3 million as of September 30, 2019 and December 31, 2018, respectively, utilizing an average borrowing rate of 2.8% and 4.4%, respectively. As of September 30, 2019, a 10% increase in the assumed average borrowing rate would lower the estimated fair value to $788.9 million, whereas a 10% decrease would increase the estimated fair value to $824.2 million.

36

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Credit Facilities of the Consolidated Funds

Certain consolidated funds may maintain revolving credit facilities that are secured by the assets of the fund or may issue senior variable rate notes to fund investments on a longer term basis, generally up to ten years. The obligations of the consolidated funds are nonrecourse to the Company.

The consolidated funds had the following debt obligations outstanding:

	Outstanding Amount as of						Facility Capacity		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Commitment Fee Rate	L/C Fee
Credit Agreement	September 30, 2019			December 31, 2018
Senior variable rate notes	$	976,470		$	870,098		$	976,470	3.39%	8.7	N/A	N/A
Less: Debt issuance costs	(4,616		)	(5,569		)
Total debt obligations, net	$	971,854		$	864,529

As of September 30, 2019 and December 31, 2018, the consolidated funds had debt obligations with an aggregate outstanding principal balance of $976.5 million. The fair value of the senior variable rate notes is a Level III valuation and aggregated $976.8 million and $871.3 million as of September 30, 2019 and December 31, 2018, respectively, using prices obtained from pricing vendors. Financial instruments that are valued using quoted prices for the security or similar securities are generally classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.

Debt Obligations of CLOs

Debt obligations of CLOs represent amounts due to holders of debt securities issued by the CLOs, as well as term loans of CLOs that had not priced as of period end.

Outstanding debt obligations of CLOs were as follows:

	As of September 30, 2019				As of December 31, 2018
	Fair Value (1)		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Fair Value (1)		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)
Senior secured notes	$	5,354,638	2.95%	9.1	$	3,976,602	2.69%	9.9
Subordinated notes (2)	198,506		N/A	8.6	151,392		N/A	9.7
Total CLO debt obligations	$	5,553,144			$	4,127,994

(1) The fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Please see notes 2 and 6 for more information.

(2) The subordinated notes do not have a contractual interest rate; instead, they receive distributions from the excess cash flows generated by the CLO.

The debt obligations of CLOs are nonrecourse to the Company and are backed by the investments held by the respective CLO. Assets of one CLO may not be used to satisfy the liabilities of another. As of September 30, 2019 and December 31, 2018, the fair value of CLO assets was $6.3 billion and $4.7 billion, respectively, and consisted of cash, corporate loans, corporate bonds and other securities.

37

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

As of September 30, 2019, future scheduled principal or par value payments with respect to the debt obligations of CLOs were as follows:

Remainder of 2019	$	600,481
2020	169,372
2021	—
2022	—
2023	—
Thereafter	4,822,368
Total	$	5,592,221

11. LEASES

The Company has operating leases related to office space and certain equipment with remaining lease terms expiring within one year through 2031, some of which include options to extend the leases for up to five years and some of which include options to terminate the leases within one year. As of September 30, 2019, there were no finance leases outstanding and no additional operating leases that have not yet commenced.

The components of lease expense included in general and administrative expense were as follows:

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost	$	4,739		$	14,226
Sublease income	(278		)	(535		)
Total lease cost	$	4,461		$	13,691

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	14,628
Weighted average remaining lease term for operating leases (in years)	9.5
Weighted average discount rate for operating leases	4.4		%

38

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

As of September 30, 2019, maturities of operating lease liabilities were as follows:

Remainder of 2019	$	4,874
2020	18,717
2021	17,702
2022	17,135
2023	16,554
Thereafter	84,617
Total lease payments	159,599
Less: imputed interest	(28,317		)
Total operating lease liabilities	$	131,282

12. NON-CONTROLLING REDEEMABLE INTERESTS IN CONSOLIDATED FUNDS

The following table sets forth a summary of changes in the non-controlling redeemable interests in the consolidated funds. Dividends reinvested and in-kind contributions or distributions are non-cash in nature and have been presented on a gross basis in the table below.

	Nine Months Ended September 30,
	2019			2018
Beginning balance	$	961,622		$	860,548
Initial consolidation of a fund	54,964			—
Deconsolidation of a fund	(424,603		)	—
Contributions	519,684			107,962
Distributions	(107,071		)	(214,096		)
Net income	82,234			18,399
Change in distributions payable	4,652			(75,196		)
Foreign currency translation and other	(10,020		)	(1,310		)
Ending balance	$	1,081,462		$	696,307

 

13. UNITHOLDERS’ CAPITAL

Unitholders’ capital reflects the economic interests attributable to Class A unitholders, preferred unitholders, non-controlling interests in consolidated subsidiaries and non-controlling interests in consolidated funds. Non-controlling interests in consolidated subsidiaries represent the portion of unitholders’ capital attributable to the OCGH non-controlling interest and third parties. The OCGH non-controlling interest is determined at the Oaktree Operating Group level, after giving effect to distributions, if any, attributable to the preferred unitholders, based on the proportionate share of Oaktree Operating Group units held by the OCGH unitholders. Certain expenses, such as income taxes and related administrative expenses of Oaktree Capital Group, LLC and its Intermediate Holding Companies, are solely attributable to the Class A unitholders. As of September 30, 2019 and December 31, 2018, respectively, OCGH units represented 62,145,608 of the total 160,112,863 Oaktree Operating Group units and 85,471,937 of the total 157,133,560 Oaktree Operating Group units. Based on total allocable Oaktree Operating Group capital of $1,442,907 and $1,997,745 as of September 30, 2019 and December 31, 2018, respectively, the OCGH non-controlling interest was $560,067 and $1,086,693. As of September 30, 2019 and December 31, 2018, non-controlling interests attributable to third parties was $4,018 and $5,661, respectively.

39

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

The following table sets forth a summary of net income attributable to the preferred unitholders, the OCGH non-controlling interest and the Class A common unitholders:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Weighted average Oaktree Operating Group units outstanding (in thousands):
OCGH non-controlling interest	83,666			85,775			84,796			86,675
Class A unitholders	75,995			71,369			74,005			70,167
Total weighted average units outstanding	159,661			157,144			158,801			156,842
Oaktree Operating Group net income (loss):
Net income attributable to preferred unitholders (1)	$	6,829		$	3,909		$	20,487		$	3,909
Net income (loss) attributable to OCGH non-controlling interest	(7,389		)	71,408			107,480			185,959
Net income (loss) attributable to OCG Class A unitholders	(6,708		)	59,417			91,226			149,956
Oaktree Operating Group net income (loss) (2)	$	(7,268	)	$	134,734		$	219,193		$	339,824
Net income (loss) attributable to OCG Class A unitholders:
Oaktree Operating Group net income (loss) attributable to OCG Class A unitholders	$	(6,708	)	$	59,417		$	91,226		$	149,956
Non-Operating Group income (expense)	(3,967		)	(321		)	(8,287		)	(629		)
Income tax benefit (expense) of Intermediate Holding Companies	(5,973		)	(6,346		)	(9,889		)	(12,724		)
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750		$	73,050		$	136,603

(1) Represents distributions declared, if any, on the preferred units.

(2) Oaktree Operating Group net income does not include amounts attributable to other non-controlling interests, which amounted to $518 and $1,779 for the three and nine months ended September 30, 2019, respectively and $597 and $1,986 for the three and nine months ended September 30, 2018, respectively.

The change in the Company’s ownership interest in the Oaktree Operating Group is set forth below:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750	$	73,050	$	136,603
Equity reallocation between controlling and non-controlling interests	267,715			4,514		304,280		78,269
Change from net income attributable to OCG Class A unitholders and transfers from non-controlling interests	$	251,067		$	57,264	$	377,330	$	214,872

 

Please see notes 14, 15 and 16 for additional information regarding transactions that impacted unitholders’ capital.

40

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

14. EARNINGS PER UNIT

The computation of net income (loss) per Class A unit is set forth below:  

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Net income (loss) per Class A unit (basic and diluted):	(in thousands, except per unit amounts)
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750	$	73,050	$	136,603
Weighted average number of Class A units outstanding (basic and diluted)	75,995			71,369		74,005		70,167
Basic and diluted net income (loss) per Class A unit	$	(0.22	)	$	0.74	$	0.99	$	1.95

41

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

15. EQUITY-BASED COMPENSATION

Restated Exchange Agreement

At the closing of the Mergers, Oaktree entered into a Third Amended and Restated Exchange Agreement that will, among other things, allow limited partners of OCGH to exchange (“Exchanges”) certain vested limited partnership units of OCGH (“OCGH Units”) for cash, Brookfield Class A Shares, notes issued by a Brookfield subsidiary or equity interests in a subsidiary of OCGH that will entitle such limited partners to the proceeds from a note, or a combination of the foregoing. Either of such notes will have a three-year maturity and will accrue interest at the then-current 5-year treasury note rate plus 3%. Only Converted Class A Units, OCGH Units issued and outstanding at the time of the closing of the Mergers, OCGH Units issued after the closing of the Mergers pursuant to agreements in effect on March 13, 2019, OCGH Units issuable upon vesting of certain phantom equity awards (“Phantom Units”) and other OCGH Units consented-to by Brookfield will be, when vested, eligible to participate in an Exchange. The form of the consideration in an Exchange is generally in the discretion of Brookfield, subject to certain limitations.

In general, OCGH limited partners will be entitled to provide an election notice to participate in an Exchange with respect to eligible vested OCGH Units during the first 60 calendar days of each year beginning January 1, 2022 (an “Open Period”). However, holders of Converted Class A Units and Phantom Units will be eligible to provide an election notice with respect to their vested units beginning as early as 2020 and each year thereafter subject to certain limitations. Each Exchange will thereafter be consummated within the first 155 days of such calendar year, subject to extension in certain circumstances.

Valuation

Except as described below, each OCGH Unit will be valued (i) by applying a 13.5x multiple to the trailing three-year average (or two-year average for Exchanges in 2022) of fee-related earnings less stock-based compensation at grant value and excluding depreciation and amortization and a 6.75x multiple to the trailing three-year average of net incentives created, and (ii) adding 100% of the value of net cash (defined as cash less the face value of debt and preferred stock, other than certain preferred stock issued in connection with certain Exchanges), 100% of the value of corporate investments and 75% of fund-level net accrued incentives as of December 31 of the prior year, in each case subject to certain adjustments. Amounts received in respect of each OCGH Unit will be reduced by the amount of any non-tax related distributions received in the calendar year in which the Exchange occurs, but increased by an amount accruing daily from January 1 of such year to the date of the closing of the Exchange at a rate per annum equal to the 5-year treasury note rate as of December 31 of the prior year plus 3%. However, in 2020 and 2021, Converted Class A Units and Phantom Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. Thereafter any such Converted Class A Units and Phantom Units will be valued using the same methodology applied to all other OCGH Units.

Annual Limits

Exchanges of OCGH Units, other than Converted Class A Units and Phantom Units, will be subject to certain annual caps and limitations as follows:

• Messrs. Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson and Larry Keele can, for the Open Period beginning in 2022, exchange up to 20% of the OCGH Units held by them at the closing of the Mergers (or issued pursuant to agreements in place on March 19, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 20% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges), such that they will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2026 (subject to yearly caps and inclusive of any prior exchanges).

• Current employees other than those included in the group named in the preceding bullet can, for the Open Period beginning in 2022, sell up to 12.5% of the OCGH Units held by them at the closing (or issued pursuant to agreements in place on March 13, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 12.5% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges) so long as they are employed by Oaktree or its subsidiaries at the

42

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

time of the exchange. They will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2029 (subject to yearly caps).

• Brookfield is not obligated to permit Exchanges that, in the aggregate together with Exchanges requested by all other OCGH limited partners, exceed certain maximum amounts per year. These maximum amounts are: 20% of the exchangeable OCGH Units in calendar year 2022, 25% in 2023, 30% in 2024, and 35% in 2025 and each year thereafter.

• In the event that OCGH limited partners wish to sell or exchange units in excess of the maximum amount for a given year, OCGH will reallocate the exchangeable units among the OCGH limited partners in its sole discretion so that the amount exchanged does not exceed the maximum amount for such year.

With respect to Exchanges of Converted Class A Units and Phantom Units, OCGH limited partners will not be entitled to exchange such units to the extent the aggregate exchange consideration payable in respect thereof, in any given Exchange, would exceed an amount equal to (i) the amount of exchange consideration that would have been payable in respect of Converted Class A Units and Phantom Units that were eligible for participation in the applicable Open Period in accordance with their original vesting schedule as of the date the notice for such Exchange was delivered plus (ii) $20 million; and in the event that OCGH limited partners deliver election notices that would result in such excess, OCGH will reallocate such units among the OCGH limited partners in its sole discretion.

In the event that OCGH limited partners would, following an Exchange, beneficially own less than 1% of the equity of the Oaktree Operating Group (as defined in the operating agreement of Oaktree, as amended from time to time), Brookfield can require that all remaining OCGH Units be exchanged on 36-months’ notice. In addition, following the 8th anniversary of the Closing Date, Brookfield can discontinue the Exchange rights on 36-months’ notice. In the event that OCGH limited partners would, following the final Exchange pursuant to a discontinuation notice, beneficially own less than 5% of the equity of the Oaktree Operating Group, Brookfield can require that all remaining OCGH Units be exchanged in such final Exchange. As a result of the foregoing, the earliest the exchange rights can be terminated is the 11th anniversary of the Closing Date. Following the delivery of a discontinuation notice, the caps and limits set forth above will cease to be in effect.

Revisions to the terms of the exchange agreement governing post-vesting restrictions and exchange consideration described above and to the terms of the operating agreement of the Company and the partnership agreement of OCGH resulted in a Type I modification of unvested Class A and OCGH units.  There was no incremental compensation cost resulting from the modifications.

Class A and OCGH Unit Awards

During the nine months ended September 30, 2019, the Company granted 1,494,324 Class A units and 1,873,155 restricted OCGH units to its employees and directors, subject to annual vesting over a weighted average period of approximately 5.9 years. The grant date fair value of OCGH units awarded during the nine months ended September 30, 2019 was determined by applying a 17.5% discount to the Class A unit trading price on the New York Stock Exchange as of the grant date. With respect to forfeitures, the Company has made an accounting policy election to account for forfeitures when they occur. Accordingly, no forfeitures have been assumed in the calculation of compensation expense.

As of September 30, 2019, the Company expected to recognize compensation expense on its unvested OCGH unit awards of $217.1 million over a weighted average period of 4.4 years.  

43

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

A summary of the status of the Company’s unvested OCGH unit awards and changes for the period presented are set forth below (actual dollars per unit):

	Converted Class A Units (1)				OCGH Units
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
Balance as of December 31, 2018	2,700,585		$	42.76	1,864,049		$	39.83
Granted	1,494,324		49.56		1,873,155		41.34
Vested	(975,072	)	43.06		(434,674	)	35.11
Forfeited	(98,301	)	44.53		—		—
Balance as of September 30, 2019	3,121,536		$	45.87	3,302,530		$	41.31

(1) At the Effective Time, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted Class A Unit”) and will thereafter be subject to the terms and conditions of the OCGH limited partnership agreement. The Converted Class A Units will (i) be subject to the same vesting terms that were applicable to such units prior to the Effective Time, (ii) be entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. However, in 2020 and 2021, Converted Class A Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. No unvested Class A Units or Converted Class A Units vested in connection with the Mergers.

Equity Value Units

OCGH equity value units (“EVUs”) represent special limited partnership units in OCGH that entitle the holder the right to receive special distributions that will be settled in OCGH units, based on value created during a specified period in excess of a fixed “Base Value.” The value created will be measured on a per unit basis, based on the appreciation of the Class A units and certain components of quarterly distributions with respect to OCGH units over the period beginning on January 1, 2015 and ending on each of December 31, 2019, December 31, 2020 and December 31, 2021, with one-third of the EVUs recapitalizing on each such date. As of September 30, 2019, the value created did not exceed the Base Value. EVUs also give the holder the right, subject to service vesting and Oaktree performance relative to the accreting Base Value, to receive certain quarterly distributions from OCGH. EVUs do not entitle the holder to any voting rights.

The value received under the EVUs will be reduced by (i) distributions received by the holder on 225,000 OCGH units granted to the holder on April 26, 2017, (ii) the value of the portion of profit sharing payments received by the holder attributable to the net incentive income received from certain funds, and (iii) the full value of the OCGH units granted to the holder on April 26, 2017. To the extent that the reduction relates to the value of any such OCGH units that are unvested at the time of the reduction, such OCGH units will vest at that time.

Certain EVUs provide the holder with liquidity rights in respect of the special distributions, if any, that will be settled in OCGH units. The Company accounts for EVUs with liquidity rights as liability-classified awards. As of September 30, 2019, there were 1,000,000 equity-classified EVUs and 1,000,000 liability-classified EVUs outstanding. As of September 30, 2019, the Company expected to recognize $0.3 million of compensation expense on its unvested EVUs over the next 0.25 years. Equity-classified EVUs that require future service are expensed on a straight-line basis over the requisite service period. Liability-classified EVUs are remeasured at the end of each quarter.

The fair value of EVUs was determined using a Monte Carlo simulation model. The fair value is affected by the Class A unit trading price and assumptions regarding certain complex and subjective variables, including the expected Class A unit trading price volatility, distributions and exercise timing, and the risk-free interest rate.

44

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Deferred Equity Units

A deferred equity unit represents a special unit award that, when vested, will be settled with an unvested OCGH unit on a one-for-one basis. The number of deferred equity units that will vest is based on the achievement of certain performance targets measured through 2024. Once a performance target has been met, the applicable number of OCGH units will be issued and begin to vest over periods of up to 10.0 years. The holder of a deferred equity unit is not entitled to any distributions until settled by the issuance of an OCGH unit. As of September 30, 2019, there were 807,307 deferred equity units outstanding. As of September 30, 2019, the Company expected to recognize compensation expense of $1.4 million on 39,808 deferred equity units over a weighted average period of 5.5 years.

The fair value of the deferred equity units issued in the nine months ended September 30, 2019 was determined at the grant date based on the then-prevailing Class A unit trading price and reflected a 17.5% lack-of-marketability discount for the OCGH units that will be issued upon vesting.

16. INCOME TAXES AND RELATED PAYMENTS

Oaktree is a publicly traded partnership and Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc., two of its Intermediate Holding Companies, are wholly-owned corporate subsidiaries. Income earned by these corporate subsidiaries is subject to U.S. federal and state income taxation and taxed at prevailing rates. Income earned by non-corporate subsidiaries is not subject to U.S. federal corporate income tax and is allocated to the Oaktree Operating Group’s unitholders.  The Company’s effective tax rate is dependent on many factors, including the estimated nature of many amounts and the mix of revenues and expenses between the subsidiaries that are or are not subject to income tax; consequently, from period to period the effective tax rate is subject to significant variation. The Company’s effective tax rate used for interim periods is based on the estimated full-year income tax rate. Certain future items that cannot be reliably estimated, such as incentive income, are excluded from the estimated annual effective tax rate. The tax expense or benefit stemming from these items is recognized in the same period as the underlying income or expense.

Tax authorities currently are examining certain income tax returns of Oaktree, with certain of these examinations at an advanced stage. Over the next four quarters ending September 30, 2020, the Company believes that it is reasonably possible that one outcome of these examinations and expiring statutes of limitation on other items may be the release of up to approximately $3.0 million of previously accrued Operating Group income taxes. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to its tax examinations and that any settlements related thereto will not have a material adverse effect on the Company’s consolidated financial statements; however, there can be no assurances as to the ultimate outcomes.

Tax Receivable Agreement

Prior to the consummation of the Mergers, subject to certain restrictions and the approval of the Company’s board of directors, each holder of OCGH units had the right to exchange his or her vested units for, at the option of the Company’s board of directors, Class A units, an equivalent amount of cash based on then-prevailing market prices and/or other consideration of equal value. Certain of the Oaktree Operating Group entities made an election under Section 754 of the U.S. Internal Revenue Code, as amended, which have resulted in an adjustment to the tax basis of the assets owned by the Oaktree Operating Group at the time of any such exchange. These exchanges have resulted in increases in tax deductions and tax basis that would reduce the amount of tax that Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. would otherwise be required to pay in the future.

Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. previously entered into a tax receivable agreement (the “Original TRA”) with OCGH unitholders that, as amended, provided for the payment to an exchanging or selling OCGH unitholder of 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income taxes that they actually realized (or were deemed to realize in the case of an early termination payment by Oaktree Holdings, Inc. or Oaktree AIF Holdings, Inc., or a change of control) as a result of an increase in the tax basis of the assets owned by the Oaktree Operating Group. When an exchange of OCGH units resulted in an increase to the tax basis of the assets owned by the Oaktree Operating Group, a deferred tax asset and an associated liability for payments to OCGH unitholders under the tax receivable agreement are recorded, subject to realizability

45

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

considerations. The establishment of a deferred tax asset increases additional paid-in capital because the transactions are between Oaktree and its unitholders.

Upon the closing of the Mergers, Oaktree entered into a Third Amended and Restated Tax Receivable Agreement (the “TRA Amendment”), which amended and restated the Original TRA.     

Pursuant to the TRA Amendment, the Original TRA no longer applies and no Tax Benefit Payments (as defined in the TRA Amendment) will be made with respect to any exchanges of OCGH Units that occur on or after March 13, 2019. With respect to any exchanges of OCGH Units that occurred prior to March 13, 2019, the TRA Amendment provides that Tax Benefit Payments will continue to be made with respect to such exchanges in accordance with the Original TRA (as amended in certain respects, including that such payments will be calculated without taking into account any tax attributes of Brookfield).

Upon the closing of the Mergers, the tax basis of the assets owned by the Oaktree Operating Group increased and as a result the Company recorded an increase of $212.0 million to its total deferred tax assets. In accordance with the above, there was no associated tax receivable agreement liability recorded with this exchange and the entire amount resulted in a corresponding increase to additional paid-in capital.

On each of the first, second and third anniversaries of the closing date, Brookfield will pay $66 million in the aggregate to the OCGH limited partners in consideration for certain tax benefits delivered upon the exchange of OCGH Units on the closing date and for future exchanges of OCGH Units following the closing date, which will be allocated among OCGH’s limited partners as set forth in the Exchange Agreement.

Assuming no further material changes in the relevant tax law and that the Company earns sufficient taxable income to realize the full tax benefit of the increased amortization of the assets, the expected estimated future payments to OCGH unitholders under the Original TRA, as of September 30, 2019, are set forth below:

Transaction	Total Future Payments		Payments Through Fiscal Year
2007 private offering	$	11,987	2029
Initial public offering	30,525		2034
May 2013 offering	43,235		2035
March 2014 offering	32,919		2036
March 2015 offering	28,093		2037
February 2018 offering	31,281		2040
Total	$	178,040

For the nine months ended September 30, 2019, $10.0 million was paid under the Original TRA.

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Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

17. COMMITMENTS AND CONTINGENCIES

In the normal course of business, Oaktree enters into contracts that contain certain representations, warranties and indemnifications. The Company’s exposure under these arrangements would involve future claims that have not yet been asserted. Inasmuch as no such claims currently exist or are expected to arise, the Company has not accrued any liability in connection with these indemnifications.

Legal Actions

Oaktree, its affiliates, investment professionals, and portfolio companies are routinely involved in litigation and other legal actions in the ordinary course of their business and investing activities.  In addition, Oaktree is subject to the authority of a number of U.S. and non-U.S. regulators, including the SEC and the Financial Industry Regulatory Authority, and those authorities periodically conduct examinations of Oaktree and make other inquiries that may result in the commencement of regulatory proceedings against Oaktree and its personnel. Oaktree is currently not subject to any pending actions or regulatory proceedings that either individually or in the aggregate are expected to have a material impact on its consolidated financial statements.

Incentive Income

In addition to the incentive income recognized by the Company, certain of its funds have amounts recorded as potentially allocable to the Company as its share of potential future incentive income, based on each fund’s net asset value. Inasmuch as this incentive income is contingent upon future investment activity and other factors, it is not recognized by the Company as revenue until it is probable that a significant reversal will not occur. As of September 30, 2019 and December 31, 2018, respectively, the aggregate of such amounts recorded at the fund level in excess of incentive income recognized by the Company was $1,344,218 and $1,434,458, for which related direct incentive income compensation expense was estimated to be $704,178 and $754,903.

Contingent Liabilities

The Company has a contingent consideration obligation of up to $36.1 million, payable in cash and Class A units. The amount of contingent consideration is based on the achievement of certain performance targets. As of both September 30, 2019 and December 31, 2018, respectively, the fair value of the contingent liability was $4.5 million and $6.7 million. Changes in this liability resulted in income of $2.2 million and $2.1 million for the three and nine months ended September 30, 2019, respectively and income of $2.5 million and $12.2 million for the three and nine months ended September 30, 2018, respectively. The fair value of the contingent consideration liability is a Level III valuation, which uses a discounted cash-flow analysis based on a probability-weighted average estimate of certain performance targets, including fundraising and revenue levels. The assumptions used in the analysis are inherently subjective, and thus the ultimate amount of the contingent consideration liability may differ materially from the most recent estimate. The contingent consideration liability is included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. Changes in the liability are recorded in general and administrative expense in the condensed consolidated statements of operations.

In connection with the BDC acquisition in October 2017, Fifth Street Management LLC pledged assets with an estimated fair value of $56.2 million to indemnify the Company or the BDCs against any claims or assessments arising from the period during which it managed the BDCs. As of September 30, 2019, the remaining amount of the pledged assets was $32.0 million.

Commitments to Funds

As of September 30, 2019 and December 31, 2018, the Company, generally in its capacity as general partner, had undrawn capital commitments of $365.1 million and $385.8 million, respectively, including commitments to both unconsolidated and consolidated funds.

Investment Commitments of the Consolidated Funds

Certain of the consolidated funds are parties to credit arrangements that provide for the issuance of letters of credit and/or revolving loans, which may require the particular fund to extend loans to investee companies. The consolidated funds use the same investment criteria in making these commitments as they do for investments that

47

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

are included in the condensed consolidated statements of financial condition. The unfunded liability associated with these credit arrangements is equal to the amount by which the contractual loan commitment exceeds the sum of funded debt and cash held in escrow, if any. As of September 30, 2019 and December 31, 2018, the consolidated funds had potential aggregate commitments of $21.4 million and $13.8 million, respectively. These commitments are expected to be funded by the funds’ cash balances, proceeds from asset sales or drawdowns against existing capital commitments.

A consolidated fund may agree to guarantee the repayment obligations of certain investee companies. As of September 30, 2019 and December 31, 2018, there were no guaranteed amounts under such arrangements.

Certain consolidated funds are investment companies that are required to disclose financial support provided or contractually required to be provided to any of their portfolio companies. During the nine months ended September 30, 2019, the consolidated funds did not provide any financial support to portfolio companies.

18. RELATED-PARTY TRANSACTIONS

The Company considers its senior executives, employees and unconsolidated Oaktree funds to be affiliates (as defined in the FASB ASC Master Glossary). Amounts due from and to affiliates are set forth below. The fair value of amounts due from and to affiliates is a Level III valuation and was valued based on a discounted cash-flow analysis. The carrying value of amounts due from affiliates approximated fair value due to their short-term nature or because their average interest rate approximated the Company’s cost of debt. The fair value of amounts due to affiliates approximated $94,043 and $95,953 as of September 30, 2019 and December 31, 2018, respectively, based on a discount rate of 10.0%.

	As of
	September 30, 2019		December 31, 2018
Due from affiliates:
Loans	$	6,416	$	3,857
Amounts due from unconsolidated funds	66,490		72,588
Management fees and incentive income due from unconsolidated funds	76,106		362,971
Payments made on behalf of unconsolidated entities	3,220		3,469
Non-interest bearing advances made to certain non-controlling interest holders and employees	—		27
Total due from affiliates	$	152,232	$	442,912
Due to affiliates:
Due to OCGH unitholders in connection with the tax receivable agreement (please see note 16)	$	178,040	$	187,872
Amounts due to senior executives, certain non-controlling interest holders and employees	1,438		495
Total due to affiliates	$	179,478	$	188,367

Loans

Loans primarily consist of interest-bearing loans made to certain non-controlling interest holders, primarily certain employees, to meet tax obligations related to vesting of equity awards. The loans, which are generally recourse to the borrower or secured by vested equity and other collateral, typically bear interest at the Company’s cost of debt and generated interest income of $18 and $66 for the three and nine months ended September 30, 2019, respectively, and $22 and $193 for the three and nine months ended September 30, 2018, respectively.

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Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

Due From Oaktree Funds and Portfolio Companies

In the normal course of business, the Company advances certain expenses on behalf of Oaktree funds. Amounts advanced on behalf of consolidated funds are eliminated in consolidation. Certain expenses paid by the Company, which typically are employee travel and other costs associated with particular portfolio company holdings, are reimbursed to the Company by the portfolio companies.

Revenues Earned From Oaktree Funds

Management fees and incentive income earned from unconsolidated Oaktree funds totaled $184.7 million and $719.3 million for the three and nine months ended September 30, 2019, respectively, and $218.0 million and $719.6 million for the three and nine months ended September 30, 2018, respectively.

Other Investment Transactions

The Company’s senior executives, directors and senior professionals are permitted to invest their own capital (or the capital of family trusts or other estate planning vehicles they control) in Oaktree funds, for which they pay the particular fund’s full management fee but not its incentive allocation. To facilitate the funding of capital calls by funds in which employees are invested, the Company periodically advances on a short-term basis the capital calls on certain employees’ behalf. These advances are reimbursed generally toward the end of the calendar quarter in which the capital calls occurred. Amounts advanced by the Company are included within “non-interest bearing advances made to certain non-controlling interest holders and employees” in the table above.

Aircraft Services

The Company owns an aircraft for business purposes. Howard Marks, the Company’s co-chairman, may use this aircraft for personal travel and will reimburse the Company to the extent his use of the aircraft for personal travel exceeds a certain threshold pursuant to a Company policy.  The Company also provides certain senior executives a personal travel allowance for private aircraft usage up to a certain threshold pursuant to the same Company policy. Additionally, the Company occasionally makes use of an aircraft owned by one of its senior executives for business purposes at a price to the Company that is based on market rates.

Special Allocations

Certain senior executives receive special allocations based on a percentage of profits of the Oaktree Operating Group. These special allocations, which are recorded as compensation expense, are made on a current basis for so long as they remain senior executives of the Company, with limited exceptions.

Leases

The Company leases certain office space from affiliates of Brookfield. Rent expense associated with these leases was $1.1 million and $3.4 million for the three and nine months ended September 30, 2019, respectively, and $1.2 million and $3.6 million for the three and nine months ended September 30, 2018, respectively. Future lease obligations associated with these leases are $63.2 million for the remaining lease commitments through 2030.

19. SEGMENT REPORTING

As a global investment manager, the Company provides investment management services through funds and separate accounts. The Company earns revenues from the management fees and incentive income generated by the funds that it manages. Management uses a consolidated approach to assess performance and allocate resources. As such, the Company’s business is comprised of one segment, the investment management business. The Company conducts its investment management business primarily in the United States, where substantially all of its revenues are generated.

49

Oaktree Capital Group, LLC

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2019

($ in thousands, except where noted)

20. SUBSEQUENT EVENTS

Class A Unit Distribution

A distribution of $0.03 per Class A unit will be paid on November 12, 2019 to holders of record at the close of business on October 31, 2019.

Preferred Unit Distributions

A distribution of $0.414063 per Series A preferred unit will be paid on December 16, 2019 to Series A preferred unitholders of record at the close of business on December 1, 2019.

A distribution of $0.409375 per Series B preferred unit will be paid on December 16, 2019 to Series B preferred unitholders of record at the close of business on December 1, 2019.

Restructuring Transaction

On September 30, 2019, Oaktree and certain other entities entered into a Restructuring Agreement (the "Restructuring") pursuant to which Oaktree’s direct and indirect ownership of general partner and limited partner interests in certain Oaktree Operating Group entities were transferred to newly-formed, indirect subsidiaries of Brookfield as of October 1, 2019. As a result, as of October 1, 2019, the Oaktree Operating Group entities included in the Company’s financial statements after the Restructuring are Oaktree Capital I, which includes the majority of Oaktree’s investments in its funds, and OCM Cayman, which represents Oaktree’s non-U.S. fee business. The four other Oaktree Operating Group entities that are no longer controlled directly by OCG and deconsolidated as a result of the Restructuring are: (i) Oaktree Capital Management, L.P., which serves as the investment manager for the majority of Oaktree’s funds; (ii) Oaktree Capital II, L.P., which includes Oaktree’s investments in funds and businesses; (iii) Oaktree Investment Holdings, L.P., which holds certain corporate investments in other entities; and (iv) Oaktree AIF Investments, L.P., which primarily holds interests in certain Oaktree fund investments for regulatory or structuring purposes.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Oaktree Capital Group, LLC and the related notes included within this quarterly report. This discussion contains forward-looking statements that are subject to risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. The factors listed under “Risk Factors” and “Forward-Looking Statements” in this quarterly report and under “Risk Factors” in our annual report provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations described in any forward-looking statements.

Business Overview

Oaktree is a leader among global investment managers specializing in alternative investments, with $121.9 billion in AUM as of September 30, 2019. Our mission is to deliver superior investment results with risk under control and to conduct our business with the highest integrity. We emphasize an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. Over more than three decades, we have developed a large and growing client base through our ability to identify and capitalize on opportunities for attractive investment returns in less efficient markets.

We manage assets on behalf of many of the most significant institutional investors in the world. Our clientele (excluding DoubleLine’s clientele) includes 71 of the 100 largest U.S. pension plans, 39 state retirement plans in the United States, over 400 corporations and/or their pension funds, over 330 university, charitable and other endowments and foundations, over 15 sovereign wealth funds, and over 400 other non-U.S. institutional investors. As measured by AUM (excluding our pro-rata portion of DoubleLine’s AUM), approximately 73% of our clients are invested in two or more different investment strategies, and 35% are invested in four or more. Headquartered in Los Angeles, we serve these clients with over 950 employees and offices in 18 cities worldwide.

Our business is comprised of one segment, our investment management business, which consists of the investment management services that we provide to our clients. Our revenue flows from the management fees and incentive income generated by the funds that we manage, as well as the investment income earned from the investments we make in our funds, third-party funds and other companies. The management fees that we receive are based on the contractual terms of the relevant fund and are typically calculated as a fixed percentage of the capital commitments (as adjusted for distributions during a fund’s liquidation period), drawn capital, cost basis or net asset value (“NAV”) of the particular fund. Incentive income represents our share (up to 20%) of the investors’ profits in most of the closed-end and evergreen funds. Investment income generally reflects the investment return on a mark-to-market basis and our equity participation on the amounts that we invest in Oaktree and third-party funds, as well as in CLOs and other companies.

Business Environment and Developments

As a global investment manager, we are affected by a wide range of factors, including the condition of the global economy and financial markets; the relative attractiveness of our investment strategies and investors’ demand for them; and regulatory or other governmental policies or actions. Global economic conditions can significantly impact the values of our funds’ investments and our ability to make new investments or sell existing investments for our funds. Historically, however, the diversified nature of both our investment strategies and our revenue mix has generally allowed us to benefit from both strong and weak economic environments. Weak economies and the declining financial markets that typically accompany them tend to dampen our revenues from asset-based management fees, investment realizations or price appreciation, but their prospect can present us with opportunities to raise relatively larger amounts of capital for certain strategies, especially Distressed Debt. Additionally, weak financial markets may also present us with more opportunities to make investments for our funds at reduced prices. Conversely, strong financial markets generally increase the value of our funds’ investments, which positions us for growth in management fees that are based on asset value, and typically create favorable exit opportunities that enhance the prospect for incentive income and fund-related realized investment income proceeds. Those same markets may delay or diminish opportunities to deploy capital and thus management fees from certain of our funds.

Financial markets generated mixed returns in the third quarter of 2019. The S&P 500 Index and the Russell 2000 Index finished the quarter with a total return of 1.7% and -2.4%, respectively. Non-U.S. equities, as measured by the MSCI ACWI ex-USA Index, returned -1.7%, emerging market equities, as measured by the MSCI Emerging Markets Index, returned -4.1%, and European equity markets, as measured by the MSCI Europe Index, returned -1.8%. Credit markets performed relatively well for the quarter. Treasury bond prices declined for the quarter, with

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the 10-year U.S. Treasury yield declining 32 basis points, to 1.68%, from 2.00% at the end of the second quarter 2019. U.S. high yield bonds, as measured by the FTSE US High Yield Cash-Pay Capped Index, returned 0.9% for the quarter, European high yield bonds, as measured by the ICE BofAML Global Non-Financial High Yield European Issuers excluding Russia 3% Constrained Index, returned 1.2% and emerging market corporate bonds, as measured by the JP Morgan Corporate Emerging Markets Bond Index (CEMBI), returned 0.3%.

Against this backdrop, Oaktree’s incentive-creating closed-end funds delivered an overall blended gross return of 1.0% and 4.1% for the quarter and 12 months ended September 30, 2019, respectively. These returns exclude Highstar Capital IV, the infrastructure fund we inherited when adding the Highstar team back in 2014. Including Highstar Capital IV, the overall blended gross return was 0.9% and 3.5% for the quarter and last 12 months, respectively. As of September 30, 2019, AUM was $121.9 billion and management fee-generating AUM was $102.1 billion. Gross capital raised was $5.8 billion and $15.8 billion for the quarter and 12 months ended September 30, 2019, respectively. As of September 30, 2019, uncalled capital commitments were $19.3 billion. Of these commitments, $13.6 billion were not yet generating management fees (“shadow AUM”). 

Brookfield Merger

On March 13, 2019, Oaktree, Brookfield Asset Management Inc., a corporation incorporated under the laws of the Province of Ontario (“Brookfield”), Berlin Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”) and a wholly-owned subsidiary of Brookfield, Oslo Holdings LLC, a Delaware limited liability company (“SellerCo”) and a wholly-owned subsidiary of Oaktree Capital Group Holdings, L.P. (“OCGH”), and Oslo Holdings Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Oaktree (“Seller MergerCo”) entered into an agreement and plan of merger (the “Merger Agreement”). Pursuant to the terms and conditions set forth in the Merger Agreement, effective on September 30, 2019, (i) Merger Sub merged with and into Oaktree (the “Merger”), with Oaktree continuing as the surviving entity, and (ii) immediately following the Merger, SellerCo merged with and into Seller MergerCo (the “Subsequent Merger” and together with the Merger, the “Mergers”), with Seller MergerCo continuing as the surviving entity.

Upon the completion of the Mergers on September 30, 2019, Brookfield acquired 61.2% of Oaktree’s business in a stock and cash transaction. The remaining 38.8% of the business will continue to be owned by OCGH, whose unitholders consist primarily of OCG’s founders and certain other members of management and current and former employees. As part of the Merger, Brookfield acquired all outstanding OCG Class A units for, at the election of OCG Class A unitholders, either $49.00 in cash or 1.0770 Class A shares of Brookfield per OCG Class A unit (subject to pro-ration to ensure that no more than fifty percent (50%) of the aggregate merger consideration is paid in the form of cash or stock), in each case, without interest and subject to any applicable withholding taxes.  In addition, as part of the Subsequent Merger the founders, senior management, and current and former employee-unitholders of OCGH sold 20% of their OCGH units to Brookfield for the same consideration as the OCG Class A unitholders received in the merger.

Restructuring Transaction

On the closing date of the Mergers, Oaktree and certain other entities entered into a Restructuring Agreement (the “Restructuring”) pursuant to which Oaktree’s direct and indirect ownership of general partner and limited partner interests in certain Oaktree Operating Group entities were transferred to newly-formed, indirect subsidiaries of Brookfield as of October 1, 2019. As a result, as of October 1, 2019, while Oaktree’s consolidated financial statements will continue to reflect its indirect economic interest in Oaktree Capital I, L.P. (“Oaktree Capital I”) and Oaktree Capital Management (Cayman), L.P. (“OCM Cayman”), such financial statements will no longer include economic interests in Oaktree Capital II, L.P., Oaktree Investment Holdings, L.P., Oaktree Capital Management, L.P. (“OCM LP”), and Oaktree AIF Investments, L.P.

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Understanding Our Results—Consolidation of Oaktree Funds

Generally accepted accounting principles in the United States (“GAAP”) requires us to consolidate entities in which we have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. A limited partnership or similar entity is a variable interest entity (“VIE”) if the unaffiliated limited partners do not have substantive kick-out or participating rights. Most of the Oaktree funds are VIEs because they have not granted unaffiliated limited partners substantive kick-out or participating rights. Oaktree consolidates those VIEs in which we are the primary beneficiary. For entities that are not VIEs, consolidation is evaluated through a majority voting interest model. Please see note 2 to our condensed consolidated financial statements included elsewhere in this quarterly report for more information.

We do not consolidate most of the Oaktree funds that are VIEs because we are not the primary beneficiary due to the fact that our fee arrangements are considered at-market and thus not deemed to be variable interests, and we do not hold any other interests in those funds that are considered to be more than insignificant. However, investment vehicles in which we have a significant investment, such as CLOs and certain Oaktree funds, are consolidated under GAAP (“consolidated funds”). When a CLO or fund is consolidated, we reflect the assets, liabilities, revenues, expenses and cash flows of the consolidated funds on a gross basis, and the majority of the economic interests in those consolidated funds, which are held by third-party investors, are reflected as debt obligations of CLOs or non-controlling interests in consolidated funds in the consolidated financial statements. All of the revenues earned by us as investment manager of the consolidated funds are eliminated in consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the consolidation of a fund does not impact net income or loss attributable to us.

Certain entities in which we have the ability to exert significant influence, including unconsolidated Oaktree funds for which we act as general partner, are accounted for under the equity method of accounting.

Management makes operating decisions and assesses business performance based on financial and operating metrics and data that are presented without the consolidation of any funds. For a more detailed discussion of the factors that affect the results of operations of our business, please see “—Non-GAAP Results” below.  

Revenues

Our business generates three types of revenue: management fees, incentive income and investment income. Management fees are billed monthly or quarterly based on annual rates and are typically earned for each of the funds that we manage. The contractual terms of management fees generally vary by fund structure. Management fees also may include performance-based fees earned from certain open-end and evergreen fund accounts. For non-GAAP reporting, management fees include the portion of the earnings from management fees attributable to our minority equity interest in DoubleLine. We also have the opportunity to earn incentive income from most of our closed-end and evergreen funds. Our closed-end funds generally provide that we receive incentive income after we have returned to our investors all of their contributed capital plus an annual preferred return, typically 8%. Once this occurs, we generally receive as incentive income 80% of all distributions otherwise attributable to our investors, and those investors receive the remaining 20% until we have received, as incentive income, 20% of all such distributions in excess of the contributed capital from the inception of the fund. Thereafter, all such future distributions attributable to our investors are distributed 80% to those investors and 20% to us as incentive income. For non-GAAP reporting, incentive income also includes the portion of the performance fees attributable to our minority equity interest in DoubleLine earned in the period. Our third revenue source, investment income, represents our pro-rata share of income or loss from our investments, generally in our capacity as general partner in our funds and as an investor in our CLOs and third-party managed funds and companies.

Our consolidated revenues reflect the elimination of all management fees, incentive income and investment income earned by us as investment manager of our consolidated funds. Investment income is presented within the other income (loss) section of our condensed consolidated statements of operations. Please see “Business—Structure and Operation of Our Business—Structure of Funds” in our annual report for a detailed discussion of the structure of our funds.

Expenses

Compensation and Benefits

Compensation and benefits expense reflects all compensation-related items not directly related to incentive income, investment income or the vesting of Class A units, OCGH units, OCGH equity value units (“EVUs”), deferred

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equity units and other performance-based units, and includes salaries, bonuses, compensation based on management fees or a definition of profits, employee benefits, payroll taxes and phantom equity awards. Phantom equity awards represent liability-classified awards subject to vesting and remeasurement at the end of each reporting period. Phantom equity award expense reflects the vesting of those liability-classified awards, the equity distribution declared in the period and changes in the Class A unit price. For GAAP, compensation and benefits expense reflects the gross-up of reimbursable costs incurred on behalf of Oaktree funds in which the Company has determined it is the principal.

Equity-based Compensation

Equity-based compensation expense reflects the non-cash charge associated with grants of Class A units, OCGH units, EVUs, deferred equity units and other performance-based units. As of September 30, 2019, there was $218.9 million of unrecognized compensation expense, which is expected to be recognized as expense over a weighted average vesting period of 4.1 years as shown in the table below. These amounts are subject to change as a result of future unit grants, forfeitures, possible modifications to award terms, changes in the fair value of liability-classified EVUs, and changes in the estimated number of deferred equity units and other performance-based units that are expected to vest.

The following table summarizes the estimated amount of equity-based compensation expense to be recognized:

Equity-based Compensation Expense	Remainder of 2019		2020		2021		2022		2023		Thereafter		Total
	(in millions)
Estimated expense from equity grants awarded through September 2019	$	21.8	$	64.6	$	47.8	$	30.4	$	18.5	$	35.8	$	218.9

Incentive Income Compensation

Incentive income compensation expense primarily reflects compensation directly related to incentive income, which generally consists of percentage interests (sometimes referred to as “points”) that we grant to our investment professionals associated with the particular fund that generated the incentive income, and secondarily, compensation directly related to investment income. There is no fixed percentage for the incentive income-related portion of this compensation, either by fund or strategy. In general, within a particular strategy more recent funds have a higher percentage of aggregate incentive income compensation expense than do older funds. The percentage that consolidated incentive income compensation expense represents of the particular period’s consolidated incentive income may not be meaningful because incentive income from consolidated funds is eliminated in consolidation, whereas no incentive income compensation expense is eliminated in consolidation. For the most comparable percentage relationship, please see “—Non-GAAP Results” below.

General and Administrative

General and administrative expense includes costs related to occupancy, outside auditors, tax professionals, legal advisers, research, consultants, travel and entertainment, communications and information services, business process outsourcing, foreign-exchange activity, insurance, placement costs, changes in the contingent consideration liability, and other general items related directly to the Company’s operations. These expenses are net of amounts borne by fund investors and are not offset by credits attributable to fund investors’ non-controlling interests in consolidated funds. For GAAP, general and administrative expense reflects the gross-up of reimbursable costs incurred on behalf of Oaktree funds in which the Company has determined it is the principal.

Depreciation and Amortization

Depreciation and amortization expense includes costs associated with the purchase of furniture and equipment, capitalized software, office leasehold improvements, corporate aircraft and acquired intangibles. Furniture and equipment and capitalized software costs are depreciated using the straight-line method over the estimated useful life of the asset, which is generally three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the respective estimated useful life or the lease term. Company-owned aircraft are depreciated using the straight-line method over the estimated useful life. Acquired intangibles primarily relate to contractual rights and are amortized over their estimated useful lives, which range from seven to 25 years.

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Consolidated Fund Expenses

Consolidated fund expenses consist primarily of costs, expenses and fees that are incurred by, or arise out of the operation and activities of or otherwise are related to, our consolidated funds, including, without limitation, travel expenses, professional fees, research and software expenses, insurance, and other costs associated with administering and supporting those funds. Inasmuch as most of these fund expenses are borne by third-party investors, they reduce the investors’ interests in the consolidated funds and have no impact on net income or loss attributable to the Company.

Other Income (Loss)

Interest Expense

Interest expense primarily reflects the interest expense of the consolidated funds, as well as the interest expense of Oaktree and its operating subsidiaries.

Interest and Dividend Income

Interest and dividend income consists of interest and dividend income earned on the investments held by our consolidated funds, and interest income earned by Oaktree and its operating subsidiaries.

Net Realized Gain (Loss) on Consolidated Funds’ Investments

Net realized gain (loss) on consolidated funds’ investments consists of realized gains and losses arising from dispositions of investments held by our consolidated funds.

Net Change in Unrealized Appreciation (Depreciation) on Consolidated Funds’ Investments

Net change in unrealized appreciation (depreciation) on consolidated funds’ investments reflects both unrealized gains and losses on investments held by our consolidated funds and the reversal upon disposition of investments of unrealized gains and losses previously recognized for those investments.

Investment Income

Investment income represents our pro-rata share of income or loss from our investments, generally in our capacity as general partner in our funds and as an investor in our CLOs and third-party managed funds and companies. Investment income, as reflected in our condensed consolidated statements of operations, excludes investment income earned by us from our consolidated funds. For non-GAAP reporting, investment income attributable to our minority equity interest in DoubleLine is reflected in management fees and incentive income as discussed under “Revenues” above. 

Other Income (Expense), Net

Other income (expense), net includes non-operating income or expense items.

Income Taxes

Oaktree is a publicly traded partnership. Because it satisfies the qualifying income test, it is not required to be treated as a corporation for U.S. federal and state income tax purposes. Instead, it is taxed as a partnership. Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc., which are two of our five Intermediate Holding Companies and wholly-owned subsidiaries, are subject to U.S. federal and state income taxes. The remainder of Oaktree’s income is generally not subject to corporate-level taxation.

Oaktree’s effective tax rate is dependent on many factors, including the mix of revenues and expenses between our two corporate Intermediate Holding Companies that are subject to income tax and our three other Intermediate Holding Companies that are not; consequently, the effective tax rate is subject to significant variation from period to period. Oaktree’s effective tax rate used for interim periods is based on the estimated full year income tax rate. Certain items that cannot be reliably estimated, such as incentive income, are excluded from the estimated annual effective tax rate. The tax expense or benefit stemming from these items is recognized in the same period as the underlying income or expense.

Oaktree’s non-U.S. income or loss before taxes is generally not significant in relation to total pre-tax income or loss, and is generally more predictable because, unlike U.S. pre-tax income, it is not significantly impacted by

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unrealized gains or losses. Non-U.S. tax expense typically represents a disproportionately large percentage of total income tax expense because nearly all of our non-U.S. income or loss is subject to corporate-level income tax, whereas a substantial portion of our U.S.-based income or loss is not subject to corporate-level taxes. In addition, changes in the proportion of non-U.S. pre-tax income to total pre-tax income impact Oaktree’s effective tax rate to the extent non-U.S. rates differ from the combined U.S. federal and state tax rate.

Income taxes are accounted for using the liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets would be reduced by a valuation allowance if it becomes more likely than not that some portion or all of the deferred tax assets will not be realized.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests represents the ownership interests that third parties hold in entities that are consolidated in our financial statements. These interests fall into two categories:

• Net Income Attributable to Non-controlling Interests in Consolidated Funds. This category represents the economic interests of the unaffiliated investors in the consolidated funds, as well as the equity interests held by third-party investors in CLOs that had not yet priced as of the respective period end. Those interests are primarily driven by the investment performance of the consolidated funds. In comparison to net income, this measure excludes our operating results and other items solely attributable to the Company; and

• Net Income Attributable to Non-controlling Interests in Consolidated Subsidiaries. This category primarily represents the economic interest in the Oaktree Operating Group owned by OCGH (“OCGH non-controlling interest”), as well as the economic interest in certain consolidated subsidiaries held by third parties. The OCGH non-controlling interest is determined at the Oaktree Operating Group level based on the weighted average proportionate share of Oaktree Operating Group units held by the OCGH unitholders. Inasmuch as the number of outstanding Oaktree Operating Group units corresponds with the total number of outstanding Class A and OCGH units, changes in the economic interest held by the OCGH unitholders are driven by our additional issuances of Class A and OCGH units, as well as repurchases and forfeitures of, and exchanges between, Class A and OCGH units. Certain of our expenses, such as income tax and related administrative expenses of Oaktree Capital Group, LLC and its Intermediate Holding Companies, are solely attributable to the Class A unitholders. Please see note 13 to our condensed consolidated financial statements included elsewhere in this quarterly report for additional information on the economic interest in the Oaktree Operating Group owned by OCGH.

Net Income Attributable to Preferred Unitholders

This category represents distributions declared, if any, on our preferred units. Please see note 13 to our condensed consolidated financial statements for more information.

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Non-GAAP Measures

Our business is comprised of one segment, our investment management business, which consists of the investment management services that we provide to our clients. Management makes operating decisions and assesses the performance of our business based on financial and operating metrics and data that are presented without the consolidation of any funds. The data most important to management in assessing our performance are distributable earnings and fee-related earnings, each for both the Operating Group and per Class A unit. For a detailed reconciliation of the non-GAAP results of operations to our condensed consolidated statements of operations, please see “—Non-GAAP Results—Reconciliation of GAAP to Non-GAAP Results” below.

Distributable Earnings

We use distributable earnings to help evaluate the financial performance of, and make resource allocation and other operating decisions for, our business. Distributable earnings (“DE”) is a non-GAAP performance measure of profitability for our investment management business. DE reflects our realized earnings, after deducting preferred unit distributions, at the Operating Group level without the effects of the consolidated funds for the purpose of, among other things, assisting in the determination of equity distributions from the Operating Group. However, the declaration, payment and determination of the amount of equity distributions, if any, is at the sole discretion of our board of directors, which may change our distribution policy at any time.

DE revenues include the portion of the earnings from management fees and performance fees attributable to our 20% ownership interest in DoubleLine, which are reflected as investment income in our GAAP statements of operations. DE excludes (a) unrealized incentive income and the associated incentive income compensation expense, (b) unrealized gains and losses resulting from foreign-currency transactions and hedging activities, and (c) excludes investment income or loss, which is largely non-cash in nature, and includes the portion of income or loss on distributions received from funds and companies. DE also excludes (a) non-cash equity-based compensation expense, (b) acquisition-related items, including amortization of intangibles, changes in the contingent consideration liability and costs related to the Brookfield transaction, (c) income taxes and other income or expense applicable to OCG or its Intermediate Holding Companies, and (d) non-controlling interests. In addition, any make-whole premium charges related to the repayment of debt are, for DE purposes, amortized through the original maturity date of the repaid debt.

Distributable earnings-Class A, or distributable earnings per Class A unit, is a non-GAAP performance measure calculated to provide Class A unitholders with a measure that shows the portion of DE attributable to their ownership.  Distributable earnings-Class A represents DE, including the effect of (a) the OCGH non-controlling interest, (b) expenses such as current income tax expense applicable to OCG or its Intermediate Holding Companies, and (c) amounts payable under a tax receivable agreement.  The income tax expense included in distributable earnings-Class A represents the implied current provision for income taxes calculated using an approach similar to that which is used in calculating the income tax provision for GAAP.

Fee-related Earnings

Fee-related earnings (“FRE”) is a non-GAAP performance measure that we use to monitor the baseline earnings of our business. FRE is a component of DE and is comprised of management fees (“fee revenues”) less operating expenses other than incentive income compensation expense and non-cash equity-based compensation expense. FRE is considered baseline because it excludes all non-management fee revenue sources and applies all cash compensation and benefits other than incentive income compensation expense, as well as all general and administrative expenses, to management fees, even though those expenses also support the generation of incentive income and realized investment income proceeds. FRE is presented before income taxes.

Fee-related earnings-Class A, or fee-related earnings per Class A unit, is a non-GAAP performance measure calculated to provide Class A unitholders with a measure that shows the portion of FRE attributable to their ownership. Fee-related earnings-Class A represents FRE including the effect of (a) the OCGH non-controlling interest, (b) other income or expenses, such as income tax expense, applicable to OCG or its Intermediate Holding Companies and (c) any Operating Group income taxes attributable to OCG. Fee-related earnings-Class A income taxes is calculated excluding any incentive income or investment income (loss).

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Assets Under Management

AUM generally refers to the assets we manage and equals the NAV of the assets we manage, the leverage on which management fees are charged, the undrawn capital that we are entitled to call from investors in our funds pursuant to their capital commitments, investment proceeds held in trust for use in investment activities and our pro-rata portion of AUM managed by DoubleLine in which we hold a minority ownership interest. For our CLOs, AUM represents the aggregate par value of collateral assets and principal cash, for our publicly-traded BDCs, gross assets (including assets acquired with leverage), net of cash, for our special purpose acquisition companies, the proceeds of any initial public offerings held in trust for use in a business combination, and for DoubleLine funds, NAV. Our AUM includes amounts for which we charge no management fees. Our definition of AUM is not based on any definition contained in our operating agreement or the agreements governing the funds, accounts or companies that we manage or sponsor. Our calculation of AUM and the two AUM-related metrics below may not be directly comparable to the AUM metrics of other investment managers.

• Management Fee-generating Assets Under Management. Management fee-generating AUM is a forward-looking metric and generally reflects the beginning AUM on which we will earn management fees in the following quarter, as well as our pro-rata portion of the fee basis of DoubleLine’s AUM. Our closed-end funds typically pay management fees based on committed capital, drawn capital or cost basis during the investment period, without regard to changes in NAV, and during the liquidation period on the lesser of (a) total funded capital or (b) the cost basis of assets remaining in the fund. Certain closed-end funds pay management fees based on gross assets or NAV. The annual management fee rate generally remains unchanged from the investment period through the liquidation period. Our open-end and evergreen funds typically pay management fees based on their NAV, our CLOs pay management fees based on the aggregate par value of collateral assets and principal cash, as defined in the applicable CLO indentures, our publicly-traded BDCs pay management fees based on gross assets (including assets acquired with leverage), net of cash, and DoubleLine funds typically pay management fees based on NAV.

• Incentive-creating Assets Under Management. Incentive-creating AUM refers to the AUM that may eventually produce incentive income. It generally represents the NAV of our funds for which we are entitled to receive an incentive allocation, excluding CLOs and investments made by us and our employees and directors (which are not subject to an incentive allocation), gross assets (including assets acquired with leverage), net of cash, for our publicly-traded BDCs, and our pro-rata portion of DoubleLine’s incentive-creating AUM. All funds for which we are entitled to receive an incentive allocation are included in incentive-creating AUM, regardless of whether or not they are currently above their preferred return or high-water mark and therefore generating incentives. Incentive-creating AUM does not include undrawn capital commitments.

Accrued Incentives (Fund Level) and Incentives Created (Fund Level)

Our funds record as accrued incentives the incentive income that would be paid to us if the funds were liquidated at their reported values as of the date of the financial statements. Incentives created (fund level) refers to the gross amount of potential incentives generated by the funds during the period, and includes our pro-rata portion of performance fees attributable to our minority interest in DoubleLine earned in the period. We refer to the amount of accrued incentives recognized as revenue by us as incentive income. Amounts recognized by us as incentive income are no longer included in accrued incentives (fund level), the term we use for remaining fund-level accruals. The amount of incentives created may fluctuate substantially as a result of changes in the fair value of the underlying investments of the fund, as well as incentives created in excess of our typical 20% share due to catch-up allocations for applicable closed-end funds. Generally speaking, while in the catch-up layer, approximately 80% of any increase or decrease, respectively, in the fund’s NAV results in a commensurate amount of positive or negative incentives created (fund level).

The same performance and market risks inherent in incentives created (fund level) affect the ability to ultimately realize accrued incentives (fund level). One consequence of the accounting method we follow for incentives created (fund level) is that accrued incentives (fund level) is an off-balance sheet metric, rather than being an on-balance sheet receivable that could require reduction if fund performance suffers. We track accrued incentives (fund level) because it provides an indication of potential future value, though the timing and ultimate realization of that value are uncertain.  

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Incentives created (fund level), incentive income and accrued incentives (fund level) are presented gross, without deduction for direct compensation expense that is owed to our investment professionals associated with the particular fund when we earn the incentive income. We call that charge “incentive income compensation expense.” Incentive income compensation expense varies by the investment strategy and vintage of the particular fund, among many other factors.

Incentives created (fund level) often reflects investments measured at fair value and therefore is subject to risk of substantial fluctuation by the time the underlying investments are liquidated. We earn the incentive income, if any, that the fund is then obligated to pay us with respect to our incentive interest (generally 20%) in the profits of our unaffiliated investors, subject to an annual preferred return of typically 8%. Under GAAP, incentive income is recognized when it is probable that significant reversal of revenue will not occur. Distributable earnings includes incentive income when realized, which reduces the possibility that revenue recognized by us would be reversed in a subsequent period. We track incentives created (fund level) because it provides an indication of the value for us currently being created by our investment activities.

Uncalled Capital Commitments

Uncalled capital commitments represent undrawn capital commitments by partners (including Oaktree as general partner) of our closed-end funds through their investment periods and certain evergreen funds. If a closed-end fund distributes capital during its investment period, that capital is typically subject to possible recall, in which case it is included in uncalled capital commitments.  

Invested Capital

Invested capital reflects deployed capital, whether involving drawn or recycled equity capital, or borrowings from fund-level credit facilities.  This metric is used in connection with incentive-creating closed-end funds and certain evergreen funds.

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GAAP Consolidated Results of Operations

The following table sets forth our unaudited condensed consolidated statements of operations: 

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands, except per unit data)
Revenues:
Management fees	$	179,761		$	175,195		$	524,798		$	538,706
Incentive income	25,429			66,032			260,290			253,125
Total revenues	205,190			241,227			785,088			791,831
Expenses:
Compensation and benefits	(111,281		)	(101,787		)	(334,919		)	(315,614		)
Equity-based compensation	(22,779		)	(14,747		)	(59,756		)	(44,614		)
Incentive income compensation	(11,427		)	(27,294		)	(136,849		)	(127,327		)
Total compensation and benefits expense	(145,487		)	(143,828		)	(531,524		)	(487,555		)
General and administrative	(86,851		)	(38,051		)	(184,592		)	(110,459		)
Depreciation and amortization	(6,602		)	(6,459		)	(19,732		)	(19,412		)
Consolidated fund expenses	(6,540		)	(2,829		)	(12,994		)	(9,383		)
Total expenses	(245,480		)	(191,167		)	(748,842		)	(626,809		)
Other income (loss):
Interest expense	(59,883		)	(39,456		)	(149,643		)	(115,504		)
Interest and dividend income	101,882			74,490			278,782			205,089
Net realized gain (loss) on consolidated funds’ investments	(3,664		)	(9,812		)	(9,036		)	(12,509		)
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments	(40,964		)	10,552			17,967			(34,939		)
Investment income	26,819			58,196			121,804			149,682
Other income, net	—			5,629			58			7,240
Total other income	24,190			99,599			259,932			199,059
Income before income taxes	(16,100		)	149,659			296,178			364,081
Income taxes	(4,798		)	(6,568		)	(11,148		)	(17,832		)
Net income	(20,898		)	143,091			285,030			346,249
Less:
Net (income) loss attributable to non-controlling interests in consolidated funds	4,208			(14,427		)	(82,234		)	(17,792		)
Net (income) loss attributable to non-controlling interests in consolidated subsidiaries	6,871			(72,005		)	(109,259		)	(187,945		)
Net (income) loss attributable to OCG	(9,819		)	56,659			93,537			140,512
Net income attributable to preferred unitholders	(6,829		)	(3,909		)	(20,487		)	(3,909		)
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750		$	73,050		$	136,603
Distributions declared per Class A unit	$	3.13		$	0.55		$	4.93		$	2.27
Net income (loss) per Class A unit (basic and diluted):
Net income (loss) per Class A unit	$	(0.22	)	$	0.74		$	0.99		$	1.95
Weighted average number of Class A units outstanding	75,995			71,369			74,005			70,167

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Third Quarter Ended September 30, 2019 Compared to the Third Quarter Ended September 30, 2018

Revenues

Management Fees

Management fees increased $4.6 million, or 2.6%, to $179.8 million for the third quarter of 2019, from $175.2 million for the third quarter of 2018. The increase reflected an aggregate increase of $25.3 million principally from closed-end funds in their investment periods, partially offset by decline of $20.7 million primarily attributable to closed-end funds in liquidation.

Incentive Income

Incentive income decreased $40.6 million, or 61.5%, to $25.4 million for the third quarter of 2019, from $66.0 million for the third quarter of 2018. The third quarter of 2019 included $13.6 million from Oaktree Opportunities Fund VIII and $9.1 million from Oaktree Opportunities Fund VIIb. The third quarter of 2018 included $45.8 million from Oaktree Opportunities Fund VIIb.

Expenses

Compensation and Benefits

Compensation and benefits expense increased $9.5 million, or 9.3%, to $111.3 million for the third quarter of 2019, from $101.8 million for the third quarter of 2018, primarily driven by growth in headcount, as well as higher expenses related to employee benefits.

Equity-based Compensation

Equity-based compensation expense increased $8.1 million, or 55.1%, to $22.8 million for the third quarter of 2019, from $14.7 million for the third quarter of 2018, primarily reflecting the impact of unit grants made during the first quarter of 2019.

Incentive Income Compensation

Incentive income compensation expense decreased $15.9 million, or 58.2%, to $11.4 million for the third quarter of 2019, from $27.3 million for the third quarter of 2018, primarily reflecting the decrease in incentive income.

General and Administrative

General and administrative expense increased $48.8 million, or 128.1%, to $86.9 million for the third quarter of 2019, from $38.1 million for the third quarter of 2018, primarily reflecting costs associated with the Brookfield transaction.

Depreciation and Amortization

Depreciation and amortization expense was $6.6 million and $6.5 million for the third quarter of 2019 and 2018, respectively.

Consolidated Fund Expenses

Consolidated fund expenses increased $3.7 million, or 132.1%, to $6.5 million for the third quarter of 2019, from $2.8 million for the third quarter of 2018. The increase reflected higher general costs of our consolidated funds.

Other Income (Loss)

Interest Expense

Interest expense increased $20.4 million, or 51.6%, to $59.9 million for the third quarter of 2019, from $39.5 million for the third quarter of 2018. The increase was primarily attributable to our consolidated funds.

Interest and Dividend Income

Interest and dividend income increased $27.4 million, or 36.8%, to $101.9 million for the third quarter of 2019, from $74.5 million for the third quarter of 2018. The increase was primarily attributable to our consolidated funds.

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Net Realized Gain (Loss) on Consolidated Funds’ Investments

Net realized gain (loss) on consolidated funds’ investments increased $6.1 million, to a loss of $3.7 million for the third quarter of 2019, from a loss of $9.8 million for the third quarter of 2018. The increase reflected our consolidated funds’ performance in each period.

Net Change in Unrealized Appreciation (Depreciation) on Consolidated Funds’ Investments

Net change in unrealized appreciation (depreciation) on consolidated funds’ investments decreased $51.6 million, to a loss of $41.0 million for the third quarter of 2019, from a gain of $10.6 million for the third quarter of 2018. Excluding the impact of the reversal of net realized gain (loss) on consolidated funds’ investments, the net change in unrealized appreciation (depreciation) on consolidated funds’ investments decreased $45.3 million, to a net loss of $44.6 million for the third quarter of 2019, from a net gain of $0.7 million for the third quarter of 2018, reflecting our consolidated funds’ performance in each period.

Investment Income

Investment income decreased $31.4 million, or 54.0%, to $26.8 million for the third quarter of 2019, from $58.2 million for the third quarter of 2018. The decrease primarily reflected lower returns on our Credit, Real Assets and Non-Oaktree investments.

Income Taxes

Income taxes decreased $1.8 million, or 27.3%, to $4.8 million for the third quarter of 2019, from $6.6 million for the third quarter of 2018.  The decrease primarily reflected a lower effective tax rate for the third quarter of 2019, resulting from costs associated with the Brookfield transaction. The effective tax rates applicable to Class A unitholders for the third quarters of 2019 and 2018 were (48)% and 11%, respectively, resulting from full-year effective rates of 0% and 8%, respectively.  The effective tax rate used for interim fiscal periods is based on an estimated full-year effective tax rate on income that can be reliably forecasted, combined with the tax expense in the current period on incentive income and any other income that cannot be reliably estimated. We generally expect variability in tax rates between periods, because the effective tax rate is a function of the mix of income and other factors, each of which can have a material impact on the particular period’s income tax expense and may vary significantly within or between years.  Please see “—Understanding Our Results—Consolidation of Oaktree Funds.”

Net Income (Loss) Attributable to Non-controlling Interests in Consolidated Funds

Net income (loss) attributable to non-controlling interests in consolidated funds decreased $18.6 million, to a loss of $4.2 million for the third quarter of 2019, from income of $14.4 million for the third quarter of 2018. The decrease reflected our consolidated funds’ performance attributable to third-party investors in each period.

Net Income Attributable to Oaktree Capital Group, LLC Class A Unitholders

Net income (loss) attributable to Oaktree Capital Group, LLC Class A unitholders decreased $69.4 million, or 131.4%, to a loss of $16.6 million for the third quarter of 2019, from income of $52.8 million for the third quarter of 2018, primarily reflecting costs associated with the Brookfield transaction.

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Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

Revenues

Management Fees

Management fees decreased $13.9 million, or 2.6%, to $524.8 million for the first nine months of 2019, from $538.7 million for the first nine months of 2018. The decrease reflected an aggregate decline of $76.4 million primarily attributable to unconsolidated closed-end funds in liquidation, partially offset by an aggregate increase of $62.5 million principally from closed-end funds in their investment periods.

Incentive Income

Incentive income increased $7.2 million, or 2.8%, to $260.3 million for the first nine months of 2019, from $253.1 million for the first nine months of 2018. The first nine months of 2019 included $177.3 million from Oaktree Opportunities Fund VIII while Oaktree Principal Opportunities Fund IV contributed $104.8 million of incentive income to the first nine months of 2018.

Expenses

Compensation and Benefits

Compensation and benefits expense increased $19.3 million, or 6.1%, to $334.9 million for the first nine months of 2019, from $315.6 million for the first nine months of 2018, primarily driven by growth in headcount, as well as higher expenses related to employee benefits.

Equity-based Compensation

Equity-based compensation expense increased $15.2 million, or 34.1% to $59.8 million for the first nine months of 2019, from $44.6 million for the first nine months of 2018, primarily due to the impact of unit grants made during the first quarter of 2019.

Incentive Income Compensation

Incentive income compensation expense increased $9.5 million, or 7.5%, to $136.8 million for the first nine months of 2019, from $127.3 million for the first nine months of 2018, primarily reflecting the increase in incentive income.

General and Administrative

General and administrative expense increased $74.1 million, or 67.1%, to $184.6 million for the first nine months of 2019, from $110.5 million for the first nine months of 2018, primarily reflecting costs associated with the Brookfield transaction.

Depreciation and Amortization

Depreciation and amortization expense increased $0.3 million, or 1.5%, to $19.7 million for the first nine months of 2019, from $19.4 million for the first nine months of 2018.

Consolidated Fund Expenses

Consolidated fund expenses increased $3.6 million, or 38.3%, to $13.0 million for the first nine months of 2019, from $9.4 million for the first nine months of 2018. The increase reflected higher general costs of our consolidated funds.

Other Income (Loss)

Interest Expense

Interest expense increased $34.1 million, or 29.5%, to $149.6 million for the first nine months of 2019, from $115.5 million for the first nine months of 2018. The increase was primarily attributable to our consolidated funds.

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Interest and Dividend Income

Interest and dividend income increased $73.7 million, or 35.9%, to $278.8 million for the first nine months of 2019, from $205.1 million for the first nine months of 2018. The increase was primarily attributable to our consolidated funds.

Net Realized Gain (Loss) on Consolidated Funds’ Investments

Net realized gain (loss) on consolidated funds’ investments increased $3.5 million, to a loss of $9.0 million for the first nine months of 2019, from a loss of $12.5 million for the first nine months of 2018. The increase reflected our consolidated funds’ performance in each period.

Net Change in Unrealized Appreciation (Depreciation) on Consolidated Funds’ Investments

Net change in unrealized appreciation (depreciation) on consolidated funds’ investments increased $52.9 million, to a gain of $18.0 million for the first nine months of 2019, from a loss of $34.9 million for the first nine months of 2018. Excluding the impact of the reversal of net realized gain (loss) on consolidated funds’ investments, the net change in unrealized appreciation (depreciation) on consolidated funds’ investments increased $56.3 million, to a net gain of $8.9 million for the first nine months of 2019, from a net loss of $47.4 million for the first nine months of 2018, reflecting our consolidated funds’ performance in each period.

Investment Income

Investment income decreased $27.9 million, or 18.6%, to $121.8 million for the first nine months of 2019, from $149.7 million for the first nine months of 2018. The decrease primarily reflected lower returns on our Credit and Real Assets investments, partially offset by higher returns on our Listed Equities investments.

Income Taxes

Income taxes decreased $6.7 million, or 37.6%, to $11.1 million for the first nine months of 2019, from $17.8 million for the first nine months of 2018.  The decrease primarily reflected lower pre-tax income attributable to Class A unitholders, partially offset by a higher effective tax rate for the first nine months of 2019. The effective tax rates applicable to Class A unitholders for the first nine months 2019 and 2018 were 13% and 10%, respectively. The effective tax rate used for interim fiscal periods is based on an estimated full-year effective tax rate on income that can be reliably forecasted, combined with the tax expense in the current period on incentive income and any other income that cannot be reliably estimated. We generally expect variability in tax rates between periods, because the effective tax rate is a function of the mix of income and other factors, each of which can have a material impact on the particular period’s income tax expense and may vary significantly within or between years.  Please see “—Understanding Our Results—Consolidation of Oaktree Funds.”

Net Income Attributable to Non-controlling Interests in Consolidated Funds

Net income attributable to non-controlling interests in consolidated funds increased $64.4 million, to $82.2 million for the first nine months of 2019, from $17.8 million for the first nine months of 2018. The increase reflected our consolidated funds’ performance attributable to third-party investors in each period.

Net Income Attributable to Oaktree Capital Group, LLC Class A Unitholders

Net income attributable to Oaktree Capital Group, LLC Class A unitholders decreased $63.5 million, or 46.5%, to $73.1 million for the first nine months of 2019, from $136.6 million for the first nine months of 2018, primarily reflecting costs associated with the Brookfield transaction.

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Non-GAAP Financial Data

Oaktree presents certain revenues and financial measures, including measures that are calculated and presented on a basis other than GAAP (“non-GAAP”). Examples of such non-GAAP measures are identified in the table below. Such non-GAAP measures should be considered in addition to, and not as a substitute for or superior to, net income, net income per Class A unit or other financial measures calculated in accordance with GAAP.

The following table presents non-GAAP financial data:

	As of or for the Three Months Ended September 30,				As of or for the Nine Months Ended September 30,
	2019		2018		2019		2018
Non-GAAP Results: (1)	(in thousands, except per unit data or as otherwise indicated)
Distributable earnings revenues	$	252,739	$	319,822	$	1,233,808	$	1,084,141
Distributable earnings	86,245		143,940		458,480		452,199
Distributable earnings per Class A unit	0.57		0.88		2.88		2.74
Fee revenues	201,557		197,056		589,695		595,938
Fee-related earnings	57,371		56,286		141,328		165,648
Fee-related earnings per Class A unit	0.35		0.34		0.86		0.99
Weighted Average Units:
OCGH	83,666		85,775		84,796		86,675
Class A	75,995		71,369		74,005		70,167
Total units	159,661		157,144		158,801		156,842
Operating Metrics:
Assets under management (in millions):
Assets under management	$	121,940	$	123,516	$	121,940	$	123,516
Management fee-generating assets under management	102,061		100,693		102,061		100,693
Incentive-creating assets under management	35,765		33,626		35,765		33,626
Uncalled capital commitments	19,336		21,435		19,336		21,435
Accrued incentives (fund level):
Incentives created (fund level)	77,330		134,966		176,664		365,468
Incentives created (fund level), net of associated incentive income compensation expense	36,742		59,278		90,441		172,497
Accrued incentives (fund level)	1,345,718		1,924,410		1,345,718		1,924,410
Accrued incentives (fund level), net of associated incentive income compensation expense	642,186		914,886		642,186		914,886

(1) Beginning with the first quarter of 2019, the Company has determined that distributable earnings is the primary financial measure used by management to make operating decisions and assess the performance of our business. In connection with this determination, the definition of distributable earnings was modified to include the deduction for preferred unit distributions and exclude costs related to the Brookfield transaction. For comparability, prior periods have been recast for this change, as applicable.

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Operating Metrics

We monitor certain operating metrics that are either common to the alternative asset management industry or that we believe provide important data regarding our business. These operating metrics include AUM, management fee-generating AUM, incentive-creating AUM, incentives created (fund level), accrued incentives (fund level) and uncalled capital commitments.

Assets Under Management

	As of
	September 30, 2019		June 30, 2019		September 30, 2018
Assets Under Management:	(in millions)
Closed-end funds	$	56,762	$	55,718	$	57,734
Open-end funds	26,564		27,359		32,454
Evergreen funds	9,247		9,284		8,672
DoubleLine (1)	29,367		28,007		24,656
Total	$	121,940	$	120,368	$	123,516

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Change in Assets Under Management:	(in millions)
Beginning balance	$	120,368		$	121,584		$	119,560		$	123,930
Closed-end funds:
Capital commitments/other (2)	4,133			2,205			8,100			5,268
Distributions for a realization event/other (3)	(1,778		)	(1,478		)	(6,108		)	(5,561		)
Change in uncalled capital commitments for funds entering or in liquidation (4)	(4		)	90			(645		)	(142		)
Foreign-currency translation	(369		)	(41		)	(396		)	(266		)
Change in market value (5)	178			745			1,159			1,701
Change in applicable leverage	(1,116		)	(81		)	(2,454		)	(137		)
Open-end funds:
Contributions	1,319			841			2,856			2,456
Redemptions	(2,182		)	(1,745		)	(8,758		)	(5,436		)
Foreign-currency translation	(217		)	(49		)	(237		)	(241		)
Change in market value (5)	285			583			2,922			234
Evergreen funds:
Contributions or new capital commitments (6)	298			306			688			809
Redemptions or distributions (7)	(164		)	(205		)	(357		)	(636		)
Foreign-currency translation	—			1			—			—
Change in market value (5)	(171		)	144			358			583
DoubleLine:
Net change in DoubleLine	1,360			616			5,252			954
Ending balance	$	121,940		$	123,516		$	121,940		$	123,516

(1) DoubleLine AUM reflects our pro-rata portion (based on our 20% ownership stake) of DoubleLine’s total AUM.

(2) These amounts include capital commitments, as well as the aggregate par value of collateral assets and principal cash related to new CLO formations.

(3) These amounts include distributions for a realization event, tax-related distributions, reductions in the par value of collateral assets and principal cash resulting from the repayment of debt as return of principal by CLOs, and recallable distributions at the end of the investment period.

(4) The change in uncalled capital commitments generally reflects declines attributable to funds entering their liquidation periods, as well as capital contributions to funds in their liquidation periods for deferred purchase obligations or other reasons.

(5) The change in market value reflects the change in NAV of our funds, less management fees and other fund expenses, as well as changes in the aggregate par value of collateral assets and principal cash held by CLOs and other levered funds.

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(6) These amounts include contributions and capital commitments, and for our publicly-traded BDCs, issuances of equity or debt capital.

(7) These amounts include redemptions and distributions, and for our publicly-traded BDCs, dividends, repurchases of equity capital or repayment of debt.

Management Fee-generating AUM

	As of
	September 30, 2019		June 30, 2019		September 30, 2018
Management Fee-generating AUM:	(in millions)
Closed-end funds:
Senior Loans	$	7,037	$	7,525	$	8,297
Other closed-end funds	30,946		30,440		28,054
Open-end funds	26,355		27,106		32,120
Evergreen funds	8,356		8,357		7,566
DoubleLine	29,367		28,007		24,656
Total	$	102,061	$	101,435	$	100,693

	Three months ended September 30,						Nine Months Ended September 30,
Change in Management Fee-generating AUM:	2019			2018			2019			2018
	(in millions)
Beginning balance	$	101,435		$	100,547		$	98,108		$	104,287
Closed-end funds:
Capital commitments to funds that pay fees based on committed capital/other (1)	1,743			465			5,078			465
Capital drawn by funds that pay fees based on drawn capital, NAV or cost basis	1,329			608			2,422			1,552
Change attributable to funds in liquidation (2)	(902		)	(1,052		)	(2,128		)	(3,628		)
Change in uncalled capital commitments for funds entering or in liquidation that pay fees based on committed capital (3)	(5		)	(174		)	(5		)	(174		)
Distributions by funds that pay fees based on NAV / other (4).	(757		)	(95		)	(1,770		)	(449		)
Foreign-currency translation	(297		)	(36		)	(314		)	(242		)
Change in market value (5).	(23		)	63			123			115
Change in applicable leverage	(1,070		)	(78		)	(2,358		)	(133		)
Open-end funds:
Contributions	1,272			791			2,807			2,355
Redemptions	(2,092		)	(1,721		)	(8,620		)	(5,412		)
Foreign-currency translation	(217		)	(49		)	(236		)	(241		)
Change in market value	286			579			2,901			230
Evergreen funds:
Contributions or capital drawn by funds that pay fees based on drawn capital or NAV (6)	288			302			737			999
Redemptions or distributions (7)	(167		)	(206		)	(363		)	(558		)
Change in market value (5).	(122		)	133			427			573
Change in applicable leverage	—			—			—			—
DoubleLine:
Net change in DoubleLine	1,360			616			5,252			954
Ending balance	$	102,061		$	100,693		$	102,061		$	100,693

(1) These amounts include capital commitments to funds that pay fees based on committed capital, as well as the aggregate par value of collateral assets and principal cash related to new CLO formations.

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(2) These amounts include the change for funds that pay fees based on the lesser of funded capital or cost basis during the liquidation period, as well as recallable distributions at the end of the investment period. For most closed-end funds, management fees are charged during the liquidation period on the lesser of (a) total funded capital or (b) the cost basis of assets remaining in the fund, with the cost basis of assets generally calculated by excluding cash balances. Thus, changes in fee basis during the liquidation period are not dependent on distributions made from the fund; rather, they are tied to the cost basis of the fund’s investments, which typically declines as the fund sells assets.

(3) The change in uncalled capital commitments reflects declines attributable to funds entering their liquidation periods, as well as capital contributions to funds in their liquidation periods for deferred purchase obligations or other reasons.

(4) These amounts include distributions by funds that pay fees based on NAV, as well as reductions in the par value of collateral assets and principal cash resulting from the repayment of debt as return of principal by CLOs.

(5) The change in market value reflects certain funds that pay management fees based on NAV and leverage, as applicable, as well as changes in the aggregate par value of collateral assets and principal cash held by CLOs and other levered funds.

(6) These amounts include contributions and capital commitments, and for our publicly-traded BDCs, issuances of equity or debt capital.

(7) These amounts include redemptions and distributions, and for our publicly-traded BDCs, dividends, repurchases of equity capital or repayment of debt.

A reconciliation of AUM to management fee-generating AUM is set forth below:  

	As of
Reconciliation of AUM to Management Fee-generating AUM:	September 30, 2019			June 30, 2019			September 30, 2018
	(in millions)
Assets under management	$	121,940		$	120,368		$	123,516
Difference between assets under management and committed capital or the lesser of funded capital or cost basis for applicable closed-end funds (1)	(1,397		)	(1,601		)	(3,040		)
Undrawn capital commitments to closed-end funds that have not yet commenced their investment periods	(9,485		)	(9,133		)	(10,098		)
Undrawn capital commitments to funds for which management fees are based on drawn capital, NAV or cost basis	(4,125		)	(4,081		)	(5,263		)
Oaktree’s general partner investments in management fee-generating funds	(1,548		)	(1,598		)	(1,798		)
Funds that pay no management fees (2)	(3,324		)	(2,520		)	(2,624		)
Management fee-generating assets under management	$	102,061		$	101,435		$	100,693

(1) This difference is not applicable to closed-end funds that pay management fees based on NAV or leverage.

(2) This includes funds that are no longer paying management fees, co-investments that pay no management fees, certain accounts that pay administrative fees intended to offset Oaktree’s costs related to the accounts, and CLOs in the warehouse stage or with extended management fee start dates that currently pay no management fees.

The period-end weighted average annual management fee rates applicable to the closed-end, open-end and evergreen management fee-generating AUM balances above are set forth below.

	As of
Weighted Average Annual Management Fee Rates:	September 30, 2019		June 30, 2019		September 30, 2018
Closed-end funds:
Senior Loans	0.45	%	0.47	%	0.50	%
Other closed-end funds	1.39		1.41		1.46
Open-end funds	0.44		0.45		0.45
Evergreen funds (1)	1.16		1.17		1.19
All Oaktree funds (2)	0.93		0.93		0.90

(1) Fee rates reflect the applicable asset-based management fee rates, exclusive of quarterly incentive fees on investment income that are included in management fees.

(2) Excludes DoubleLine funds.

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Incentive-creating AUM

Incentive-creating AUM is set forth below. The portion of incentive-creating AUM generating incentives at the fund level was $24.5 billion as of September 30, 2019, $19.5 billion as of December 31, 2018 and $21.1 billion as of September 30, 2018. Incentive-creating AUM does not include undrawn capital commitments. 

	As of
	September 30, 2019		June 30, 2019		September 30, 2018
Incentive-creating AUM:	(in millions)
Closed-end funds	$	28,411	$	28,521	$	26,801
Evergreen funds	6,726		6,822		6,236
DoubleLine	628		657		589
Total	$	35,765	$	36,000	$	33,626

Third Quarter Ended September 30, 2019

AUM increased $1.5 billion, or 1.2%, to $121.9 billion as of September 30, 2019, from $120.4 billion as of June 30, 2019. The increase primarily reflected $4.1 billion of capital commitments to closed-end funds and $1.4 billion attributable to DoubleLine, partially offset by $1.8 billion of distributions to closed-end fund investors, change in applicable leverage of $1.1 billion, and $0.9 billion of net outflows from open-end funds. Commitments to closed-end funds included $1.5 billion for CLOs, $0.9 for Oaktree Principal Continuation Fund V, $0.6 billion for Emerging Markets Opportunities, $0.4 billion for Oaktree Transportation Infrastructure Fund, and $0.3 billion for Oaktree Special Situations Fund II (“SS II”).

Management fee-generating AUM, a forward-looking metric, increased $0.7 billion, or 0.7%, to $102.1 billion as of September 30, 2019, from $101.4 billion as of June 30, 2019. The increase primarily reflected $1.7 billion of capital commitments to funds that pay fees based on committed capital, $1.4 billion attributable to DoubleLine and$1.3 billion of capital drawn by funds that pay fees based on drawn capital, NAV or cost basis, partially offset by $1.1 billion change in applicable leverage, $0.9 billion attributable to closed-end funds in liquidation, and $0.8 billion of net outflows from open-end funds.

Incentive-creating AUM decreased $0.2 billion, or 0.6%, to $35.8 billion as of September 30, 2019, from $36.0 billion as of June 30, 2019. The decrease reflected an aggregate decrease of $2.1 billion primarily attributable to distributions and market-value losses, partially offset by an aggregate $1.9 billion of drawdowns and contributions.

Third Quarter Ended September 30, 2018

AUM increased $1.9 billion, or 1.6%, to $123.5 billion as of September 30, 2018, from $121.6 billion as of June 30, 2018. The increase primarily reflected $2.2 billion in new capital commitments to closed-end funds, $1.5 billion in market-value gains and $0.6 billion attributable to DoubleLine, partially offset by $1.5 billion of distributions to closed-end fund investors and $0.9 billion of net outflows from open-end funds. Commitments to closed-end funds included $0.7 billion for our Middle Market Direct Lending strategy, $0.5 billion for Oaktree Special Situations Fund II (“SSF II”) and $0.4 billion for our Emerging Markets Debt strategy.

Management fee-generating AUM, a forward-looking metric, increased $0.2 billion, or 0.2%, to $100.7 billion as of September 30, 2018, from $100.5 billion as of June 30, 2018. The increase primarily reflected $0.8 billion in market-value gains, $0.6 billion attributable to DoubleLine and $0.6 billion from capital drawn by funds that pay fees based on drawn capital, NAV or cost basis, largely offset by $1.2 billion attributable to closed-end funds in liquidation and $0.9 billion of net outflows from open-end funds.

Incentive-creating AUM increased $0.3 billion, or 0.9%, to $33.6 billion as of September 30, 2018, from $33.3 billion as of June 30, 2018. The increase reflected an aggregate $2.0 billion in drawdowns or contributions by closed-end and evergreen funds and market-value gains, partially offset by an aggregate $1.7 billion decline primarily attributable to distributions by closed-end funds.

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Nine Months Ended September 30, 2019

AUM increased $3.0 billion, or 2.5%, to $121.9 billion as of September 30, 2019, from $119.6 billion as of December 31, 2018. The increase primarily reflected $8.1 billion of capital commitments to closed-end funds, $5.3 billion attributable to DoubleLine and, $4.4 billion in market-value gains, partially offset by $6.8 billion of distributions to closed-end fund investors and uncalled capital commitments and $5.9 billion of net outflows from open-end funds.

Management fee-generating AUM, a forward-looking metric, increased $4.0 billion, or 4.0%, to $102.1 billion as of September 30, 2019, from $98.1 billion as of December 31, 2018. The increase primarily reflected $5.3 billion attributable to DoubleLine, $4.6 billion for new CLOs, HS III and Oaktree Power Opportunities Fund V, and $3.5 billion in market-value gains, partially offset by $5.8 billion of net outflows from open-end funds and $3.8 billion attributable to closed-end funds in liquidation and distributions by funds that pay fees based on NAV.

Incentive-creating AUM increased $1.2 billion, or 3.0%, to $35.8 billion as of September 30, 2019, from $34.6 billion as of December 31, 2018. The increase reflected an aggregate $6.4 billion in drawdowns, contributions and market-value gains, partially offset by an aggregate decline of $5.2 billion primarily attributable to distributions.

Nine Months Ended September 30, 2018

AUM decreased $0.4 billion, or 0.3%, to $123.5 billion as of September 30, 2018, from $123.9 billion as of December 31, 2017. The decrease primarily reflected $5.6 billion of distributions to closed-end fund investors, $3.0 billion of net outflows from open-end funds and $0.5 billion of unfavorable foreign-currency translation, largely offset by $5.3 billion in new capital commitments to closed-end funds, $2.5 billion in market-value gains and $1.0 billion attributable to DoubleLine. Commitments to closed-end funds included $1.2 billion for SSF II, $1.1 billion for Oaktree Transportation Infrastructure Fund (“TIF”), $0.9 billion to Oaktree Real Estate Debt Fund II, $0.7 billion for our Middle Market Direct Lending strategy and $0.5 billion for our Emerging Markets Debt strategy.

Management fee-generating AUM, a forward-looking metric, decreased $3.6 billion, or 3.5%, to $100.7 billion as of September 30, 2018, from $104.3 billion as of December 31, 2017. The decrease primarily reflected $3.6 billion attributable to closed-end funds in liquidation, $3.1 billion of net outflows from open-end funds and $0.5 billion of unfavorable foreign-currency translation, partially offset by $1.6 billion from capital drawn by closed-end funds that pay fees based on drawn capital, NAV or cost basis, $1.0 billion attributable to DoubleLine, $0.9 billion in market-value gains and $0.4 billion of net capital inflows to evergreen funds.

Incentive-creating AUM increased $0.3 billion, or 0.9%, to $33.6 billion as September 30, 2018, from $33.3 billion as of December 31, 2017. The increase reflected an aggregate $6.2 billion in drawdowns or contributions by closed-end and evergreen funds and market-value gains, partially offset by an aggregate $5.9 billion decline primarily attributable to distributions by closed-end funds.

Accrued Incentives (Fund Level) and Incentives Created (Fund Level)

Accrued incentives (fund level), gross and net of incentive income compensation expense, as well as changes in accrued incentives (fund level), are set forth below.  

	As of or for the Three Months Ended September 30,						As of or for the Nine Months Ended September 30,
	2019			2018			2019			2018
Accrued Incentives (Fund Level):	(in thousands)
Beginning balance	$	1,294,866		$	1,863,932		$	1,722,120		$	1,920,339
Incentives created (fund level):
Closed-end funds	88,049			115,659			145,147			315,815
Evergreen funds	(11,768		)	18,787			26,917			49,033
DoubleLine	1,049			520			4,600			620
Total incentives created (fund level)	77,330			134,966			176,664			365,468
Less: incentive income recognized by us	(26,478		)	(74,488		)	(553,066		)	(361,397		)
Ending balance	$	1,345,718		$	1,924,410		$	1,345,718		$	1,924,410
Accrued incentives (fund level), net of associated incentive income compensation expense	$	642,186		$	914,886		$	642,186		$	914,886

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As of September 30, 2019 and 2018, the portion of net accrued incentives (fund level) represented by funds that were currently paying incentives was $127.2 million (or 20%) and $329.9 million (or 36%), respectively, with the remainder arising from funds that as of that date were not at the stage of their cash distribution waterfall where Oaktree was entitled to receive incentives, other than possibly tax-related distributions.

As of September 30, 2019, $495.2 million, or 77%, of the net accrued incentives (fund level) was in evergreen or closed-end funds in their liquidation period. Please see note 2 for a discussion of the fair-value hierarchy level established by GAAP.

Third Quarters Ended September 30, 2019 and 2018

Incentives created (fund level) was $77.3 million for the third quarter of 2019, primarily reflecting $43.1 million of incentives created (fund level) from Private Equity funds and $41.5 million from Real Asset funds.

Incentives created (fund level) was $135.0 million for the third quarter of 2018, primarily reflecting $53.4 million of incentives created (fund level) from Private Equity funds, $38.9 million from Credit funds, and $35.5 million from Real Asset funds.

Nine Months Ended September 30, 2019 and 2018

Incentives created (fund level) was $176.7 million for the first nine months of 2019, primarily reflecting $95.6 million of incentives created (fund level) from Real Asset funds and $58.9 million from Credit funds.

Incentives created (fund level) was $365.5 million for the first nine months of 2018, primarily reflecting $174.3 million of incentives created (fund level) from Credit funds, $104.6 million from Private Equity funds and $79.1 million from Real Asset funds.

Uncalled Capital Commitments

As of September 30, 2019, June 30, 2019, and September 30, 2018, uncalled capital commitments were $19.3 billion, $18.0 billion and $21.4 billion, respectively. Invested capital during the quarter and 12 months ended September 30, 2019 aggregated $1.9 billion and $10.3 billion, respectively, as compared with $2.8 billion and $8.7 billion for the comparable prior-year periods.

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Non-GAAP Results

Our business is comprised of one segment, our investment management business, which consists of the investment management services that we provide to our clients. Management makes operating decisions and assesses the performance of our business based on financial data that are presented without the consolidation of our funds. The data most important to management in assessing our performance are distributable earnings and fee-related earnings, each for both the Operating Group and per Class A unit. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented below under “—Reconciliation of GAAP to Non-GAAP Results.”

Distributable Earnings

The following schedules set forth the components of distributable earnings: 

Distributable Earnings Revenues

	Three Months Ended September 30,				Nine months ended September 30, 2019
	2019		2018		2019		2018
	(in thousands)
Revenues:
Management fees	$	201,557	$	197,056	$	589,695	$	595,938
Incentive income	26,478		74,488		553,066		361,397
Realized investment income proceeds	24,704		48,278		91,047		126,806
Total distributable earnings revenues	$	252,739	$	319,822	$	1,233,808	$	1,084,141

Adjusted Expenses

	Three Months Ended September 30,						Nine months ended September 30, 2019
	2019			2018			2019			2018
	(in thousands)
Expenses:
Compensation and benefits	$	(108,489	)	$	(100,589	)	$	(329,946	)	$	(309,001	)
Incentive income compensation	(11,427		)	(31,508		)	(293,015		)	(182,934		)
General and administrative	(33,289		)	(37,963		)	(111,273		)	(114,508		)
Depreciation and amortization	(2,408		)	(2,218		)	(7,148		)	(6,781		)
Total adjusted expenses	$	(155,613	)	$	(172,278	)	$	(741,382	)	$	(613,224	)

Distributable Earnings

	Three Months Ended September 30,						Nine months ended September 30, 2019
	2019			2018			2019			2018
	(in thousands)
Interest expense, net of interest income (1)	$	(1,705	)	$	(2,197	)	$	(3,257	)	$	(8,006	)
Preferred unit distributions	(6,829		)	(3,909		)	(20,487		)	(3,909		)
Operating Group income taxes	1,175			(222		)	(1,258		)	(5,108		)
Other income (expense), net	(3,522		)	2,724			(8,944		)	(1,695		)
Distributable earnings (2)	$	86,245		$	143,940		$	458,480		$	452,199

(1) Interest income was $4.5 million and $15.4 million for the three and nine months ended September 30, 2019, respectively, and $4.0 million and $9.9 million for the three and nine months ended September 30, 2018, respectively.

(2) Reflects the sum of total distributable earnings revenues, adjusted expenses, net interest expense, preferred unit distributions, Operating Group income taxes and other income (expense).

72

Third Quarter Ended September 30, 2019 Compared to the Third Quarter Ended September 30, 2018

Distributable Earnings Revenues

Management Fees

A summary of management fees is set forth below:

	Three months ended September 30,
	2019		2018
	(in thousands)
Management fees:
Closed-end funds	$	122,159	$	114,236
Open-end funds	30,774		36,201
Evergreen funds	29,565		28,269
DoubleLine	19,059		18,350
Total management fees	$	201,557	$	197,056

Management fees increased $4.5 million, or 2.3%, to $201.6 million for the third quarter of 2019, from $197.1 million for the third quarter of 2018, for the reasons described below.

• Closed-end funds.    Management fees attributable to closed-end funds increased $8.0 million, or 7.0%, to $122.2 million for the third quarter of 2019, from $114.2 million for the third quarter of 2018. The increase reflected an aggregate increase of $25.6 million principally from closed-end funds in their investment periods, partially offset by an aggregate decline of $17.6 million primarily attributable to closed-end funds in liquidation.

• Open-end funds.    Management fees attributable to open-end funds decreased $5.4 million, or 14.9%, to $30.8 million for the third quarter of 2019, from $36.2 million for the third quarter of 2018. The decrease was primarily attributable to net outflows.

• Evergreen funds.    Management fees attributable to evergreen funds increased $1.3 million, or 4.6%, to $29.6 million for the third quarter of 2019, from $28.3 million for the third quarter of 2018, primarily reflecting net inflows.

• DoubleLine.    Management fees attributable to DoubleLine increased $0.7 million, or 3.8%, to $19.1 million for the third quarter of 2019, from $18.4 million for the third quarter of 2018, primarily driven by AUM growth.

Incentive Income

A summary of incentive income is set forth below:  

	Three months ended September 30,
	2019		2018
	(in thousands)
Incentive Income:
Closed-end funds	$	25,335	$	73,576
Evergreen funds	94		392
DoubleLine	1,049		520
Total	$	26,478	$	74,488

Incentive income decreased $48.0 million, or 64.4%, to $26.5 million for the third quarter of 2019, from $74.5 million for the third quarter of 2018. The third quarter of 2019 included $13.6 million from Oaktree Opportunities Fund VIII and $9.1 million from Oaktree Opportunities Fund VIIb. The third quarter of 2018 included $45.8 million from Oaktree Opportunities Fund VIIb.

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Realized Investment Income Proceeds

A summary of realized investment income proceeds is set forth below: 

	Three months ended September 30,
	2019		2018
	(in thousands)
Oaktree funds:
Credit	$	13,845	$	11,575
Private Equity	4,179		6,023
Real Assets	1,930		4,061
Listed Equities	3,394		14,375
Non-Oaktree	1,356		12,244
Total realized investment income proceeds	$	24,704	$	48,278

Realized investment income proceeds decreased $23.6 million, or 48.9%, to $24.7 million for the third quarter of 2019, from $48.3 million for the third quarter of 2018, primarily reflecting lower proceeds from our Listed Equities and non-Oaktree investments.

Adjusted Expenses

Compensation and Benefits

Compensation and benefits expense increased $7.9 million, or 7.9%, to $108.5 million for the third quarter of 2019, from $100.6 million for the third quarter of 2018, primarily driven by growth in headcount, as well as higher expenses related to employee benefits.

Incentive Income Compensation

Incentive income compensation expense decreased $20.1 million, or 63.8%, to $11.4 million for the third quarter of 2019, from $31.5 million for the third quarter of 2018, reflecting the decrease in incentive income.

General and Administrative

General and administrative expense decreased $4.7 million, or 12.4%, to $33.3 million for the third quarter of 2019, from $38.0 million for the third quarter of 2018, primarily reflecting lower expenses related to professional fees and placement fees associated with fundraising activities.

Depreciation and Amortization

Depreciation and amortization expense increased $0.2 million, or 9.1%, to $2.4 million for the third quarter of 2019, from $2.2 million for the third quarter of 2018.

Interest Expense, Net

Interest expense, net decreased $0.5 million, or 22.7%, to $1.7 million for the third quarter of 2019, from $2.2 million for the third quarter of 2018. The decrease was driven by higher interest income.

Preferred Unit Distributions

The third quarter of 2019 included Series A and Series B preferred unit distributions of $6.8 million in the aggregate, as compared with a $3.9 million Series A preferred unit distribution in the third quarter of 2018. Our Series B preferred units were issued in the third quarter of 2018.

Other income (expense), net

Other income (expense), net decreased $6.2 million to $3.5 million of other expense for the third quarter of 2019 compared with $2.7 million of other income for the third quarter of 2018. The third quarter of 2018 benefited from gains associated with non-operating corporate activities.

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Distributable Earnings

Distributable earnings decreased $57.7 million, or 40.1%, to $86.2 million for the third quarter of 2019, from $143.9 million for the third quarter of 2018. The decrease primarily reflected $27.9 million in lower net incentive income and $23.6 million in lower realized investment income proceeds. The portion of distributable earnings attributable to our Class A units was $0.57 and $0.88 per unit for the third quarters of 2019 and 2018, respectively, reflecting distributable earnings per Operating Group unit of $0.54 and $0.92, respectively, less costs borne by Class A unitholders for professional fees and other expenses, cash taxes attributable to the Intermediate Holding Companies, and amounts payable pursuant to the tax receivable agreement.

Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

Distributable Earnings Revenues

Management Fees

A summary of management fees is set forth below:

	Nine months ended September 30,
	2019		2018
	(in thousands)
Management fees:
Closed-end funds	$	353,770	$	352,718
Open-end funds	93,666		111,399
Evergreen funds	89,940		77,758
DoubleLine	52,319		54,063
Total management fees	$	589,695	$	595,938

Management fees decreased $6.2 million, or 1.0%, to $589.7 million for the first nine months of 2019, from $595.9 million for the first nine months of 2018, for the reasons described below.

• Closed-end funds.    Management fees attributable to closed-end funds increased $1.1 million, or 0.3%, to $353.8 million for the first nine months of 2019, from $352.7 million for the first nine months of 2018. The increase reflected an aggregate increase of $60.5 million principally from closed-end funds in their investment periods, partially offset by an aggregate decline of $59.4 million primarily attributable to closed-end funds in liquidation.

• Open-end funds.    Management fees attributable to open-end funds decreased $17.7 million, or 15.9%, to $93.7 million for the first nine months of 2019, from $111.4 million for the first nine months of 2018. The decrease was primarily attributable to net outflows.

• Evergreen funds.    Management fees attributable to evergreen funds increased $12.1 million, or 15.6%, to $89.9 million for the first nine months of 2019, from $77.8 million for the first nine months of 2018, primarily attributable to AUM growth.

• DoubleLine.    Management fees attributable to DoubleLine decreased $1.8 million, or 3.3%, to $52.3 million for the first nine months of 2019, from $54.1 million for the first nine months of 2018, primarily reflecting higher expenses.

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Incentive Income

A summary of incentive income is set forth below:  

	Nine months ended September 30,
	2019		2018
	(in thousands)
Incentive Income:
Closed-end funds	$	545,034	$	357,029
Evergreen funds	3,432		3,748
DoubleLine	4,600		620
Total	$	553,066	$	361,397

Incentive income increased $191.7 million, or 53.0%, to $553.1 million for the first nine months of 2019, from $361.4 million for the first nine months of 2018. The 2019 period included regular and tax-related incentive income of $251.3 million and $301.8 million, respectively, as compared to $243.7 million and $117.7 million in the 2018 period, respectively.

Realized Investment Income Proceeds

A summary of realized investment income proceeds is set forth below: 

	Nine Months Ended September 30,
	2019		2018
	(in thousands)
Oaktree funds:
Credit	$	57,805	$	39,816
Private Equity	3,069		25,918
Real Assets	9,510		12,329
Listed Equities	11,192		19,926
Non-Oaktree	9,471		28,817
Total realized investment income proceeds	$	91,047	$	126,806

Realized investment income proceeds decreased $35.8 million, or 28.2%, to $91.0 million for the first nine months of 2019, from $126.8 million for the first nine months of 2018, primarily reflecting lower proceeds from our Private Equity, non-Oaktree, and Listed Equities investments, partially offset by higher proceeds from our Credit investments.

Adjusted Expenses

Compensation and Benefits

Compensation and benefits expense increased $20.9 million, or 6.8%, to $329.9 million for the first nine months of 2019, from $309.0 million for the first nine months of 2018, primarily driven by growth in headcount, as well as higher expenses related to employee benefits.

Incentive Income Compensation

Incentive income compensation expense increased $110.1 million, or 60.2%, to $293.0 million for the first nine months of 2019, from $182.9 million for the first nine months of 2018, reflecting the growth in incentive income.

General and Administrative

General and administrative expense decreased $3.2 million, or 2.8%, to $111.3 million for the first nine months of 2019, from $114.5 million for the first nine months of 2018, primarily reflecting lower professional fees, partially offset by higher placement fees associated with fundraising activities.

76

Depreciation and Amortization

Depreciation and amortization expense increased $0.3 million, or 4.4%, to $7.1 million for the first nine months of 2019, from $6.8 million for the first nine months of 2018.

Interest Expense, Net

Interest expense, net decreased $4.7 million, or 58.8%, to $3.3 million for the first nine months of 2019, from $8.0 million for the first nine months of 2018. The decrease was primarily driven by higher interest income.

Preferred Unit Distributions

The first nine months of 2019 included Series A and Series B preferred unit distributions of $20.5 million in the aggregate, as compared with $3.9 million for the first nine months of 2018, reflecting the issuances of our Series A and Series B preferred units in the second and third quarters of 2018, respectively.

Other income (expense), net

Other income (expense), net decreased $7.2 million to $8.9 million of other expense for the first nine months of 2019 compared with $1.7 million of other expense for the first nine months of 2018. The first nine months of 2018 benefited from gains associated with non-operating corporate activities.

Distributable Earnings

Distributable earnings increased $6.3 million, or 1.4%, to $458.5 million for the first nine months of 2019, from $452.2 million for the first nine months of 2018. The increase reflected $81.6 million in higher net incentive income, partially offset by $35.8 million in lower realized investment income proceeds, $24.3 million in lower fee-related earnings, and $16.6 million of higher preferred unit distributions. The portion of distributable earnings attributable to our Class A units was $2.88 and $2.74 per unit for the first nine months of 2019 and 2018, respectively, reflecting distributable earnings per Operating Group unit of $2.89 and $2.88, respectively, less costs borne by Class A unitholders.

Fee-related Earnings

Third Quarter Ended September 30, 2019 Compared to the Third Quarter Ended September 30, 2018

Fee-related earnings increased $1.1 million, or 2.0%, to $57.4 million for the third quarter of 2019, from $56.3 million for the third quarter of 2018, primarily reflecting $4.7 million in lower general and administrative expenses and an increase of $4.5 million in management fees, partially offset by $7.9 million in higher compensation and benefits expense.

The effective tax rates applicable to fee-related earnings for the third quarters of 2019 and 2018 were 2% and 5%, respectively, resulting from full-year effective tax rates of 3% and 6%, respectively. The rate used for interim fiscal periods is based on the estimated full-year effective tax rate, which is subject to change as the year progresses. In general, the annual effective tax rate increases as annual fee-related earnings increase, and vice versa.

Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

Fee-related earnings decreased $24.3 million, or 14.7%, to $141.3 million for the first nine months of 2019, from $165.6 million for the first nine months of 2018, primarily reflecting $20.9 million in higher compensation and benefits expense and $6.2 million in lower management fees.

The effective tax rates applicable to fee-related earnings for the first nine months of 2019 and 2018 were 2% and 5%, respectively.

77

Reconciliation of GAAP to Non-GAAP Results

The following table reconciles net income attributable to Oaktree Capital Group, LLC Class A unitholders to distributable earnings and fee-related earnings.

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands)
Net income attributable to OCG Class A unitholders	$	(16,648	)	$	52,750		$	73,050		$	136,603
Incentive income (1)	—			7,935			288,176			107,581
Incentive income compensation (1)	—			(4,214		)	(156,166		)	(55,607		)
Investment income	4,349			(51,796		)	(86,618		)	(94,567		)
Realized investment income proceeds (2)	24,704			48,278			91,047			126,806
Equity-based compensation (3)	22,779			14,747			59,756			44,614
Foreign-currency hedging (4)	(634		)	(247		)	(525		)	(3,110		)
Acquisition-related items (5)	56,385			1,703			82,087			443
Other expense, net (6)	(2,745		)	(2,745		)	(8,235		)	(8,235		)
Income taxes	5,973			6,346			9,890			12,724
Non-Operating Group (income) expenses (7)	19			321			177			629
Non-controlling interests (7)	(7,937		)	70,862			105,841			184,318
Distributable earnings (8)	86,245			143,940			458,480			452,199
Incentive income	(26,478		)	(74,488		)	(553,066		)	(361,397		)
Incentive income compensation	11,427			31,508			293,015			182,934
Realized investment income proceeds	(24,704		)	(48,278		)	(91,047		)	(126,806		)
Interest expense, net of interest income	1,705			2,197			3,257			8,006
Preferred unit distributions	6,829			3,909			20,487			3,909
Other expense, net	3,522			(2,724		)	8,944			1,695
Operating Group income taxes	(1,175		)	222			1,258			5,108
Fee-related earnings (8)	$	57,371		$	56,286		$	141,328		$	165,648

(1) This adjustment relates to unrealized incentive income which is excluded from distributable earnings revenues and incentive income compensation expense.

(2) This adjustment reflects the portion of distributions received from funds characterized as realized investment income or loss. In general, the income or loss component of a distribution from a fund is calculated by multiplying the amount of the distribution by the ratio of our investment’s undistributed income or loss to our remaining investment balance. In addition, if the distribution is made during the investment period, it is generally not reflected in distributable earnings until after the investment period ends.

(3) This adjustment adds back the effect of equity-based compensation expense, which is excluded from distributable earnings because it is a non-cash charge that does not affect our financial position.

(4) This adjustment removes the effect of unrealized gains and losses related to foreign-currency hedging activities.

(5) This adjustment adds back the effect of acquisition-related items associated with the amortization of intangibles, changes in the contingent consideration liability and costs related to the Brookfield transaction, which are excluded from distributable earnings.

(6) For distributable earnings, the $22 million make-whole premium charge that was included in net income attributable to OCG Class A unitholders in the fourth quarter of 2017 in connection with the early repayment of our 2019 Notes is amortized through the original maturity date of December 2019.

(7) Because distributable earnings is calculated at the Operating Group level, this adjustment adds back the effect of items applicable to OCG, its Intermediate Holding Companies or non-controlling interests.

(8) Per Class A unit amounts are calculated to evaluate the portion of distributable earnings and fee-related earnings attributable to Class A unitholders. Reconciliations of distributable earnings to distributable earnings per Class A unit and fee-related earnings to fee-related earnings per Class A unit are presented below.

78

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands, except per unit data)
Distributable earnings	$	86,245		$	143,940		$	458,480		$	452,199
OCGH non-controlling interest	(45,195		)	(78,568		)	(246,352		)	(250,726		)
Non-Operating Group income (expense)	(19		)	(321		)	(177		)	(629		)
Distributable earnings-Class A income taxes	6,068			1,687			12,919			3,327
Tax receivable agreement	(3,827		)	(4,008		)	(11,481		)	(11,874		)
Distributable earnings-Class A	$	43,272		$	62,730		$	213,389		$	192,297
Distributable earnings per Class A unit	$	0.57		$	0.88		$	2.88		$	2.74
Weighted average number of Class A units outstanding	75,995			71,369			74,005			70,167

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands, except per unit data)
Fee-related earnings	$	57,371		$	56,286		$	141,328		$	165,648
OCGH non-controlling interest	(30,064		)	(30,723		)	(75,307		)	(91,614		)
Non-Operating Group expense	(140		)	(239		)	(810		)	(984		)
Fee-related earnings-Class A income taxes	(594		)	(1,170		)	(1,328		)	(3,324		)
Fee-related earnings-Class A	$	26,573		$	24,154		$	63,883		$	69,726
Fee-related earnings per unit	$	0.35		$	0.34		$	0.86		$	0.99
Weighted average number of total units outstanding	75,995			71,369			74,005			70,167

The following table reconciles GAAP revenues to distributable earnings revenues and fee-related earnings revenues.

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(in thousands)
GAAP revenues	$	205,190		$	241,227		$	785,088		$	791,831
Consolidated funds (1)	2,737			3,512			12,578			3,240
Management fees (2)	19,059			18,350			52,319			54,063
Incentive income (3)	1,049			8,455			292,776			108,201
Realized investment income proceeds	24,704			48,278			91,047			126,806
Distributable earnings revenues	252,739			319,822			1,233,808			1,084,141
Incentive income	(26,478		)	(74,488		)	(553,066		)	(361,397		)
Realized investment income proceeds	(24,704		)	(48,278		)	(91,047		)	(126,806		)
Fee revenues	$	201,557		$	197,056		$	589,695		$	595,938

(1) This adjustment represents amounts attributable to the consolidated funds that were eliminated in consolidation, the reclassification of gains and losses related to foreign-currency hedging activities from general and administrative expense to revenues, the elimination of non-controlling interests from adjusted revenues, and certain compensation and administrative related expense reimbursements netted with expenses.

(2) This adjustment reclassifies the portion of the earnings from the management fees attributable to our 20% ownership interest in DoubleLine, which is included in consolidated investment income in our GAAP statements of operations to revenues.

(3) This adjustment relates to unrealized incentive income which is excluded from distributable earnings revenues and reclassifies the portion of the earnings from the performance fees attributable to our 20% ownership interest in DoubleLine, which is included in consolidated investment income in our GAAP statements of operations to revenues.

79

The following tables reconcile GAAP consolidated financial data to non-GAAP data: 

	For the Three Months Ended September 30, 2019
	Consolidated			Adjustments			Distributable Earnings
	(in thousands)
Management fees (1)	$	179,761		$	21,796		$	201,557
Incentive income (1)	25,429			1,049			26,478
Realized investment income proceeds (2)	—			24,704			24,704
Total expenses (3)	(245,480		)	89,867			(155,613		)
Interest expense, net (4)	(59,883		)	58,178			(1,705		)
Investment income (2)	26,819			(26,819		)	—
Other income (expense), net (5)	—			(3,522		)	(3,522		)
Other income of consolidated funds (6)	57,254			(57,254		)	—
Income taxes	(4,798		)	5,973			1,175
Net income attributable to non-controlling interests in consolidated funds	4,208			(4,208		)	—
Net income attributable to non-controlling interests in consolidated subsidiaries	6,871			(6,871		)	—
Net income attributable to preferred unitholders	(6,829		)	—			(6,829		)
Net income attributable to OCG Class A unitholders / Distributable earnings	$	(16,648	)	$	102,893		$	86,245

(1) The adjustment (a) adds back amounts earned from the consolidated funds, (b) reclassifies DoubleLine investment income of $19,059 to management fees and $1,049 to incentive income, and (c) for management fees, reclassifies $865 of net gains related to foreign-currency hedging activities from general and administrative expense and $4,579 of expense reimbursements grossed-up for GAAP reporting, but netted with expenses for distributable earnings.

(2) Distributable earnings excludes investment income or loss and includes the portion of income or loss on distributions received from funds and companies.

(3) The expense adjustment consists of (a) equity-based compensation expense of $22,779, (b) consolidated fund expenses of $6,704, (c) expenses incurred by the Intermediate Holding Companies of $140, (d) $1,976 of acquisition-related items, (e) $54,409 related to the Brookfield transaction, (f) $720 of net losses related to foreign-currency hedging activities, and (g) $4,579 of reimbursements grossed-up as revenues for GAAP reporting, but netted with expenses for distributable earnings.

(4) The interest expense adjustment removes interest expense of the consolidated funds and reclassifies interest income from other income of consolidated funds.

(5) The adjustment to other income (expense), net represents adjustments related to (a) the reclassification of $778 in net losses related to foreign-currency hedging activities from general and administrative expense and the amortization of make-whole premium expenses.

(6) The adjustment to other income of consolidated funds removes interest, dividend and other investment income attributable to third-party investors in our consolidated funds, and reclassifies interest income to interest expense, net.

80

	For the Three Months Ended September 30, 2018
	Consolidated			Adjustments			Distributable Earnings
	(in thousands)
Management fees (1)	$	175,195		$	21,861		$	197,056
Incentive income (1)	66,032			8,456			74,488
Realized investment income proceeds (2)	—			48,278			48,278
Total expenses (3)	(191,167		)	18,889			(172,278		)
Interest expense, net (4)	(39,456		)	37,259			(2,197		)
Investment income (2)	58,196			(58,196		)	—
Other income (expense), net (5)	5,629			(2,905		)	2,724
Other income of consolidated funds (6)	75,230			(75,230		)	—
Income taxes	(6,568		)	6,346			(222		)
Net income attributable to non-controlling interests in consolidated funds	(14,427		)	14,427			—
Net income attributable to non-controlling interests in consolidated subsidiaries	(72,005		)	72,005			—
Net income attributable to preferred unitholders	(3,909		)	—			(3,909		)
Net income attributable to OCG Class A unitholders / Distributable earnings	$	52,750		$	91,190		$	143,940

(1) The adjustment (a) adds back amounts earned from the consolidated funds, (b) reclassifies DoubleLine investment income of $18,350 to management fees and $520 to incentive income, (c) for management fees, reclassifies $46 of net losses related to foreign-currency hedging activities from general and administrative expense and $2,835 of expense reimbursements grossed-up for GAAP reporting, but netted with expenses for distributable earnings, and (d) adds back the effect of $7,395 related to unrealized incentive income.

(2) Distributable earnings excludes investment income or loss and includes the portion of income or loss on distributions received from funds and companies.

(3) The expense adjustment consists of (a) equity-based compensation expense of $14,747, (b) consolidated fund expenses of $3,620, (c) expenses incurred by the Intermediate Holding Companies of $239, (d) incentive income compensation expense related to unrealized incentive income of $4,214, (e) $1,703 of acquisition-related items, (f) $41 of net gains related to foreign-currency hedging activities, and (g) $2,835 of reimbursements grossed-up as revenues for GAAP reporting, but netted with expenses for distributable earnings.

(4) The interest expense adjustment removes interest expense of the consolidated funds and reclassifies interest income from other income of consolidated funds.

(5) The adjustment to other income (expense), net represents adjustments related to (a) the reclassification of $160 in net losses related to foreign-currency hedging activities from general and administrative expense and the amortization of make-whole premium expenses.

(6) The adjustment to other income of consolidated funds removes interest, dividend and other investment income attributable to third-party investors in our consolidated funds, and reclassifies interest income to interest expense, net.

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	For the Nine Months Ended September 30, 2019
	Consolidated			Adjustments			Distributable Earnings
	(in thousands)
Management fees (1)	$	524,798		$	64,897		$	589,695
Incentive income (1)	260,290			292,776			553,066
Realized investment income proceeds (2)	—			91,047			91,047
Total expenses (3)	(748,842		)	7,460			(741,382		)
Interest expense, net (4)	(149,643		)	146,386			(3,257		)
Investment income (2)	121,804			(121,804		)	—
Other income (expense), net (5)	58			(9,002		)	(8,944		)
Other income of consolidated funds (6)	287,713			(287,713		)	—
Income taxes	(11,148		)	9,890			(1,258		)
Net income attributable to non-controlling interests in consolidated funds	(82,234		)	82,234			—
Net income attributable to non-controlling interests in consolidated subsidiaries	(109,259		)	109,259			—
Net income attributable to preferred unitholders	(20,487		)	—			(20,487		)
Net income attributable to OCG Class A unitholders / Distributable earnings	$	73,050		$	385,430		$	458,480

(1) The adjustment (a) adds back amounts earned from the consolidated funds, (b) reclassifies DoubleLine investment income of $52,319 to management fees and $4,600 to incentive income, (c) for management fees, reclassifies $2,582 of net gains related to foreign-currency hedging activities from general and administrative expense and $9,543 of expense reimbursements grossed-up for GAAP reporting, but netted with expenses for distributable earnings, and (d) adds back the effect of $288,176 related to unrealized incentive income.

(2) Distributable earnings excludes investment income or loss and includes the portion of income or loss on distributions received from funds and companies.

(3) The expense adjustment consists of (a) equity-based compensation expense of $59,756, (b) consolidated fund expenses of $13,767 (c) expenses incurred by the Intermediate Holding Companies of $810, (d) incentive income compensation expense related to unrealized incentive income of $156,166, (e) $10,895 of acquisition-related items, (f) $71,196 related to the Brookfield transaction, (g) $2,338 of net losses related to foreign-currency hedging activities, and (h) $9,543 of reimbursements grossed-up as revenues for GAAP reporting, but netted with expenses for distributable earnings.

(4) The interest expense adjustment removes interest expense of the consolidated funds and reclassifies interest income from other income of consolidated funds.

(5) The adjustment to other income (expense), net represents adjustments related to (a) the reclassification of $768 in net losses related to foreign-currency hedging activities from general and administrative expense and the amortization of make-whole premium expenses.

(6) The adjustment to other income of consolidated funds removes interest, dividend and other investment income attributable to third-party investors in our consolidated funds, and reclassifies interest income to interest expense, net.

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	For the Nine Months Ended September 30, 2018
	Consolidated			Adjustments			Distributable Earnings
	(in thousands)
Management fees (1)	$	538,706		$	57,232		$	595,938
Incentive income (1)	253,125			108,272			361,397
Realized investment income proceeds (2)	—			126,806			126,806
Total expenses (3)	(626,809		)	13,585			(613,224		)
Interest expense, net (4)	(115,504		)	107,498			(8,006		)
Investment income (2)	149,682			(149,682		)	—
Other income (expense), net (5)	7,240			(8,935		)	(1,695		)
Other income of consolidated funds (6)	157,641			(157,641		)	—
Income taxes	(17,832		)	12,724			(5,108		)
Net income attributable to non-controlling interests in consolidated funds	(17,792		)	17,792			—
Net income attributable to non-controlling interests in consolidated subsidiaries	(187,945		)	187,945			—
Net income attributable to preferred unitholders	(3,909		)	—			(3,909		)
Net income attributable to OCG Class A unitholders / Distributable earnings	$	136,603		$	315,596		$	452,199

(1) The adjustment (a) adds back amounts earned from the consolidated funds, (b) reclassifies DoubleLine investment income of $54,063 to management fees and $620 to incentive income, (c) for management fees, reclassifies $4,234 of net losses related to foreign-currency hedging activities from general and administrative expense and $9,508 of expense reimbursements grossed-up for GAAP reporting, but netted with expenses for distributable earnings, and (d) adds back the effect of $107,581 related to unrealized incentive income.

(2) Distributable earnings excludes investment income or loss and includes the portion of income or loss on distributions received from funds and companies.

(3) The expense adjustment consists of (a) equity-based compensation expense of $44,614, (b) consolidated fund expenses of $11,819, (c) expenses incurred by the Intermediate Holding Companies of $984, (d) incentive income compensation expense related to unrealized incentive income of $55,607, (e) $443 of acquisition-related items, (f) $1,824 of net losses related to foreign-currency hedging activities, and (g) $9,508 of reimbursements grossed-up as revenues for GAAP reporting, but netted with expenses for distributable earnings.

(4) The interest expense adjustment removes interest expense of the consolidated funds and reclassifies interest income from other income of consolidated funds.

(5) The adjustment to other income (expense), net represents adjustments related to (a) the reclassification of $700 in net losses related to foreign-currency hedging activities from general and administrative expense and the amortization of make-whole premium expenses.

(6) The adjustment to other income of consolidated funds removes interest, dividend and other investment income attributable to third-party investors in our consolidated funds, and reclassifies interest income to interest expense, net.

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GAAP Statement of Financial Condition (Unaudited)

We manage our financial condition without the consolidation of our funds. Since our founding, we have managed our financial condition in a way that builds our capital base and maintains sufficient liquidity for known and anticipated uses of cash. We have issued debt largely to help fund our corporate investments in funds and companies, favoring longer terms to better match the multi-year nature of our typical investments. Our assets do not include accrued incentives (fund level), an off-balance sheet metric, nor do they reflect the fair-market value of our 20% interest in DoubleLine, which is carried at cost, as adjusted under the equity method of accounting.

The following table presents our unaudited condensed consolidating statement of financial condition:

	As of September 30, 2019
	Oaktree and Operating Subsidiaries		Consolidated Funds		Eliminations			Consolidated
	(in thousands)
Assets:
Cash and cash-equivalents	$	356,431	$	—	$	—		$	356,431
U.S. Treasury and other securities	24,025		—		—			24,025
Corporate investments	1,985,916		—		(844,684		)	1,141,232
Deferred tax assets	441,322		—		—			441,322
Operating lease assets	102,608		—		—			102,608
Receivables and other assets	679,795		—		(3,747		)	676,048
Assets of consolidated funds	—		8,997,529		—			8,997,529
Total assets	$	3,590,097	$	8,997,529	$	(848,431	)	$	11,739,195
Liabilities and Capital:
Liabilities:
Accounts payable and accrued expenses	$	403,238	$	—	$	(1,362	)	$	401,876
Due to affiliates	179,478		—		—			179,478
Debt obligations	746,343		—		—			746,343
Operating lease liabilities	131,282		—		—			131,282
Liabilities of consolidated funds	—		7,252,625		(183,627		)	7,068,998
Total liabilities	1,460,341		7,252,625		(184,989		)	8,527,977
Non-controlling redeemable interests in consolidated funds	—		—		1,081,462			1,081,462
Capital:
Capital attributable to OCG preferred unitholders	400,584		—		—			400,584
Capital attributable to OCG Class A unitholders	1,165,087		405,960		(405,960		)	1,165,087
Non-controlling interest in consolidated subsidiaries	564,085		257,482		(257,482		)	564,085
Non-controlling interest in consolidated funds	—		1,081,462		(1,081,462		)	—
Total capital	2,129,756		1,744,904		(1,744,904		)	2,129,756
Total liabilities and capital	$	3,590,097	$	8,997,529	$	(848,431	)	$	11,739,195

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Corporate Investments

	As of
	September 30, 2019			June 30, 2019			September 30, 2018
	(in thousands)
Oaktree funds:
Credit	$	1,153,930		$	1,014,918		$	1,026,207
Private Equity	311,368			283,377			296,224
Real Assets	433,388			366,615			239,208
Listed Equities	51,050			65,700			94,258
Non-Oaktree	41,759			65,618			63,936
Total corporate investments – Non-GAAP	1,991,495			1,796,228			1,719,833
Adjustments (1)	(5,579		)	7,389			33,850
Total corporate investments – Oaktree and operating subsidiaries	1,985,916			1,803,617			1,753,683
Eliminations	(844,684		)	(649,164		)	(698,332		)
Total corporate investments – Consolidated	$	1,141,232		$	1,154,453		$	1,055,351

(1) This adjusts CLO investments carried at amortized cost to fair value for GAAP reporting.

Liquidity and Capital Resources

We manage our liquidity and capital requirements by focusing on our cash flows before the consolidation of our funds and the effect of normal changes in short-term assets and liabilities. Our primary cash flow activities on an unconsolidated basis involve (a) generating cash flow from operations, (b) generating income from investment activities, including strategic investments in certain third parties, (c) funding capital commitments that we have made to our funds, (d) funding our growth initiatives, (e) distributing cash flow to our Class A and OCGH unitholders, (f) borrowings, interest payments and repayments under credit agreements, our senior notes and other borrowing arrangements, and (g) issuances of, and distributions made on, our preferred units. As of September 30, 2019, Oaktree and its operating subsidiaries had $380.5 million of cash and U.S. Treasury and other securities, and $746 million in outstanding debt, which included no borrowings outstanding against its $500 million revolving credit facility. Our investments in funds and companies on a non-GAAP basis had a carrying value of $2.0 billion as of September 30, 2019.

Ongoing sources of cash include (a) management fees, which are collected monthly or quarterly, (b) incentive income, which is volatile and largely unpredictable as to amount and timing, and (c) distributions stemming from our corporate investments in funds and companies. As of September 30, 2019, corporate investments of $2.0 billion included unrealized investment income proceeds of $358 million, of which $118 million was in closed-end funds in their liquidation period. We primarily use cash flow from operations and distributions from our corporate investments to pay compensation and related expenses, general and administrative expenses, income taxes, debt service, capital expenditures and distributions. This same cash flow, together with proceeds from equity and debt issuances, is also used to fund corporate investments, fixed assets and other capital items. If there were insufficient cash flow from operations to fund quarterly or tax distributions by the Oaktree Operating Group entities, we expect that these distributions would not be made. We believe that we have sufficient access to cash from existing balances, our operations and the revolving credit facility described below to fund our operations and commitments.

Distributions on the preferred units are discretionary and non-cumulative. We may redeem, at our option, out of funds legally available, the preferred units, in whole or in part, at any time on or after June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, at a price of $25.00 per preferred unit plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of the preferred units have no right to require the redemption of such preferred units.

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Consolidated Cash Flows

The accompanying condensed consolidated statements of cash flows include our consolidated funds, despite the fact that we typically have only a minority economic interest in those funds. The assets of consolidated funds, on a gross basis, are larger than the assets of our business and, accordingly, have a substantial effect on the cash flows reflected in our condensed consolidated statements of cash flows. The primary cash flow activities of our consolidated funds involve:

• raising capital from third-party investors;

• using the capital provided by us and third-party investors to fund investments and operating expenses;

• financing certain investments with indebtedness;

• generating cash flows through the realization of investments, as well as the collection of interest and dividend income; and

• distributing net cash flows to fund investors and to us.

Because our consolidated funds are either treated as investment companies for accounting purposes or represent CLOs whose primary operations are investing activities, their investing cash flow amounts are included in our cash flows from operations. We believe that each of the consolidated funds and Oaktree has sufficient access to cash to fund their respective operations in the near term.

Significant amounts from our condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 are discussed below.

Operating Activities

Operating activities used $2,796.2 million and $138.6 million of cash for the first nine months of 2019 and 2018, respectively. These amounts principally reflected net income, net of non-cash adjustments, and net purchases of securities of the consolidated funds in each respective period.

Investing Activities

Investing activities provided $635.4 million and used $263.5 million of cash for the first nine months of 2019 and 2018, respectively. Net activity from purchases, maturities and sales of U.S. Treasury and other securities included net proceeds of $522.4 million and net purchases of $293.3 million for the first nine months of 2019 and 2018, respectively. Corporate investments in funds and companies of $254.5 million and $212.4 million for the first nine months of 2019 and 2018, respectively, consisted of the following:

	Nine Months Ended September 30,
	2019			2018
	(in thousands)
Funds	$	898,560		$	469,702
Eliminated in consolidation	(644,082		)	(257,275		)
Total investments	$	254,478		$	212,427

Distributions and proceeds from corporate investments in funds and companies of $373.9 million and $245.8 million for the first nine months of 2019 and 2018, respectively, consisted of the following:

	Nine months Ended September 30,
	2019			2018
	(in thousands)
Funds	$	695,110		$	356,702
Eliminated in consolidation	(321,194		)	(110,901		)
Total proceeds	$	373,916		$	245,801

Purchases of fixed assets were $6.4 million and $3.5 million for the first nine months of 2019 and 2018, respectively.

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Financing Activities

Financing activities provided $2,415.9 million and $309.4 million of cash for the first nine months of 2019 and 2018, respectively, and included: (a) net contributions from non-controlling interests in consolidated funds of $412.6 million and net distributions to non-controlling interests in consolidated funds $129.0 million; (b) distributions to unitholders of $815.4 million and $383.4 million; (c) net unit purchases of $12.2 million and $12.0 million; (d) proceeds from CLO debt obligations of $3,892.4 million and $1,170.3 million and repayments of $1,188.5 million and $729.5 million, and (e) payments of debt issuance costs of $3.1 million and $4.0 million. Additionally, the first nine months of 2019 included borrowings of $505.5 million and repayments of $372.0 million related to consolidated funds.

Future Sources and Uses of Liquidity

We expect to continue to make distributions to our preferred unitholders in accordance with their contractual terms and to the common equity holders of the Oaktree Operating Group pursuant to our distribution policy. In the future, we may also issue additional preferred units or debt securities with the objective of increasing our available capital. In addition, we may, from time to time, repurchase our preferred units in open market or privately negotiated purchases or otherwise, redeem our preferred units pursuant to the terms of their respective governing documents, or repurchase OCGH units.

In addition to our ongoing sources of cash that include management fees, incentive income and distributions related to our corporate investments in funds and companies, we also have access to liquidity through our debt financings, credit agreements and equity financings. We believe that the sources of liquidity described below will be sufficient to fund our working capital requirements for at least the next twelve months.

Debt Financings

In March 2018, Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., and Oaktree Capital I, L.P. (collectively, the “Borrowers”) entered into the Fourth Amendment to Credit Agreement (the “Fourth Amendment”), which amended the credit agreement dated as of March 31, 2014 (as amended through and including the Third Amendment, the “Credit Agreement”). The Credit Agreement consists of a $150 million fully-funded term loan, and a $500 million revolving credit facility (the “Revolver”). The Fourth Amendment extended the maturity date of the Credit Agreement from March 31, 2021 to March 29, 2023, at which time the entire remaining principal balance of $150 million will be due, and provides the Borrowers with the option to extend the new maturity date by one year if the lenders holding at least 50% of the aggregate amount of the term loan and the revolving loan commitment thereunder on the date of the Borrowers’ extension request consent to such extension. The Fourth Amendment also favorably updated the commitment fee in the corporate ratings-based pricing grid, increased the maximum leverage ratio and made certain other amendments to the provisions of the Credit Agreement. Borrowings under the Credit Agreement generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of Oaktree Capital Management, L.P., the interest rate on borrowings is LIBOR plus 1.00% per annum and the commitment fee on the unused portions of the Revolver is 0.10% per annum. The Credit Agreement contains customary financial covenants and restrictions, including (after giving effect to the Fourth Amendment) covenants regarding a maximum leverage ratio of 3.50-to-1.00 and a minimum required level of assets under management (as defined in the credit agreement). As of September 30, 2019, we had no outstanding borrowings under our $500 million revolving credit facility.

In December 2017, our indirect subsidiary, Oaktree Capital Management, L.P., issued and sold to certain accredited investors $250 million of 3.78% senior notes due 2032 (the “2032 Notes”). The 2032 Notes are senior unsecured obligations of the issuer, jointly and severally guaranteed by our indirect subsidiaries, Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. The proceeds from the sale of the 2032 Notes and cash on hand were used to redeem the $250 million of 6.75% Senior Notes due 2019 and to pay the related make-whole premium to holders thereof. In connection with the Notes offering, we entered into a cross-currency swap agreement to euros, reducing the interest cost to 1.95% per year. The 2032 Notes provide for certain affirmative and negative covenants, including financial covenants relating to the issuer’s and guarantors’ combined leverage ratio and minimum assets under management. In addition, the 2032 Notes contain customary representations and warranties of the issuer and the guarantors, and customary events of default, in certain cases, subject to cure periods. The issuer may prepay all, or from time to time any part of, the 2032 Notes at any time, subject to the issuer’s payment of the applicable make-whole amount determined with respect to such principal amount prepaid. Upon the occurrence of a change of control, the issuer will be required to make an offer to prepay the 2032 Notes together with the applicable make-whole amount determined with respect to such principal amount prepaid.

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In July 2016, Oaktree Capital Management, L.P., issued and sold to certain accredited investors $100 million of 3.69% senior notes due July 12, 2031 (the “2031 Notes”). The 2031 Notes are senior unsecured obligations of the issuer, jointly and severally guaranteed by Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. pursuant to a note and guaranty agreement. The proceeds from the sale of the 2031 Notes were used to simultaneously repay $100 million of borrowings outstanding under our $250 million term loan due March 31, 2021. The 2031 Notes provide for certain affirmative and negative covenants, including financial covenants relating to the issuer’s and guarantors’ combined leverage ratio and minimum assets under management. In addition, the 2031 Notes contain customary representations and warranties of the issuer and the guarantors, and customary events of default, in certain cases, subject to cure periods. The issuer may prepay all, or from time to time any part of, the 2031 Notes at any time, subject to the issuer’s payment of the applicable make-whole amount determined with respect to such principal amount prepaid. Upon the occurrence of a change of control, the issuer will be required to make an offer to prepay the 2031 Notes together with the applicable make-whole amount determined with respect to such principal amount prepaid.

In September 2014, Oaktree Capital Management, L.P. issued and sold to certain accredited investors $50 million aggregate principal amount of 3.91% Senior Notes, Series A, due September 3, 2024 (the “Series A Notes”), $100 million aggregate principal amount of 4.01% Senior Notes, Series B, due September 3, 2026 (the “Series B Notes”) and $100 million aggregate principal amount of 4.21% Senior Notes, Series C, due September 3, 2029 (the “Series C Notes” and together with the Series A Notes and the Series B Notes, the “Senior Notes”) pursuant to a note and guarantee agreement. The Senior Notes are senior unsecured obligations of the issuer, guaranteed on a joint and several basis by Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. Interest on the 2014 Notes is payable semi-annually. The Senior Notes provide for certain affirmative and negative covenants, including financial covenants relating to the issuer’s and guarantors’ combined leverage ratio and minimum assets under management. In addition, the Senior Notes contain customary representations and warranties of the issuer and the guarantors, and customary events of default, in certain cases, subject to cure periods. The issuer may prepay all, or from time to time any part of, the Senior Notes at any time, subject to the issuer’s payment of the applicable make-whole amount determined with respect to such principal amount prepaid. Upon the occurrence of a change of control, the issuer will be required to make an offer to prepay the Senior Notes together with the applicable make-whole amount determined with respect to such principal amount prepaid.

Preferred Unit Issuances

On May 17, 2018, we issued 7,200,000 of our 6.625% Series A preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $173.7 million in net proceeds to us. Distributions on the Series A preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on September 17, 2018. Distributions on the Series A preferred units are non-cumulative.

On August 9, 2018, we issued 9,400,000 of our 6.550% Series B preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $226.9 million in net proceeds to us. Distributions on the Series B preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on December 17, 2018. Distributions on the Series B preferred units are non-cumulative.

Unless distributions have been declared and paid or declared and set apart for payment on the preferred units for a quarterly distribution period, during the remainder of that distribution period we may not repurchase any common units or any other units that are junior in rank, as to the payment of distributions, to the preferred units and we may not declare or pay or set apart payment for distributions on any common units or junior units for the remainder of that distribution period, other than certain Permitted Distributions (as defined in the unit designation related to the applicable preferred units (each, the “Preferred Unit Designation”)).

We may redeem, at our option, out of funds legally available, the preferred units, in whole or in part, at any time on or after June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, at a price of $25.00 per preferred unit plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of the preferred units have no right to require the redemption of the preferred units.

If a Change of Control Event (as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, we may, at our option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon

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at least 30 days’ notice, within 60 days of the occurrence of such Change of Control Event, at a price of $25.25 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions.

If a Tax Redemption Event or Rating Agency Event (each, as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, we may, at our option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such Tax Redemption Event or Rating Agency Event, at a price of $25.50 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions.

The preferred units are not convertible into Class A units or any other class or series of our interests or any other security. Holders of the preferred units do not have any of the voting rights given to holders of our Class A units, except that holders of the preferred units are entitled to certain voting rights under certain conditions.

Tax Receivable Agreement

Oaktree Holdings, Inc., Oaktree AIF Holdings, Inc., Oaktree Capital II, L.P., Oaktree Capital Management, L.P., Oaktree Investment Holdings, L.P., Oaktree AIF Investments, L.P. and certain other parties thereto previously entered into a tax receivable agreement (the “Original TRA”) with OCGH unitholders that, as amended, provided for the payment to an exchanging or selling OCGH unitholder of 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income taxes that they actually realized (or are deemed to realize in the case of an early termination payment by Oaktree Holdings, Inc. or Oaktree AIF Holdings, Inc., or a change of control) as a result of an increase in the tax basis of the assets owned by the Oaktree Operating Group. When an exchange of OCGH units results in an increase to the tax basis of the assets owned by the Oaktree Operating Group, a deferred tax asset and an associated liability for payments to OCGH unitholders under the tax receivable agreement are recorded, subject to realizability considerations. The establishment of a deferred tax asset increases additional paid-in capital because the transactions are between Oaktree and its unitholders.

Upon the closing of the Mergers, Oaktree entered into a Third Amended and Restated Tax Receivable Agreement (the “TRA Amendment”), which amended and restated the Original TRA. Pursuant to the TRA Amendment, the Original TRA no longer applies and no Tax Benefit Payments (as defined in the Original TRA) will be made with respect to any exchanges of OCGH Units that occur on or after March 13, 2019. With respect to any exchanges of OCGH Units that occurred prior to March 13, 2019, the TRA Amendment provides that Tax Benefit Payments will continue to be made with respect to such exchanges in accordance with the Original TRA (as amended in certain respects, including that such payments will be calculated without taking into account any tax attributes of Brookfield).

Upon the Merger, the tax basis of the assets owned by the Oaktree Operating Group increased and as a result the Company recorded an increase of $212.0 million to its total deferred tax assets. In accordance with the above, there was no associated tax receivable agreement liability recorded with this exchange and the entire amount resulted in a corresponding increase to additional paid-in capital.

Assuming no further material changes in the relevant tax law and that Oaktree earns sufficient taxable income to realize the full tax benefit of the increased amortization of the assets, as of September 30, 2019, future payments of this nature were estimated to aggregate $12.0 million over the period ending approximately in 2029 with respect to the 2007 private offering, $30.5 million over the period ending approximately in 2034 with respect to the initial public offering, $43.2 million over the period ending approximately in 2035 with respect to the public offering in May 2013, $33.0 million over the period ending approximately in 2036 with respect to the public offering in March 2014, $28.1 million over the period ending approximately in 2037 with respect to the public offering in March 2015, and $31.3 million over the period ending approximately in 2040 with respect to the public offering in February 2018.

For the nine months ended September 30, 2019, $10.0 million was paid under the Original TRA.

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Capital Requirements of Regulated Entities

We are required to maintain minimum net capital balances for regulatory purposes in the U.S. and certain non-U.S. jurisdictions in which we do business, which are met in part by retaining cash and cash-equivalents in those jurisdictions. As a result, we may be restricted in our ability to transfer cash between different jurisdictions. As of September 30, 2019, we were required to maintain approximately $170.2 million in net capital at these subsidiaries and were in compliance with all regulatory minimum net capital requirements as of such date.

Contractual Obligations, Commitments and Contingencies

In the ordinary course of business, Oaktree and our consolidated funds enter into contractual arrangements that may require future cash payments. The following table sets forth information related to anticipated future cash payments as of September 30, 2019:  

	Remainder of 2019		2020-2021		2022-2023		Thereafter		Total
	(in thousands)
Oaktree and Operating Subsidiaries:
Operating lease obligations (1)	$	4,874	$	36,419	$	33,689	$	84,617	$	159,599
Debt obligations payable (2)	—		—		150,000		600,000		750,000
Interest obligations on debt (3)	6,968		55,897		52,448		148,671		263,984
Tax receivable agreement	—		28,305		39,639		110,096		178,040
Contingent consideration (4)	6,405		—		—		—		6,405
Commitments to Oaktree and third-party funds (5)	365,148		—		—		—		365,148
Subtotal	383,395		120,621		275,776		943,384		1,723,176
Consolidated Funds:
Debt obligations payable (2)	—		—		—		976,470		976,470
Interest obligations on debt (3)	8,271		66,168		66,168		147,589		288,196
Debt obligations of CLOs (2)	600,481		169,372		—		4,822,368		5,592,221
Interest on debt obligations of CLOs (3)	39,512		268,589		267,511		844,228		1,419,840
Commitments to fund investments (6)	21,421		—		—		—		21,421
Total	$	669,685	$	504,129	$	333,679	$	6,790,655	$	8,298,148

(1) We lease our office space under agreements that expire periodically through 2031. The table includes both guaranteed and expected minimum lease payments for these leases and does not project other lease-related payments. These leases are classified as operating leases for financial statement purposes and as are recorded as operating lease right-of-use assets and operating lease liabilities in our consolidated statements of financial condition.

(2) These obligations represent future principal payments, gross of debt issuance costs, and for CLOs, the par value.

(3) Interest obligations include accrued interest on outstanding indebtedness. Where applicable, current interest rates are applied to estimate future interest obligations on variable-rate debt.

(4) This represents the undiscounted contingent consideration obligation as of September 30, 2019. Due to uncertainty in the timing of payment, if any, the entire amount is presented in the 2019 column. Please see note 17 to our condensed consolidated financial statements for more information.

(5) These obligations represent commitments by us to provide general partner capital funding to our funds and limited partner capital funding to funds managed by unaffiliated third parties. These amounts are generally due on demand and are therefore presented in the 2019 column. Capital commitments are expected to be called over a period of several years.

(6) These obligations represent commitments by our funds to make investments or fund uncalled contingent commitments. These amounts are generally due either on demand or by various contractual dates that vary by investment and are therefore presented in the 2019 column. Capital commitments are expected to be called over a period of several years.

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In some of our service contracts or management agreements, we have agreed to indemnify third-party service providers or separate account clients under certain circumstances. The terms of the indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined and has neither been included in the above table nor recorded in our condensed consolidated financial statements as of September 30, 2019.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements. Please see note 17 to our condensed consolidated financial statements included elsewhere in this quarterly report for information on our commitments and contingencies.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. We believe our critical accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates or judgments. For a summary of our significant accounting policies, please see the notes to our condensed consolidated financial statements included elsewhere in this quarterly report and the notes to our consolidated financial statements in our annual report. For a summary of our critical accounting policies, please see “Management’s Discussion and Analysis of Financial Condition and Result of Operations—Critical Accounting Policies” in our annual report.

The table below summarizes the fair value of the investments and other financial instruments held by our consolidated funds by fund structure and fair-value hierarchy levels and the debt obligations of our CLOs for each period presented in our condensed consolidated statements of financial condition (in thousands):

As of September 30, 2019	Level I		Level II			Level III		Total
Closed-end funds	$	—	$	6,940,821		$	336,826	$	7,277,647
Open-end funds	476		646,710			37,753		684,939
Evergreen funds	2,662		118,002			184,460		305,124
Total	$	3,138	$	7,705,533		$	559,039	$	8,267,710
CLO debt obligations	$	—	$	(5,553,144	)	$	—	$	(5,553,144	)

As of December 31, 2018	Level I		Level II			Level III		Total
Closed-end funds	$	—	$	5,331,300		$	93,428	$	5,424,728
Open-end funds	1,386		790,203			183,965		975,554
Evergreen funds	21,311		60,475			48,529		130,315
Total	$	22,697	$	6,181,978		$	325,922	$	6,530,597
CLO debt obligations	$	—	$	(4,127,994	)	$	—	$	(4,127,994	)

Recent Accounting Developments

Please see note 2 to our condensed consolidated financial statements included elsewhere in this quarterly report for information regarding recent accounting developments.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to a broad range of risks inherent in the financial markets in which we participate, including price risk, interest-rate risk, access to and cost of financing risk, liquidity risk, counterparty risk and foreign exchange-rate risk. Potentially negative effects of these risks may be mitigated to a certain extent by those aspects of our investment approach, investment strategies, fundraising practices or other business activities that are designed to benefit, either in relative or absolute terms, from periods of economic weakness, tighter credit or financial market dislocations.

Our predominant exposure to market risk is related to our role as general partner or investment adviser to our funds and as an investor in our CLOs, and the sensitivities to movements in the fair value of their investments on management fees, incentive income and investment income, as applicable. The fair value of the financial assets and liabilities of our funds and CLOs may fluctuate in response to changes in, among many factors, the fair value of securities, foreign-exchange rates, commodities prices and interest rates.

Price Risk

Impact on Net Change in Unrealized Appreciation (Depreciation) on Consolidated Funds’ Investments

As of September 30, 2019, we had investments, at fair value of $8.3 billion related to our consolidated funds, primarily consisting of investments held by our CLOs. We estimate that a 10% decline in market values would result in a decrease in unrealized appreciation (depreciation) on the consolidated funds’ investments of $826.7 million. Of this decline, approximately $323.7 million would impact net income and $198.1 million would impact net income attributable to OCG Class A unitholders, with the remainder attributable to non-controlling interests and third-party debt holders in our CLOs. The magnitude of the impact on net income is largely affected by the percentage of our equity ownership interest and levered nature of our CLO investments.

Impact on Management Fees (before consolidation of funds)

Management fees are generally assessed in the case of (a) our open-end and evergreen funds, based on NAV, and (b) our closed-end funds, based on committed capital, drawn capital or cost basis during the investment period and, during the liquidation period, based on the lesser of (i) the total funded committed capital or (ii) the cost basis of assets remaining in the fund. Management fees are affected by changes in market values to the extent they are based on NAV. For the nine months ended September 30, 2019 and 2018, NAV-based management fees represented approximately 35% and 37%, respectively, of total management fees. Based on investments held as of September 30, 2019, we estimate that a 10% decline in market values of the investments held in our funds would result in an approximate $6.3 million decrease in the amount of quarterly management fees. These estimated effects are without regard to a number of factors that would be expected to increase or decrease the magnitude of the change to degrees that are not readily quantifiable, such as the use of leverage facilities in certain of our funds or the timing of fund flows.

Impact on Incentive Income (before consolidation of funds)

Incentive income is recognized only when it is probable that a significant reversal will not occur, which in the case of (a) our closed-end funds, generally occurs only after all contributed capital and an annual preferred return on that capital (typically 8%) have been distributed to the fund’s investors and (b) our active evergreen funds, generally occurs as of December 31, based on the increase in the fund’s NAV during the year, subject to any high-water marks or hurdle rates. In the case of closed-end funds, the link between short-term fluctuations in market values and a particular period’s incentive income may in part be indirect. Thus the effect on incentive income of a 10% decline in market values is not readily quantifiable. A decline in market values would be expected to cause a decline in incentive income.

Impact on Investment Income (before consolidation of funds)

Investment income or loss arises from our pro-rata share of income or loss from our investments, generally in our capacity as general partner in our funds and as an investor in our CLOs and third-party managed funds or companies. This income is directly affected by changes in market risk factors. Based on investments held as of September 30, 2019, a 10% decline in fair values of the investments held in our funds and other holdings would result in a $457.1 million decrease in the amount of investment income. The estimated decline of $457.1 million is greater than 10% of the September 30, 2019 corporate investments balance primarily due to the levered nature of our CLO investments. These estimated effects are without regard to a number of factors that would be expected to

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increase or decrease the magnitude of the change to degrees that are not readily quantifiable, such as the use of leverage facilities in certain of our funds, the timing of fund flows or the timing of new investments or realizations.

Exchange-rate Risk

Our business is affected by movements in the exchange rate between the U.S. dollar and non-U.S. dollar currencies in the case of (a) management fees that vary based on the NAV of our funds that hold investments denominated in non-U.S. dollar currencies, (b) management fees received in non-U.S. dollar currencies, (c) operating expenses for our foreign offices that are denominated in non-U.S. dollar currencies, and (d) cash and other balances we hold in non-U.S. dollar currencies. We manage our exposure to exchange-rate risks through our regular operating activities and, when appropriate, through the use of derivative instruments.

We estimate that for the nine months ended September 30, 2019, without considering the impact of derivative instruments, a 10% decline in the average exchange rate of the U.S. dollar would have resulted in the following approximate effects on our operating results:

• our management fees (relating to (a) and (b) above) would have increased by $7.3 million;

• our operating expenses would have increased by $12.2 million;  

• OCGH interest in net income of consolidated subsidiaries would have decreased by $2.6 million; and

• our income tax expense would have decreased by $0.6 million.

These movements would have decreased our net income attributable to OCG Class A unitholders by $1.6 million.

At any point in time, some of the investments held by our closed-end and evergreen funds may be denominated in non-U.S. dollar currencies on an unhedged basis. Changes in currency rates could affect incentive income, incentives created (fund level) and investment income with respect to such closed-end and evergreen funds; however, the degree of impact is not readily determinable because of the many indirect effects that currency movements may have on individual investments.

Credit Risk

We are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements. In such agreements, we depend on the respective counterparty to make payment or otherwise perform. We generally endeavor to minimize our risk of exposure by limiting to reputable financial institutions the counterparties with which we enter into financial transactions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.

Interest-rate Risk

As of September 30, 2019, Oaktree and its operating subsidiaries had $746.3 million in debt obligations, consisting of three senior notes issuances and a funded term loan. Each senior notes issuance accrues interest at a fixed rate. The funded term loan accrues interest at a variable rate. As of September 30, 2019, interest expense attributable to Oaktree and its operating subsidiaries would increase by $1.5 million on an annualized basis as a result of a 100-basis point increase in interest rates. Of the $0.4 billion of aggregate cash and U.S. Treasury and other securities as of September 30, 2019, we estimate that Oaktree and its operating subsidiaries would generate an additional $3.8 million in interest income on an annualized basis as a result of a 100-basis point increase in interest rates.

Our consolidated funds have debt obligations, most of which accrue interest at variable rates. Changes in these rates would affect the amount of interest payments that our funds would have to make, impacting future earnings and cash flows. As of September 30, 2019, the consolidated funds had $6.1 billion of principal or par value, as applicable, outstanding under these debt obligations. We estimate that interest expense relating to variable-rate debt would increase on an annualized basis by $61.0 million in the event interest rates were to increase by 100 basis points.

As credit-oriented investors, we are also subject to interest-rate risk through the securities we hold in our consolidated funds. A 100-basis point increase in interest rates would be expected to negatively affect prices of

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securities that accrue interest income at fixed rates and therefore negatively impact the net change in unrealized appreciation (depreciation) on consolidated funds’ investments. The actual impact is dependent on the average duration of such holdings. Conversely, securities that accrue interest at variable rates would be expected to benefit from a 100-basis point increase in interest rates because these securities would generate higher levels of current income and therefore positively impact interest and dividend income. In cases where our funds pay management fees based on NAV, we would expect our management fees to experience a change in direction and magnitude corresponding to that experienced by the underlying portfolios.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective at the reasonable assurance level to accomplish their objectives of ensuring that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during our most recent quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of legal proceedings, please see the section entitled “Legal Actions” in note 17 to our condensed consolidated financial statements included elsewhere in this quarterly report, which section is incorporated herein by reference. Also, please see “Item 1A. Risk Factors—Risks Related to Our Business—Extensive regulation in the United States and abroad affects our activities and creates the potential for significant liabilities and penalties that could adversely affect our business and results of operations” in our annual report.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, please see the information under “Risk Factors” in our annual report. There have been no material changes to the risk factors as disclosed in our annual report.

The risks described in our annual report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Under our operating agreement, we are required to issue one Class B unit for each OCGH unit issued.  Accordingly, we issued 39,807 Class B units to OCGH on July 1, 2019 and 513,124 Class B units to OCGH on September 26, 2019, which, in the aggregate, corresponded to the number of OCGH units issued by OCGH pursuant to our 2011 Equity Incentive Plan, subject to time-based vesting.

No purchase price was paid by OCGH to the Company for the issuances of the Class B units to OCGH.  These issuances, to the extent they constitute sales, were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act, as transactions by an issuer not involving any public offering.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Fund Data

Information regarding our closed-end, open-end and evergreen funds, together with benchmark data where applicable, is set forth below. For our closed-end and evergreen funds, no benchmarks are presented in the tables as there are no known comparable benchmarks for these funds’ investment philosophy, strategy and implementation.

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Closed-end Funds

			As of September 30, 2019
	Investment Period		Total Committed Capital		% Invested (1)		% Drawn (2)		Fund Net Income Since Inception			Distri- butions Since Inception		Net Asset Value		Manage- ment Fee-gener- ating AUM		Incentive Income Recog- nized (Non-GAAP)		Accrued Incentives (Fund Level) (3)		Unreturne-d Drawn Capital Plus Accrued Preferred Return (4)		IRR Since Inception (5)					Multiple of Drawn Capital (6)
	Start Date	End Date																						Gross			Net
Credit	(in millions)
Distressed Debt
Oaktree Opportunities Fund Xb (7)(13)	TBD	—	$	8,872	37	%	13	%	$	(150	)	$	—	$	1,042	$	1,166	$	—	$	—	$	1,286	nm			nm		0.9x
Oaktree Opportunities Fund X (7)	Jan. 2016	Jan. 2019	3,603		86		86		1,122			618		3,584		2,917		72		148		3,108		20.4	%		12.2	%	1.5
Oaktree Opportunities Fund IX (7)	Jan. 2014	Jan. 2017	5,066		nm		100		948			2,178		3,835		3,652		—		—		5,188		6.1			3.7		1.3
Oaktree Opportunities Fund VIIIb	Aug. 2011	Aug. 2014	2,692		nm		100		997			2,669		1,019		1,228		52		—		1,418		8.8			6.1		1.5
Special Account B	Nov. 2009	Nov. 2012	1,031		nm		100		616			1,660		67		65		16		1		—		13.5			11.1		1.6
Oaktree Opportunities Fund VIII (7)	Oct. 2009	Oct. 2012	4,507		nm		100		2,559			6,771		294		339		452		46		—		12.8			9.0		1.7
OCM Opportunities Fund VIIb	May 2008	May 2011	10,940		nm		90		9,033			18,582		295		—		1,705		49		—		21.8			16.5		2.0
OCM Opportunities Fund VII	Mar. 2007	Mar. 2010	3,598		nm		100		1,486			4,908		176		—		87		—		384		10.2			7.4		1.5
Legacy funds (8)	Various	Various	12,748		nm		100		10,773			23,500		22		—		1,626		—		—		23.6			18.5		1.8
																								21.9	%		15.9	%
Private/Alternative Credit
Oaktree European Capital Solutions Fund (7)(10)	Dec. 2015	Dec. 2018	€703		99	%	91	%	€100			€278		€458		€	457	€	5	€	9	€412		14.9	%		10.3	%	1.2x
Oaktree European Dislocation Fund (10)	Oct. 2013	Oct. 2016	€294		nm		62		€39			€203		€18		€	17	€	3	€	3	€—		18.6			13.0		1.3
Special Account E (10)	Oct. 2013	Apr. 2015	€379		nm		69		€64			€321		€4		€	3	€	9	€	1	€—		14.2			11.0		1.3
																								15.2	%		10.8	%
Oaktree Mezzanine Fund IV (9)	Oct. 2014	Oct. 2019	$	852	95	%	90	%	$	161		$	347	$	582	$	568	$	6	$	16	$	560	11.4	%		8.4	%	1.2x
Oaktree Mezzanine Fund III (11)	Dec. 2009	Dec. 2014	1,592		nm		89		479			1,837		65		51		34		16		—		15.3		10.4 / 9.3			1.4
OCM Mezzanine Fund II	Jun. 2005	Jun. 2010	1,251		nm		88		480			1,694		37		—		—		—		138		10.8			7.2		1.5
OCM Mezzanine Fund (12)	Oct. 2001	Oct. 2006	808		nm		96		302			1,075		—		—		38		—		—		15.4			10.8 / 10.5		1.5
																								13.0	%		8.7	%
Emerging Markets Debt
Special Account H (13)	Sep. 2018	Jul. 2022	$	351	49	%	49	%	$	(27	)	$	—	$	146	$	142	$	—	$	—	$	180	nm			nm		0.9x
Oaktree Emerging Markets Opportunities Fund II (13)	TBD	—	344		41		41		(23		)	3		114		132		—		—		142		nm			nm		0.9
Oaktree Emerging Market Opportunities Fund	Sep. 2013	Sep. 2017	384		nm		78		131			341		88		70		9		14		37		15.9	%		10.9	%	1.5
Special Account F	Jan. 2014	Sep. 2017	253		nm		96		85			275		52		52		7		9		19		15.6			11.2		1.4
																								12.8	%		7.7	%
Private Equity
Corporate Private Equity
Oaktree European Principal Fund IV (7)(10)(13)	Jul. 2017	Jul. 2022	€1,119		99	%	97	%	€302			€206		€1,181		€	1,082	€	—	€	58	€1,000		nm			nm		1.3x
Oaktree European Principal Fund III (10)	Nov. 2011	Nov. 2016	€3,164		nm		87		€2,588			€2,511		€2,827		€	2,500	€	154	€	347	€1,603		17.5	%		12.0	%	2.1
OCM European Principal Opportunities Fund II (10)	Dec. 2007	Dec. 2012	€1,759		nm		100		€204			€1,913		€22		€	—	€	29	€	—	€769		6.7			2.2		1.3
OCM European Principal Opportunities Fund	Mar. 2006	Mar. 2009	$	495	nm		96		$	454		$	927	$	—	$	—	$	87	$	—	$	—	11.7			8.9		2.1
																								13.1	%		8.6	%

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			As of September 30, 2019
	Investment Period		Total Committed Capital		% Invested (1)		% Drawn (2)		Fund Net Income Since Inception			Distri- butions Since Inception		Net Asset Value			Manage- ment Fee-gener- ating AUM			Incentive Income Recog- nized (Non-GAAP)		Accrued Incentives (Fund Level) (3)			Unreturned Drawn Capital Plus Accrued Preferred Return (4)		IRR Since Inception (5)				Multiple of Drawn Capital (6)
	Start Date	End Date																									Gross		Net
	(in millions)
Oaktree Power Opportunities Fund V (13)	Apr. 2019	Apr. 2024	$	1,400	13	%	12	%	$	(16	)	$	—	$	153		$	1,390		$	—	$	—		$	177	nm		nm		1.0x
Oaktree Power Opportunities Fund IV	Nov. 2015	Nov. 2020	1,106		94		94		222			112		1,154			1,078			—		11			1,139		11.8	%	8.2	%	1.3
Oaktree Power Opportunities Fund III	Apr. 2010	Apr. 2015	1,062		nm		73		505			1,045		239			322			50		46			—		20.4		13.1		1.8
Legacy funds (8)	Various	Various	1,470		nm		63		1,687			2,615		(4		)	—			123		—			—		35.1		27.4		2.8
																											34.2		25.8
Special Situations
Oaktree Special Situations Fund II (7)(13)	TBD	—	$	2,204	11	%	4	%	$	—		$	9	$	76		$	234		$	—	$	—		$	36	nm		nm		1.0x
Oaktree Special Situations Fund (7)	Nov. 2015	Nov. 2018	1,377		100		86		184			190		1,175			1,115			—		12			1,168		14.4	%	8.2	%	1.2x
Other funds:
Oaktree Principal Continuation Fund V (13)	—	—	$	886	nm		80	%	$	146		$	—	$	853		$	711		$	—	$	14		$	708	nm		nm		1.2x
Oaktree Principal Fund V	Feb. 2009	Feb. 2015	2,827		nm		91		312			2,388		510			613			50		—			2,308		5.9	%	1.9	%	1.3
Special Account C	Dec. 2008	Feb. 2014	505		nm		91		102			490		72			235			21		—			295		7.2		3.5		1.4
OCM Principal Opportunities Fund IV	Oct. 2006	Oct. 2011	3,328		nm		100		2,900			6,166		63			—			554		11			—		12.2		8.8		2.0
Legacy funds (8)	Various	Various	3,701		nm		100		2,718			6,404		15			—			407		—			—		14.4		11.1		1.8
																											12.8	%	9.0	%
Real Assets
Real Estate
Oaktree Real Estate Opportunities Fund VII (14)	Jan. 2016	Jan. 2020	$	2,921	92	%	92	%	$	716		$	666	$	2,746		$	2,794		$	—	$	148		$	2,189	44.8	%	25.7	%	1.3x
Oaktree Real Estate Opportunities Fund VI	Aug. 2012	Aug. 2016	2,677		nm		100		1,440			2,887		1,230			983			90		188			812		14.4		9.3		1.7
Oaktree Real Estate Opportunities Fund V	Mar. 2011	Mar. 2015	1,283		nm		100		972			2,106		150			96			157		29			—		16.9		12.5		1.9
Special Account D	Nov. 2009	Nov. 2012	256		nm		100		207			435		36			—			17		4			—		14.6		12.7		1.8
Oaktree Real Estate Opportunities Fund IV	Dec. 2007	Dec. 2011	450		nm		100		390			805		36			—			66		8			—		15.6		10.6		2.0
Legacy funds (8)	Various	Various	2,341		nm		99		2,010			4,326		—			—			232		—			—		15.2		11.9		1.9
																											15.5	%	11.8	%
Oaktree Real Estate Debt Fund II (9)(13)	Mar. 2017	Mar. 2020	$	2,087	69	%	39	%	$	123		$	114	$	823		$	1,403		$	—	$	18		$	756	nm		nm		1.2x
Oaktree Real Estate Debt Fund	Sep. 2013	Oct. 2016	1,112		nm		83		219			994		150			162			12		19			11		19.2	%	14.3	%	1.3
Oaktree PPIP Fund (15)	Dec. 2009	Dec. 2012	2,322		nm		48		457			1,570		—			—			47		—			—		28.2	%	n/a		1.4
Special Account G (Real Estate Income) (9)	Oct. 2016	Oct. 2020	$	615	99	%	99	%	$	161		$	100	$	669		$	574		$	—	$	31		$	603	14.7	%	10.7	%	1.3x
Infrastructure
Oaktree Transportation Infrastructure Fund (13)	Dec. 2018	Dec. 2023	$	1,518	33	%	33	%	$	(17	)	$	11	$	466		$	1,296		$	—	$	—		$	507	nm		nm		1.0x
Highstar III Successor Funds (13)	—	—	1,081		87		87		(8		)	2		931			945			—		—			1,687		nm		nm		1.0
Highstar Capital IV (16)	Nov. 2010	Nov. 2016	2,000		nm		100		(38		)	1,512		857			1,160			—		—			1,645		3.9	%	—	%	1.1
																	29,937		(10)			1,295		(10)
												Other (17)					7,988					11
												Total (18)					$	37,925				$	1,306

(1) For our incentive-creating closed-end funds in their investment periods, this percentage equals invested capital divided by committed capital. Invested capital for this purpose is the sum of capital drawn from fund investors plus net borrowings outstanding under a fund-level credit facility (if any), where such borrowings were made in lieu of drawing capital from fund investors.

(2) Represents capital drawn from fund investors, net of distributions to such investors of uninvested capital, divided by committed capital. The aggregate change in drawn capital for the three months ended September 30, 2019 was $2.5 billion.

(3) Accrued incentives (fund level) exclude non-GAAP incentive income previously recognized.

97

(4) Unreturned drawn capital plus accrued preferred return reflects the amount the fund needs to distribute to its investors as a return of capital and a preferred return (as applicable) before Oaktree is entitled to receive incentive income (other than tax distributions) from the fund.

(5) The internal rate of return (“IRR”) is the annualized implied discount rate calculated from a series of cash flows. It is the return that equates the present value of all capital invested in an investment to the present value of all returns of capital, or the discount rate that will provide a net present value of all cash flows equal to zero. Fund-level IRRs are calculated based upon the actual timing of cash contributions/distributions to investors and the residual value of such investor’s capital accounts at the end of the applicable period being measured. Gross IRRs reflect returns before allocation of management fees, expenses and any incentive allocation to the fund’s general partner. To the extent material, gross returns include certain transaction, advisory, directors or other ancillary fees (“fee income”) paid directly to us in connection with our funds’ activities (we credit all such fee income back to the respective fund(s) so that our funds’ investors share pro rata in the fee income’s economic benefit). Net IRRs reflect returns to non-affiliated investors after allocation of management fees, expenses and any incentive allocation to the fund’s general partner.

(6) Multiple of drawn capital is calculated as drawn capital plus gross income and, if applicable, fee income before fees and expenses divided by drawn capital.

(7) Fund data include the performance of the main fund and any associated fund-of-one accounts, except the gross and net IRRs presented reflect only the performance of the main fund. Certain fund-of-one accounts pay management fees based on cost basis, rather than committed capital.

(8) Legacy funds represent certain predecessor funds within the relevant strategy or product that have substantially or completely liquidated their assets, including funds managed by certain Oaktree investment professionals while employed at the Trust Company of the West prior to Oaktree’s founding in 1995. When these employees joined Oaktree upon, or shortly after, its founding, they continued to manage the fund through the end of its term pursuant to a sub-advisory relationship between the Trust Company of the West and Oaktree.

(9) Management fees during the investment period are calculated on drawn capital or cost basis, rather than committed capital. As a result, as of September 30, 2019 management fee-generating AUM included only that portion of committed capital that had been drawn.

(10) Aggregate IRRs or totals are based on the conversion of cash flows or amounts, respectively, from euros to USD using the September 30, 2019 spot rate of $1.09.

(11) The fund’s partnership interests are divided into Class A and Class B interests, with the Class A interests having priority with respect to the distribution of current income and disposition proceeds. The net IRR for Class A interests was 10.4% and Class B interests was 9.3%. The combined net IRR for Class A and Class B interests was 9.9%.

(12) The fund’s partnership interests are divided into Class A and Class B interests, with the Class A interests having priority with respect to the distribution of current income and disposition proceeds. The net IRR for Class A interests was 10.8% and Class B interests was 10.5%. The combined net IRR for the Class A and Class B interests was 10.6%.

(13) The IRR is not considered meaningful (“nm”) as the period from the initial capital contribution through September 30, 2019 was less than 36 months.

(14) A portion of this fund pays management fees based on drawn, rather than committed, capital.

(15) Due to differences in the allocation of income and expenses to this fund’s two primary limited partners, the U.S. Treasury and Oaktree PPIP Private Fund, a combined net IRR is not presented. Of the $2,322 million in capital commitments, $1,161 million related to the Oaktree PPIP Private Fund, whose gross and net IRR were 24.7% and 18.6%, respectively.

(16) The fund follows the American-style distribution waterfall, whereby the general partner may receive an incentive allocation as soon as it has returned the drawn capital and paid a preferred return on the fund’s realized investments (i.e., on a deal-by-deal basis). However, such cash distributions of incentives may be subject to repayment, or clawback. As of September 30, 2019, Oaktree had not recognized any incentive income from this fund. The accrued incentives (fund level) for this fund represents Oaktree’s effective 8% of the potential incentives generated by this fund in accordance with the terms of the Highstar acquisition.

(17) This includes our closed-end Senior Loan funds, CLOs, a non-Oaktree fund and certain separate accounts and co-investments.

(18) The total excludes one closed-end fund with management fee-generating AUM of $58 million as of September 30, 2019, which has been included as part of the Strategic Credit strategy within the evergreen funds table.

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Open-end Funds

			Manage- ment Fee-gener- ating AUM as of September 30, 2019		Twelve Months Ended September 30, 2019						Since Inception through September 30, 2019
	Strategy Inception				Rates of Return (1)						Annualized Rates of Return (1)						Sharpe Ratio
					Oaktree				Rele- vant Bench- mark		Oaktree				Rele- vant Bench- mark		Oaktree Gross	Rele- vant Bench- mark
					Gross		Net				Gross		Net
		(in millions)
Credit
High Yield Bonds
U.S. High Yield Bonds	1986		$	11,454	5.7	%	5.2	%	5.6	%	9.0	%	8.5	%	8.2	%	0.78	0.56
Global High Yield Bonds	2010		2,469		5.6		5.0		6.3		6.8		6.3		6.6		1.05	1.05
European High Yield Bonds	1999		421		9.5		8.9		7.9		8.0		7.5		6.4		0.74	0.47
Convertibles
U.S. Convertibles	1987		273		0.3		(0.2	)	4.0		9.1		8.6		8.3		0.49	0.39
Non-U.S. Convertibles	1994		602		1.6		1.1		2.1		7.9		7.3		5.2		0.75	0.38
High Income Convertibles	1989		1,037		4.5		3.9		5.7		10.9		10.1		8.0		1.05	0.60
Senior Loans
U.S. Senior Loans	2008		503		2.2		1.7		3.1		5.7		5.2		5.1		1.05	0.65
European Senior Loans	2009		1,091		3.4		2.9		2.3		7.0		6.5		7.5		1.64	1.61
Multi-Strategy Credit
Multi-Strategy Credit (2)	Various		3,278		nm		nm		nm		nm		nm		nm		nm	nm
Listed Equities
Emerging Markets Equities
Emerging Markets Equities	2011		5,227		4.1		3.3		(2.0	)	2.5		1.7		0.8		0.10	0.01
Total			$	26,355

(1) Returns represent time-weighted rates of return, including reinvestment of income, net of commissions and transaction costs. The returns for Relevant Benchmarks are presented on a gross basis.

(2) Includes Global Credit Fund and individual accounts across various strategies with different investment mandates. As such, a combined performance measure is not considered meaningful (“nm”).

99

Evergreen Funds

		As of September 30, 2019						Twelve Months Ended September 30, 2019				Since Inception through September 30, 2019
		AUM		Manage- ment Fee-gener- ating AUM		Accrued Incen- tives (Fund Level)
	Strategy Inception							Rates of Return (1)				Annualized Rates of Return (1)
								Gross		Net		Gross		Net
		(in millions)
Credit
Private/Alternative Credit
Strategic Credit (2).	2012	$	5,445	$	5,271	$	10	1.4	%	1.1	%	8.6	%	6.4	%
Distressed Debt
Value Opportunities	2007	990		947		1		(1.2	)	(2.0	)	9.2		5.6
Emerging Markets Debt
Emerging Markets Debt (3)	2015	1,197		860		—		(6.1	)	(7.0	)	9.4		6.8
Listed Equities
Value/Other Equities
Value Equities (4)	2012	733		508		7		2.5		0.9		18.3		13.2
				7,586		18
Other (5)				828		18
Restructured funds				—		4
Total (2)				$	8,414	$	40

(1) Returns represent time-weighted rates of return.

(2)    Includes our publicly-traded BDCs and one closed-end fund with $64 million and $58 million of AUM and management fee-generating AUM, respectively. The rates of return reflect the performance of a composite of certain evergreen accounts and exclude our publicly-traded BDCs.

(3)    Includes the Emerging Markets Debt Total Return and Emerging Markets Opportunities strategies. The rates of return reflect the performance of a composite of accounts for the Emerging Markets Debt Total Return strategy, including a single account with a December 2014 inception date.

(4)    Includes performance of a proprietary fund with an initial capital commitment of $25 million since its inception in May 2012.

(5)    Includes certain Real Estate and Multi-Strategy Credit accounts.

100

Item 6. Exhibits

For a list of exhibits filed with this report, refer to the Exhibits Index on the page immediately preceding the exhibits, which Exhibit Index is incorporated herein by reference.

101

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 7, 2019  

Oaktree Capital Group, LLC
By:	/s/    Daniel D. Levin
Name:	Daniel D. Levin
Title:	Chief Financial Officer and Authorized Signatory

102

EXHIBITS INDEX

Exhibit No.	Description of Exhibit
3.1	Restated Certificate of Formation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-1, filed with the SEC on June 17, 2011).
3.2	Fifth Amended and Restated Operating Agreement of the registrant dated as of September 30, 2019 and effective as of October 1, 2019 (including Unit Designation, dated as of November 16, 2015, Unit Designation with respect to the Series A Preferred Units, dated May 17, 2018, and Unit Designation with respect to the Series B Preferred Units, dated August 9, 2018) (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated October 4, 2019, filed with the SEC on October 4, 2019).
10.1	Third Amended and Restated Exchange Agreement, dated as of September 30, 2019, by and among Atlas Holdings, LLC, Atlas OCM Holdings, LLC, Oaktree Capital Group, LLC, OCM Holdings I, LLC, Oaktree New Holdings, LLC, Oaktree AIF Holdings II, LLC, Oaktree Holdings, Ltd., Oaktree Capital Group Holdings, L.P., Oaktree Capital I, L.P., Oaktree Capital II, L.P., Oaktree Capital Management, L.P., Oaktree Capital Management (Cayman), L.P., Oaktree AIF Investments, L.P., Oaktree Investment Holdings, L.P., OCGH ExchangeCo, L.P. and the other parties thereto.
10.2	Restructuring Agreement, dated as of September 30, 2019, by and among Brookfield Asset Management Inc., Oaktree Capital Group, LLC, Berlin Merger Sub, LLC, Oslo Holdings LLC, Oslo Holdings Merger Sub LLC, Brookfield Holdings Canada Inc., Brookfield US Holdings, Inc., Brookfield US Inc., Atlas Holdings, LLC, Atlas OCM Holdings, LLC, Oaktree Capital Group Holdings, L.P. and the other parties thereto.
10.3	Third Amended and Restated Tax Receivable Agreement, dated as of September 30, 2019, by and among Brookfield Asset Management Inc., Oaktree Holdings, Inc., Oaktree AIF Holdings, Inc., Oaktree Capital II, L.P., Oaktree Capital Management, L.P., Oaktree Investment Holdings, L.P., Oaktree AIF Investments, L.P., Oaktree Capital Group Holdings, L.P. and the other parties thereto.
31.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

103

EX-10.1

Exhibit 10.1

Execution Version

THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT

by and among

ATLAS HOLDINGS, LLC,

ATLAS OCM HOLDINGS, LLC,

OAKTREE CAPITAL GROUP, LLC,

OCM HOLDINGS I, LLC,

OAKTREE NEW HOLDINGS, LLC,

OAKTREE AIF HOLDINGS II, LLC,

OAKTREE HOLDINGS, LTD.,

OAKTREE CAPITAL GROUP HOLDINGS, L.P.,

OAKTREE CAPITAL I, L.P.,

OAKTREE CAPITAL II, L.P.,

OAKTREE CAPITAL MANAGEMENT, L.P.,

OAKTREE CAPITAL MANAGEMENT (CAYMAN), L.P.,

OAKTREE AIF INVESTMENTS, L.P.,

OAKTREE INVESTMENT HOLDINGS, L.P.,

OCGH EXCHANGECO, L.P.,

the OCGH LIMITED PARTNERS,

solely for purposes of Section 5.17, BROOKFIELD ASSET MANAGEMENT INC.

and

OTHER PARTIES JOINED HERETO FROM TIME TO TIME

Dated as of September 30, 2019

TABLE OF CONTENTS

ARTICLE IDEFINITIONS    2

Section 1.1Definitions    2

ARTICLE IIEXCHANGES    17

Section 2.1Exchange Procedure    17

Section 2.2Closing Procedures    24

Section 2.3Dispute Resolution    27

Section 2.4Termination of Exchanges    27

Section 2.5Delivery of Valuation    27

Section 2.6Total Equity Value    29

Section 2.7Post-Closing Consents and Amendments    29

Section 2.8Additional Payments    31

ARTICLE IIIREPRESENTATIONS & WARRANTIES    31

Section 3.1Representations and Warranties of Brookfield    31

Section 3.2Representations and Warranties of ExchangeCo    33

Section 3.3Representations and Warranties of OCGH    35

ARTICLE IVPROTECTIVE PROVISIONS    36

Section 4.1Certain Events    36

ARTICLE VMISCELLANEOUS    37

Section 5.1Notices    37

Section 5.2Interpretation    37

Section 5.3Joinder    37

Section 5.4Transaction Expenses    38

Section 5.5Reserved    38

Section 5.6Severability    38

Section 5.7Counterparts    38

Section 5.8Entire Agreement; Third Party Beneficiaries    38

Section 5.9Further Assurances    39

Section 5.10Governing Law    39

Section 5.11Arbitration of Disputes    39

Section 5.12Amendments; Waivers    41

Section 5.13Assignment    41

Section 5.14Tax Treatment    41

Section 5.15Interference    41

Section 5.16Contra Proferentem    42

Section 5.17Brookfield Asset Management Inc    42

Section 5.18ExchangeCo Units    43

Exhibits

Exhibit A – Extraordinary Items

Exhibit B – Illustrative Calculation of Current Equity Value

Exhibit C – Form of Atlas Note Purchase Agreement

Exhibit D – Form of ExchangeCo Note Purchase Agreement

Exhibit E – Registration Rights Agreement

Exhibit F – Form of Call Agreement

Exhibit G – Form of Put Agreement

Exhibit H – Closed-End Funds

Exhibit I – Additional Payment Allocation

This THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT (the “Agreement”), dated as of September 30, 2019, is by and among Atlas Holdings, LLC (“Brookfield”), Atlas OCM Holdings, LLC, a Delaware limited liability company (“Atlas OCM”), Oaktree Capital Group, LLC, a Delaware limited liability company (“Oaktree”), OCM Holdings I, LLC, a Delaware limited liability company (“OCM Holdings”), Oaktree New Holdings, LLC, a Delaware limited liability company (“Oaktree LLC”), Oaktree AIF Holdings II, LLC, a Delaware limited liability company (“Oaktree AIF”), Oaktree Holdings, Ltd., a Cayman Islands exempted company (“Oaktree Ltd.”), Oaktree Capital Group Holdings, L.P., a Delaware limited partnership (“OCGH”), OCGH ExchangeCo, L.P., a Delaware limited partnership (“ExchangeCo”), the OCGH Limited Partners (as defined below), the OpCos (as defined below), solely for purposes of Section 5.17, Brookfield Asset Management Inc., a corporation amalgamated under the laws of the Province of Ontario (“BAM”), and other parties joined hereto from time to time pursuant to Section 5.3. Capitalized terms used but not otherwise defined herein have the respective meanings ascribed thereto in Section 1.1.

WHEREAS, BAM, Berlin Merger Sub, LLC, Oaktree and the other parties thereto entered into an Agreement and Plan of Merger, dated as of March 13, 2019 (as the same may be amended, supplemented or waived from time to time in accordance with its terms, the “Merger Agreement”), pursuant to which, among other things, Berlin Merger Sub, LLC merged with and into Oaktree (the “Merger”) with Oaktree continuing as the surviving company in accordance with the terms set forth in the Merger Agreement;

WHEREAS, OCGH is an owner of OpCo Units;

WHEREAS, on the terms and subject to the conditions set forth herein, in the OCGH Partnership Agreement, any Oaktree equity ownership plan (pursuant to which Former Oaktree Units were issued) and any other arrangements between OCGH and the limited partners of OCGH, each limited partner of OCGH has the right to sell or exchange his or her vested OCGH Units, at Brookfield’s option (except as set forth herein): (i) to Brookfield in exchange for cash, (ii) to Brookfield in exchange for Class A Shares, (iii) to Brookfield in exchange for Atlas Notes, (iv) to OCGH in exchange for ExchangeCo Units or (v) a combination of the foregoing;

WHEREAS, on the terms and subject to the conditions set forth herein and in the OCGH Partnership Agreement, OCGH shall redeem the OCGH Units acquired by Brookfield or cancel the OCGH Units acquired by OCGH, as applicable, in an Exchange and, in exchange therefore, shall distribute to Brookfield the Equivalent OpCo Units that correspond to the redeemed or canceled OCGH Units;

WHEREAS, on the terms and subject to the conditions set forth herein, immediately upon the distribution of the Equivalent OpCo Units by OCGH to Brookfield, a number of Class B OCG Units and Class B AOH Units held by OCGH equal to the number of Equivalent OpCo Units delivered to Brookfield shall be automatically canceled without any further action by any party;

WHEREAS, the parties intend that (i) each Exchange for cash, Class A Shares, Atlas Notes, or a combination of the foregoing, consummated hereunder be treated for U.S. federal income tax purposes as a taxable sale of OCGH Units by an OCGH Limited Partner to Brookfield and (ii) each Exchange for ExchangeCo Units consummated hereunder (and any distributions on the ExchangeCo Units received in such Exchange) be treated as a distribution pursuant to Section 731 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”);

WHEREAS, the parties executed an Exchange Agreement, dated as of May 25, 2007 (the “Original Agreement”);

WHEREAS, the Original Agreement was amended and restated in its entirety by the execution of an Amended and Restated Exchange Agreement, dated as of March 28, 2008 (the “First Amended Agreement”);

WHEREAS, the First Amended Agreement was amended and restated in its entirety by the execution of a Second Amended and Restated Exchange Agreement, dated as of March 29, 2012 (the “Second Amended Agreement”);

WHEREAS, Section 3.11 of the Second Amended Agreement provides that the Second Amended Agreement may be amended, modified or waived at any time in writing by agreement of Oaktree and OCGH without the approval or consent of any other party (unless such amendment, modification or waiver would adversely affect in any material respect any OCGH Limited Partner relative to all OCGH Limited Partners collectively as a group); and

WHEREAS, Oaktree and OCGH desire to amend and restate the Second Amended Agreement in a manner that does not adversely affect in any material respect any OCGH Limited Partner relative to all OCGH Limited Partners collectively as a group.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Oaktree and OCGH hereby agree to amend and restate the Second Amended Agreement in its entirety as follows:

ARTICLE I
DEFINITIONS

Section 1.1Definitions. As used in this Agreement, the following terms shall have the following meanings:

“2018 10-K” means Oaktree’s Form 10-K for the year-ended December 31, 2018.

“Accelerated Former Oaktree Units” means any Former Oaktree Unit which has vested other than in connection with its original vesting schedule.

“Additional Payment” has the meaning set forth in Section 2.8.

“Advisers Act” means the U.S. Investment Advisers Act of 1940, as amended.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by, or is under common Control with, the Person in question; provided that no Fund or portfolio company (or any investment vehicle through which any Fund holds its interest in a portfolio company) of any Oaktree Group Member or Brookfield Group Member shall be deemed to be an Affiliate of any Oaktree Group Member or Brookfield Group Member.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Aggregate Exchange Notice” has the meaning set forth in Section 2.1(a).

“AOH Operating Agreement” means the operating agreement of Atlas OCM, as it may be amended or modified from time to time.

“Ancillary Agreement” means the Registration Rights Agreement, an Atlas Note Purchase Agreement, an ExchangeCo Note Purchase Agreement, a Put Agreement or a Call Agreement and any agreements entered into pursuant to any of the foregoing.

“Applicable Maximum Amount” has the meaning set forth in Section 2.1(b)(ii).

“Atlas Note Minimum Amount” means an amount equal to the product of (x) the difference between (1) the aggregate Current Equity Value of all Cash/Share/Note Exchange Units in a given Exchange and (2) the aggregate U.S. federal income tax basis of all such Exchanged Units (determined without taking into account any Partnership liabilities attributed to any Exchanged Units) assuming, for this purpose, that all such Exchanged Units have a U.S. federal income tax basis equal to the U.S. federal income tax basis of the Exchanged Unit with the lowest U.S. federal income tax basis, as determined in good faith by OCGH and reported to Brookfield, with reasonable back-up calculations, no later than the day that is twenty (20) days following the end of the applicable Open Period, it being understood that the result of this clause (2) shall not be less than zero, and (y) the maximum combined U.S. federal state and local income tax rate applicable to dispositions of OCGH Units, as determined in good faith by OCGH and reported to Brookfield for an individual subject to tax in Los Angeles, California or New York City, New York (whichever is higher).

“Atlas Note Purchase Agreement” means a note agreement substantially in the form attached as Exhibit C hereto.

“Atlas Notes” means the Atlas Notes as described in and issuable by Brookfield under the Atlas Note Purchase Agreement.

“Atlas OCM” has the meaning set forth in the preamble to this Agreement.

“Bankruptcy Event” means the date on which BAM or Brookfield makes any bankruptcy filing or declaration of insolvency or consents to the appointment of a receiver, liquidator, assignee, custodian or trustee for the purpose of winding up the affairs of BAM or Brookfield.

“Base Date” means February 28, 2019.

“Base Fee Earnings” means for any fiscal year, without duplication, (a) the aggregate of (i) all management fees, Specified Performance Fees (but excluding any other performance based fees), asset management fees, administrative fees, transaction fees or similar fees, earned by any Oaktree Group Member (in each case, grossed up for any fee offsets to the extent such fee offsets (x) are also included as an expense or (y) are not otherwise included as an increase to Base Fee Earnings as a result of any other sub-clause of this clause (a)), calculated in a manner consistent with the line item entitled “Management Fees” set forth on pages 98 and 99 of the 2018 10-K, plus (ii) any amounts attributable to any Oaktree Group Member with respect to the interests of OCGH, Oaktree and Atlas OCM in the fee-related earnings of the type described in clause (i) above, calculated including any depreciation and amortization, of DL Capital or other investment managers, calculated in a manner consistent with such amount as captured within the line item entitled “Corporate investments” set forth on page 111 of the 2018 10-K, less (b) the aggregate of (i) compensation and benefits (excluding (x) equity issued in respect of compensation, (y) Compensation Expense Related to Incentive Income or compensation relating to Investment Income and (z) expenses in connection with the Brookfield Bonus Fund (as defined in the Oaktree Operating Agreement)), calculated in a manner consistent with the line item entitled “Compensation and benefits” set forth on page 98 of the 2018 10-K, (ii) Stock Based Compensation and (iii) general and administrative expenses (excluding depreciation and amortization), calculated in a manner consistent with the line item entitled “General and administrative” set forth on page 98 of the 2018 10-K. The items referenced in this definition shall be calculated using the Historic Principles, subject to only those adjustments described on Exhibit A. For the avoidance of doubt and notwithstanding the foregoing, Base Fee Earnings shall not include revenue attributable to Investment Income, Incentive Income or total other income (calculated in a manner consistent with the line items entitled “Other income (expense), net” and “Interest expense, net of interest income” set forth on page 98 of the 2018 10-K).

“Beneficially Own” has the meaning ascribed to such term in the Oaktree Operating Agreement; provided that notwithstanding anything to the contrary in the Oaktree Operating Agreement, all OCGH Units transferred pursuant to Permitted Control Released Transfers (as defined in the OCGH Partnership Agreement) shall be deemed not to be “Beneficially Owned” by the Permitted Oaktree Holders for purposes of this Agreement.

“Blackout Period” means a quarterly or other trading “blackout period” imposed as a matter of corporate or employment policy by BAM or any of its Affiliates that restricts the ability of an OCGH Limited Partner from freely trading its Class A Shares.

“Brookfield” has the meaning set forth in the preamble to this Agreement.

“Brookfield Group” means BAM and its Affiliates (other than, for the avoidance of doubt, (i) OCGH and (ii) until the expiration of the Initial Period, Oaktree, Atlas OCM or any of their respective subsidiaries, or any OpCo).

“Brookfield Group Member” means any member of the Brookfield Group.

“Brookfield OpCo Units” has the meaning set forth in Section 4.1(a).

“Business Day” means any day, other than a Saturday, Sunday or other day on which commercial banks located in the State of New York or the Province of Ontario are authorized or required by law or other governmental action to close.

“Buyback Event” has the meaning set forth in Section 4.1(b).

“Buyback Notice” has the meaning set forth in Section 4.1(a).

“Buyback Right” has the meaning set forth in Section 4.1(a).

“Call Agreement” means a Call Agreement substantially in the form attached hereto as Exhibit F.

“Capital Distributions” means distributions made by OCGH in respect of the return of capital.

“Cash/Share/Note Exchange Units” has the meaning set forth in Section 2.1(c).

“Class A Shares” means Class A Limited Voting Shares of BAM that comply with Section 3.1(c).

“Class A Units” has the meaning set forth in the Oaktree Operating Agreement.

“Class B AOH Unit” means a Class B Unit of Atlas OCM, as described in the AOH Operating Agreement.

“Class B OCG Units” has the meaning set forth in the Oaktree Operating Agreement.

“Client” has the meaning set forth in the Merger Agreement.

“Closed-End Base Date Assets Under Management” means (a) for each Closed-End Fund that is a Registered Fund that has elected to be treated as a business development company under the Investment Company Act or that is a collaterized loan obligation, the aggregate assets under management as of the Base Date for such Closed-End Fund, (b) for each other Closed-End Fund, the investment period of which has not terminated as of the Base Date, the aggregate capital commitments to such Closed-End Fund as of the Base Date, and (c) for each other Closed-End Fund, the investment period of which has terminated as of the Base Date, the aggregate capital contributions, the aggregate cost basis of investments held by such Closed-End Fund, or other aggregate amount, in each case, as of the Base Date, upon which investment advisory, investment management, subadvisory or other similar recurring fees for such Closed-End Fund are calculated, in each case excluding general partner capital commitments.

“Closed-End Funds” means each closed-end Company Fund (including, for this purpose, each Registered Fund that has elected to be treated as a business development company under the Investment Company Act and each collaterized loan obligation) as of the Base Date, other than any closed-end Company Fund that has had an event of dissolution or is scheduled to have an event of dissolution on or prior to December 31, 2019. All Closed-End Funds are set forth on Exhibit H.

“Closed-End Revenue Run-Rate” means, as of the Base Date, the aggregate annualized investment advisory, investment management, subadvisory or other similar recurring fees for all Closed-End Funds (but excluding any Incentive Income and Investment Income) payable to any OpCo or any subsidiary of an OpCo, determined by multiplying (a) the Closed-End Base Date Assets Under Management for each such Closed-End Fund as of the Base Date by (b) the applicable annual fee rate for such Closed-End Fund under the applicable Investment Advisory Arrangement as of the Base Date (not including any Incentive Income and Investment Income and net of any sub-advisory fees paid by any OpCo or any subsidiary of an OpCo to a Person that is not an OpCo or a subsidiary of an OpCo).

“Closing” has the meaning set forth in Section 2.2(b).

“Code” has the meaning set forth in the Recitals.

“Company Fund” has the meaning set forth in the Merger Agreement.

“Compensation Expense Related to Incentive Income” shall be calculated using the Historic Principles in a manner consistent with the line item entitled “Incentive income compensation expense” set forth on page 98 of the 2018 10-K.

“Competitive Business” means any business that is competitive with any portion of the Oaktree Strategy (including raising, organizing, managing or advising any fund or separate account having an investment strategy in any way competitive with any of the funds or separate accounts managed by any Oaktree Group Member).

“Competitor Acquisition Event” means the acquisition, directly or indirectly, of Control of BAM by a Person that materially engages in a core business that is directly and materially competitive with a core Oaktree Strategy (regardless of the form of such transaction and whether in a single transaction or in a series of related transactions); provided that in no event shall a Competitor Acquisition Event be deemed to occur if, following any such transaction or transactions, both (i) a majority of the Class B Limited Voting Shares of BAM are owned, beneficially or otherwise, by individuals who were, immediately prior to the consummation of such acquisition, existing or former officers, directors and employees of BAM or their respective Related Parties and (ii) a majority of the Class B Limited Voting Shares of BAM continue to have the right to elect at least 50% of BAM’s board of directors.

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“Control Party” has the meaning set forth in Section 2.5(a).

“Convertible Phantom Units” means 9,621 “phantom equity” units of OCGH, which convert, upon vesting in accordance with their terms, into an equal number of OCGH Units.

“Current Equity Value” means, as of any Exchange Date, a value per OCGH Unit calculated as (i) Total Equity Value divided by F, (ii) reduced by Quarterly Distributions already paid in respect of such OCGH Unit and (iii) increased by the Ticking Fee on the net amount of the foregoing clauses (i) and (ii), where:

“F” is the total number of common units outstanding as of December 31 of the immediately preceding calendar year with respect to one OpCo (it being understood that all OpCos shall at all times have the same number of units outstanding at the same time);

provided that, for any Exchange Date occurring in fiscal years 2020 or 2021, the Current Equity Value in respect of any Exchangeable Unit that is a Former Oaktree Unit shall be equal to the sum of (x) $49.00 minus (y) the value of the Capital Distributions received from OCGH upon the vesting of such Former Oaktree Unit. An illustrative calculation of the Current Equity Value as of December 31, 2018 is attached hereto as Exhibit B.

“Current Equity Value Calculation” has the meaning set forth in Section 2.5(a).

“Dispute Notice” has the meaning set forth in Section 2.5(b).

“DL Capital” means, collectively, DoubleLine Capital LP, DoubleLine GP Holdings LP and each of their respective subsidiaries.

“Enforceability Exceptions” has the meaning set forth in Section 3.1(b).

“Equivalent OpCo Unit” means, with respect to any OCGH Unit, the number and type of OpCo Units held by OCGH that correspond to such OCGH Unit, as determined by the General Partner and Brookfield.

“Exchange” means the exchange by an OCGH Limited Partner of an OCGH Unit for cash, Class A Shares, an ExchangeCo Unit, Atlas Notes or a combination of the foregoing, as described in Article II of this Agreement.

“Exchange Consideration” means, for each OCGH Unit being exchanged on the same Exchange Date:

(i)if Brookfield elects to deliver Class A Shares as consideration for all or a portion of the Exchange, a number of Class A Shares equal to (A) the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (i) divided by (B) the ten (10)-day aggregate volume-weighted average price per Class A Share (as reported on Bloomberg) on the New York Stock Exchange or NASDAQ or any other U.S. national securities exchange on which shares of the same class are then listed for the VWAP Period; provided that no fractional Class A Shares shall be delivered as consideration and, in lieu thereof, cash in United States Dollars shall be paid at the same valuation as the Class A consideration; provided, further, that all fractional shares to which a single Exchanging LP would be entitled shall be aggregated;

(ii)if Brookfield elects to deliver cash as consideration for all or a portion of the Exchange, an amount of cash in United States Dollars equal to the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (ii);

(iii)if Brookfield elects for OCGH to deliver ExchangeCo Units as consideration for all or a portion of the Exchange, a number of ExchangeCo Units which shall in the aggregate represent the right to indirectly receive the proceeds from an ExchangeCo Note with an aggregate principal amount equal to the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (iii), subject to the limitations of Section 2.1(f)(iii); provided that the ExchangeCo Units to be issued as Exchange Consideration shall be of the same series for all Exchanged Units by all Exchanging LPs at the Closing effected on such Exchange Date; and/or

(iv)if Brookfield elects to deliver Atlas Notes as consideration for all or a portion of the Exchange, such Atlas Notes shall have an aggregate principal amount equal to the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (iv), subject to the limitations of Section 2.1(f)(iii).

For the avoidance of doubt, the total Exchange Consideration for each OCGH Unit being exchanged on the same Exchange Date shall equal the Current Equity Value of the applicable Exchangeable Unit.

“Exchange Date” has the meaning set forth in Section 2.2(a).

“Exchangeable Unit” means (a) any OCGH Unit issued and outstanding on the Merger Closing Date immediately after giving effect to the Transactions and (b) any Permitted Post-Closing OCGH Units.

“ExchangeCo” has the meaning set forth in the preamble to this Agreement.

“ExchangeCo Exchange Units” has the meaning set forth in Section 2.1(c).

“ExchangeCoNote Purchase Agreement” means a note purchase agreement substantially in the form attached as Exhibit D hereto.

“ExchangeCo Notes” means the notes issuable to ExchangeCo pursuant to an ExchangeCo Note Purchase Agreement.

“ExchangeCo Unit” means a unit of equity interest in ExchangeCo entitled to receive distributions in respect of ExchangeCo Notes.

“Exchanged Units” has the meaning set forth in Section 2.1(a).

“Exchanging LP” has the meaning set forth in Section 2.1(a).

“First Amended Agreement” has the meaning set forth in the Recitals.

“Former Oaktree Unit” means any OCGH Unit (a) that (i) in connection with the transactions contemplated pursuant to the Merger Agreement was converted or exchanged into an OCGH Unit from a Class A Unit, (ii) immediately prior to such conversion or exchange, was not a Vested Class A OCG Unit and (iii) immediately prior to the consummation of the Merger, was not a Vested Unit or (b) described in clause (a)(ii) of the definition of Permitted Post-Closing OCGH Units.

“Former Oaktree Unit Threshold” means, in any given Exchange, an amount equal to the sum of (a) the product of (x) the applicable Current Equity Value for an OCGH Unit being exchanged and (y) the total number of Former Oaktree Units eligible for participation in the applicable Open Period and which were fully vested, in accordance with their original vesting schedules, as of the date of delivery of the Aggregate Exchange Notice for such Exchange, and (b) $20,000,000.

“Founding Co-Chairmen” means Howard Marks and Bruce Karsh, and “Founding Co-Chairman” means either of them individually.

“Fund” means any limited partnership, limited liability company, group trust, mutual fund, investment company or other entity (including any collateralized loan obligation vehicle or business development company), or any investment account.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America, except any requirement for the consolidation of investment funds or CLOs advised or managed by the OpCos and other entities that may be required by FASB ASC 810-20 or similar and subsequent authoritative accounting pronouncements.

“General Partner” means the general partner of OCGH.

“Governmental Entity” means any court, administrative agency, regulatory body, commission or other governmental authority, board, bureau or instrumentality, domestic or foreign and any subdivision thereof.

“Historic Principles” means the accounting principles used in preparation of the GAAP and non-GAAP financials set forth in the 2018 10-K. Unless otherwise agreed by OCGH and Brookfield, the changes in accounting principles after December 31, 2018 shall be disregarded when calculating any financial results, balance sheet items or other financial metrics that are expressly required to be calculated using Historic Principles (e.g., a change in accounting principles that would require an operating lease to be reclassified as a capital lease).

“Incentive Income” means an amount, for any fiscal year, calculated, without duplication, using the Historic Principles in a manner consistent with the line item entitled “Incentive income” set forth on page 98 of the 2018 10-K.

“Initial Period” means the “Initial Period” as defined in the Oaktree Operating Agreement.

“Investment Advisory Arrangement” has the meaning set forth in the Merger Agreement.

“Investment Company Act” has the meaning set forth in the Merger Agreement.

“Investment Income” means an amount, for any fiscal year, calculated, without duplication, using the Historic Principles in a manner consistent with the line item entitled “Investment income” set forth on page 98 of the 2018 10-K.

“Investor” has the meaning set forth in the Merger Agreement.

“Issuer” has the meaning set forth in Section 3.2(d).

“JAMS” has the meaning set forth in Section 5.11(a).

“Liens” means any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever.

“Managed Account” has the meaning set forth in the Merger Agreement.

“Material Adverse Effect” of a Person means a material adverse effect on (i) the business, operations, properties, assets or condition (financial or otherwise) of such Person, (ii) the ability of such Person to fully and timely perform their obligations under this Agreement or (iii) the rights, remedies or benefits available to OCGH or any OCGH Limited Partner under this Agreement.

“Merger” has the meaning set forth in the Recitals.

“Merger Agreement” has the meaning set forth in the Recitals.

“Merger Closing Date” has the meaning ascribed to the term “Closing Date” in the Merger Agreement.

“Merger Closing Units Amount” means a number equal to the sum of (i) 59,024,072 plus (ii) the amount of all Permitted Post-Closing OCGH Units (other than those referenced in clause (a)(ii) of the definition thereof).

“Merger Signing Date” means March 13, 2019.

“Negative Consent” has the meaning set forth in the Merger Agreement.

“NetIncentives Created” means, for any fiscal year, without duplication and calculated, where applicable, using the Historic Principles in a manner consistent with the line item entitled “Incentives created (fund level), net of associated incentive income compensation expense” set forth on page 91 of the 2018 10-K, the aggregate of (i) any “carried interest,” “incentive allocation,” “performance allocation,” “performance fees” (other than Specified Performance Fees) or similar items of gain or loss generated (directly or indirectly) by any Fund or any other investment vehicle based on mark-to-market performance during such fiscal year less any compensation expense that is a direct result of such gain or loss (other than, for the avoidance of doubt, (x) amounts that are treated as Base Fee Earnings and (y) allocations that are made pro rata based on contributed capital of all partners, members or other holders of similar economic interests in the applicable fund) plus (ii) the respective pro rata portion of any “carried interest,” “incentive allocation,” “performance allocation,” “performance fees” (other than Specified Performance Fees) or similar items of gain or loss), that are attributable to interests of OCGH, Oaktree and Atlas OCM in DL Capital or other investment managers generated during such fiscal year less any compensation expense that is a direct result of such gain or loss. For the avoidance of doubt, Net Incentives Created may be a negative amount.

“Non-Control Party” has the meaning set forth in Section 2.5(a).

“Non-Senior Service Partners Group” means the OCGH Limited Partners other than those enumerated in the definition of “Senior Service Partners Group”.

“Oaktree” has the meaning set forth in the preamble to this Agreement.

“Oaktree AIF” has the meaning set forth in the preamble to this Agreement.

“Oaktree Business” means the business of any Oaktree Group Member as conducted as of the Merger Closing Date.

“Oaktree Group” means Oaktree and its Affiliates (other than, for the avoidance of doubt, the Brookfield Group) including each OpCo and, for so long as they are an Affiliate of Oaktree, OCGH and the General Partner.

“Oaktree Group Member” means each member of the Oaktree Group.

“Oaktree LLC” has the meaning set forth in the preamble to this Agreement.

“Oaktree Ltd.” has the meaning set forth in the preamble to this Agreement.

“Oaktree Operating Agreement” means the operating agreement of Oaktree, as it may be amended or modified from time to time.

“Oaktree Strategy” means (i) any business or strategy that Oaktree is engaged in as of the Merger Closing Date, including the Oaktree Business; (ii) any business or strategy that is included in any business plan shared with BAM prior to the Merger Signing Date; and (iii) any other strategies in any other industries, as have been or may be agreed by BAM, which Oaktree can form, launch or add at any time following the Merger Closing Date.

“OCGH” has the meaning set forth in the preamble to this Agreement.

“OCGH Limited Partner” means a “Limited Partner” as defined in the OCGH Partnership Agreement.

“OCGH Partnership Agreement” means the limited partnership agreement of OCGH, as it may be amended or modified from time to time; provided that, any amendment or modification that would adversely affect any OpCo or Brookfield Group Member shall not be binding on such OpCo or Brookfield Group Member, as applicable, without the written consent of Brookfield. For the avoidance of doubt, amendments or modifications to any definitions used herein that are defined in the OCGH Partnership Agreement shall be disregarded for purposes of this Agreement, unless such amendment or modification was approved by Brookfield in writing.

“OCGH Units” means limited partnership units of OCGH.

“OCM Holdings” has the meaning set forth in the preamble to this Agreement.

“OpCo” means an “Oaktree Operating Group Member” as defined in the Oaktree Operating Agreement.

“OpCo Unit” means any equity unit of an OpCo.

“Open Period” means (a) with respect to Exchangeable Units that are Former Oaktree Units, the first sixty (60) days of each calendar year and (b) with respect to other Exchangeable Units, the first sixty (60) days of each calendar year beginning January 1, 2022.

“Original Agreement” has the meaning set forth in the Recitals.

“Paying Agent” means a Person serving as the agent of Brookfield and its subsidiaries, who shall be designated, from time to time, by mutual agreement of Oaktree and OCGH, with the consent of Brookfield (not to be unreasonably withheld) to facilitate Exchanges. The initial Paying Agent is OCGH.

“Percentage Interest” means with respect to any OCGH Limited Partner, as of any time, the fraction, expressed as a percentage, (i) the numerator of which is the aggregate number of OCGH Units held of record by such OCGH Limited Partner at such time, and (ii) the denominator of which is the aggregate number of OCGH Units issued and outstanding at such time, in each case, subject to any adjustment thereof in accordance with the Unit Designation of any such OCGH Unit or class of OCGH Units. The aggregate Percentage Interests of the OCGH Limited Partners shall at all times total 100%.

“Permitted Oaktree Holder” has the meaning ascribed to such term in the Oaktree Operating Agreement.

“Permitted Post-Closing OCGH Units” ” means (a) any OCGH Unit issued after the Merger Closing Date pursuant to (i) agreements in existence on the Merger Signing Date and set forth on Section 4.22A of the Company Disclosure Schedule and (ii) the Convertibile Phantom Units, in each case that is a Vested Unit, and (b) any other OCGH Unit issued after the Merger Closing Date and approved by Brookfield as a “Permitted Post-Closing OCGH Unit.”

“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, Governmental Entity or other entity.

“Put Agreement” means a Put Agreement substantially in the form attached hereto as Exhibit G.

“Quarterly Distribution” means, with respect to any Exchangeable Unit exchanged, or to be exchanged, pursuant to Section 2.1, the distribution per such Exchangeable Unit in respect of (a) the fourth fiscal quarter of the fiscal year immediately preceding the fiscal year in which such Open Period occurs (payable in the first quarter of the year in which the Open Period occurs), (b) the first fiscal quarter of the fiscal year in which such Open Period occurs (payable in the second quarter of such year), (c) the second fiscal quarter of the fiscal year in which such Open Period occurs (payable in the third quarter of such year) and (d) each other fiscal quarter of such fiscal year that has elapsed prior to the Exchange Date (with such distribution payable in the subsequent applicable quarter); provided, that a Quarterly Distribution shall exclude any portion of such distribution that is a Tax Distribution.

“Registered Fund” has the meaning set forth in the Merger Agreement.

“Registration Rights Agreement” means the Registration Rights Agreement executed on the date hereof and attached as Exhibit E hereto.

“Related Parties” means, with respect to any individual, (i) such individual’s spouse, child (natural or adopted) a spouse of any such child, a grandchild, or a lineal descendent of the foregoing (the Persons referred to in this clause (i), such individual’s “Family Members”), (ii) a trust solely for the benefit of Family Members, (iii) a private foundation controlled by such individual or his or her Family Member or (iv) any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization or other entity of which the Persons listed in clauses (i)-(ii) above collectively own 100% of the outstanding securities.

“Required Amendment” means, with respect to each applicable Company Fund (or Managed Account or sub-advisory relationship), an amendment to the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of such Company Fund (or the Investment Advisory Arrangement in respect of such Managed Account or sub-advisory relationship) that (a) provides for the advance approval of the assignment (within the meaning of the Advisers Act) of the applicable Investment Advisory Arrangement to Brookfield or its Affiliates and (b) other than with respect to any Registered Fund, either (i) modifies the definition of “affiliate” contained therein such that no affiliate of Oaktree, any OpCo, or its or their subsidiaries in respect of which an actual or virtual information barrier is in place, or in respect of which there is no coordination or consultation in respect of investment decisions (in each case, as determined by Oaktree in its discretion based on the relevant facts and circumstances applicable to each particular situation) shall be deemed to be an “affiliate” of Oaktree, any OpCo, or its or their direct or indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement), or (ii) otherwise provides that no Brookfield Group Member or any of its affiliates will be an “affiliate” of Oaktree, any OpCo, or its or their direct or indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement).

“Required Closed-End Amendment Percentage” means a fraction (expressed as a percentage) the numerator of which is the Required Closed-End Amendment Revenue Run-Rate and the denominator of which is the Closed-End Revenue Run-Rate.

“Required Closed-End Amendment Revenue Run-Rate” means, as of any date of determination, the Closed-End Revenue Run-Rate as of the Base Date for all Closed-End Funds that have obtained the requisite consent described in clause (a) of the definition of Required Amendment, in each case, as of such date in accordance with the terms of the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of each such Closed-End Fund. For purposes of the foregoing, each Closed-End Fund that has an event of dissolution on or after January 1, 2020 shall be deemed to have obtained the requisite consent to the Required Amendment if and when such Closed-End Fund liquidates in the ordinary course.

“Second Amended Agreement” has the meaning set forth in the Recitals.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Service Partners Group” means Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson and Larry Keele.

“Service Partner” means any OCGH Limited Partner or Person who will become an OCGH Limited Partner upon receiving OCGH Units who provides (or has provided) services to OCGH or any other Oaktree Group Member.

“Specified Performance Fees” means, without duplication and calculated in accordance with the Historic Principles, performance based fees payable by a business development company, permanent capital vehicle or open end fund similar to those vehicles currently included in the line item entitled “Management Fees” set forth on pages 98 and 99 of the 2018 10-K.

“Stock Based Compensation” means, for any fiscal year, an amount equal to the difference between (a) the product of (i) the number of Exchangeable Units (of the type described in clause (b) of the definition thereof) issued to compensate Service Partners during such year that dilute BAM’s direct or indirect interests in the Oaktree Group, and (ii) (A) in respect of fiscal years 2020 and 2021, $49.00 less the amount of cumulative Capital Distributions already paid from and after the Merger Closing Date in respect of a single Exchangeable Unit (of the type described in clause (a) of the definition thereof) and (B) in respect of fiscal years 2022 and thereafter, 100% of the Current Equity Value as determined for an Exchange Date (regardless of whether any Exchanges actually occur on such date) occurring in the fiscal year in which such Exchangeable Units (of the type described in clause (b) of the definition thereof) are issued and (b) the product of (1) the number of Exchangeable Units forfeited by such Service Partners or that otherwise ceased to be outstanding due to a “clawback” in such year (other than any such Exchangeable Units that do not ratably accrete to BAM’s direct or indirect interest in the Oaktree Group), and (2) (x) in respect of fiscal years 2020 and 2021, $49.00 plus the amount of the Capital Distributions actually forfeited with respect to such Exchangeable Units less the amount of cumulative Capital Distributions already paid from and after the Merger Closing Date in respect of a single Exchangeable Unit (of the type described in clause (a) of the definition thereof) and (y) in respect of fiscal years 2022 and thereafter, 100% of the Current Equity Value as determined for an Exchange Date (regardless of whether any Exchanges actually occur on such date) occurring in the fiscal year in which such Exchangeable Units (of the type described in clause (b) of the definition thereof) are issued plus the amount of the Capital Distributions actually forfeited with respect to such Exchangeable Units.

“Tax Distribution” means distributions related to the tax-related Incentive Income with respect to taxable income allocated by a Fund during the fiscal year prior to the Exchange Date (which is usually recognized on a non-GAAP basis in the first quarter and paid in the second quarter of the fiscal year in which the Exchange Date occurs).

“Ticking Fee” means the product of (i) the number of days between (x) December 31st of the calendar year immediately preceding an Exchange Date and (y) such Exchange Date (not including December 31st and such Exchange Date) divided by 365, and (ii) the yield on the U.S. 5-year Treasury note plus 300 basis points as of December 31st of the calendar year immediately preceding such Exchange Date.

“Total Equity Value” means, as of any Exchange Date, a value calculated on a pro forma basis assuming deconsolidation of any Funds that may be reported on a consolidated basis, as (A*D + B*E + C) and pursuant to Section 2.6 hereof, where:

“A” is the average of Base Fee Earnings over the three fiscal years immediately preceding such Exchange Date, except for the Exchange Date that may occur in 2022 when “A” shall be calculated as the average of Base Fee Earnings over the two fiscal years immediately preceding such Exchange Date.

“B” is the average of Net Incentives Created over the three fiscal years immediately preceding such Exchange Date. The amount resulting from such average cannot be less than zero.

“C” is an amount equal to (a) the sum of (i) the value of each OpCo’s and its subsidiaries’ corporate investments as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “Corporate investments – Non-GAAP” set forth on page 112 of the 2018 10-K (but specifically excluding unfunded commitments and amounts attributable to DL Capital and other investment managers whose earnings are included in Base Fee Earnings), (ii) cash and cash-equivalents as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “Cash and cash-equivalents” set forth on page 111 of the 2018 10-K (but specifically excluding any cash or cash-equivalents distributed by any Fund in the fiscal year immediately prior to the Exchange Date in order to make Tax Distributions to the extent such Tax Distributions have been distributed by the OpCos by the second quarter of the subsequent year), (iii) U.S. Treasury and other securities as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “U.S. Treasury and other securities” set forth on page 111 of the 2018 10-K and (iv) seventy-five percent (75%) of the amount equal to (A) the accrued incentives of Funds on an aggregate basis net of (B) compensation expense related to such accrued incentives as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “Accrued incentives (fund level), net of associated incentive income compensation expense” set forth on page 91 of the 2018 10-K, less (b) the aggregate full face value of the debt and preferred equity of Oaktree and its direct and indirect subsidiaries and (without duplication) each OpCo, in each case calculated on a consolidated basis (but prior to the consolidation of any Funds) as reported in the financial statements of such entities for the December 31 preceding the Exchange Date;provided that the amount in the preceding clause (b) shall exclude (x) preferred equity issued in accordance with an Exchange and (y) debt owed by an OpCo that no longer nets to zero on a consolidated basis because such debt was transferred from Oaktree to another party.

“D” is a multiple equal to 13.5.

“E” is a multiple equal to 6.75.

An illustrative calculation of the Total Equity Value as of December 31, 2018 is attached hereto as Exhibit B.

Notwithstanding the foregoing in this definition, to the extent not eliminated in the consolidation process, the calculation of “Total Equity Value” shall disregard payments made to, and costs incurred by, any Oaktree Group Member in connection with any agreement whereby one Oaktree Group Member provides bona fide services to another Oaktree Group Member.

“Transactions” means the Merger, the Subsequent Merger (as defined in the Merger Agreement) and the other transactions contemplated by the Merger Agreement.

“Treasury Regulations” means the regulations promulgated by the U.S. Department of the Treasury under the Code.

“Unit Designation” means a designation certificate approved by the General Partner and Brookfield.

“Valuation Firm” has the meaning set forth in Section 2.5(c).

“Vested Class A OCG Units” means a Class A Unit of Oaktree not subject to vesting or forfeiture.

“Vested Unit” has the meaning set forth in the OCGH Partnership Agreement.

“VWAP Period” means the period of the ten (10) consecutive trading days ending on the third (3^rd) Business Day prior to the date of the issuance of Class A Shares as consideration in an Exchange.

ARTICLE II
EXCHANGES

Section 2.1Exchange Procedure.

(a)Delivery of Aggregate Exchange Notices. Subject to Section 2.1(b) and Section 2.4, no later than the third (3^rd) Business Day following the applicable Open Period, OCGH shall deliver written notice to Brookfield or its designee (an “Aggregate Exchange Notice”) (i) specifying (A) the name of each OCGH Limited Partner participating in the applicable Exchange (each, an “Exchanging LP”) and (B) the number of Exchangeable Units to be Exchanged by each such Exchanging LP subject to the limits, if any, set forth in Section 2.1(b) below (the “Exchanged Units”) and (ii) containing a representation and warranty by OCGH that all the Exchanging LPs are the legal, record and beneficial owners of the applicable Exchanged Units and that upon the sale of the applicable Exchanged Units pursuant to this Agreement, all right, title and interest in such Exchanged Units will vest in the purchaser thereof, free and clear of all Liens (other than Permitted Transfer Restrictions (as defined in the OCGH Partnership Agreement)). If, upon receipt of an Aggregate Exchange Notice, Brookfield determines that, following the applicable Exchange Date, the Permitted Oaktree Holders would in the aggregate Beneficially Own less than 1% of the issued and outstanding Oaktree Operating Group Units (as defined in the Oaktree Operating Agreement), Brookfield may thereupon provide written notice to OCGH to require that all remaining Exchangeable Units be included in the Aggregate Exchange Notice with respect to a specified future Open Period (which shall not be earlier than 36 months following the receipt of such written notice), it being understood and agreed that such right shall apply each time an Aggregate Exchange Notice is delivered to Brookfield, in the event that Brookfield has not previously exercised such right; provided that concurrently with or following the delivery of the written notice pursuant to Section 2.4, Brookfield shall have the right to require that all remaining Exchangeable Units be exchanged pursuant to an Aggregate Exchange Notice delivered with respect to the final Open Period if, following the Exchange Date with respect to the final Open Period, the Permitted Oaktree Holders would otherwise in the aggregate Beneficially Own less than 5% of the issued and outstanding Oaktree Operating Group Units (as defined in the Oaktree Operating Agreement). Except as otherwise permitted by Brookfield or its designee:

(i)an Aggregate Exchange Notice shall be irrevocable once delivered and must be unconditional;

(ii)any Aggregate Exchange Notice that purports to be revocable or conditional may be ignored or treated as irrevocable and unconditional; and

(iii)any Aggregate Exchange Notice that is delivered with respect to any Open Period shall not be valid with respect to any other Open Period.

For the avoidance of doubt, any portion of the Exchangeable Units whose sale is being requested by such Aggregate Exchange Notice but are not sold due to exceeding the limitations set forth in Section 2.1(b)(i) or Section 2.1(b)(iv), may be submitted on a new Aggregate Exchange Notice in a subsequent Open Period with respect to any such excess.

(b)Limitations on Exchanges.

(i)In connection with each Open Period, except as otherwise agreed by Brookfield and an OCGH Limited Partner, Exchanging LPs shall not be permitted to sell a number of Exchangeable Units (other than in respect of Former Oaktree Units) pursuant to this Agreement in excess of the amount determined as set forth under the heading “Amount” in the table below; provided that (x) this Section 2.1(b) (other than Section 2.1(b)(iv)) shall not apply with respect to Exchangeable Units that were Former Oaktree Units and (y) references in the below table to “Exchangeable Units” shall exclude any Former Oaktree Units.

Period	Amount(Senior Service Partners Group)	Amount(Non-Senior Service Partners)
At any time following January 1, 2022	Up to 20% of Merger Closing Units Amount held collectively by Senior Service Partners Group	Up to 12.5% of Merger Closing Units Amount held collectively by Non-Senior Service Partners Group
At any time following January 1, 2023	Up to 40% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group	Up to 25% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group
At any time following January 1, 2024	Up to 60% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group	Up to 37.5% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group
At any time following January 1, 2025	Up to 80% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group	Up to 50% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group
At any time following January 1, 2026	Up to 100% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group	Up to 62.5% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group
At any time following January 1, 2027	Up to 100% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group	Up to 75% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group
At any time following January 1, 2028	Up to 100% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group	Up to 87.5% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group
At any time following January 1, 2029	Up to 100% of Merger Closing Units Amount held collectively by Senior Service Partners Group	Up to 100% of Merger Closing Units Amount held collectively by Non-Senior Service Partners Group

(ii)The maximum amount of the Exchangeable Units (excluding Former Oaktree Units, which are instead subject to the limitations set forth in Section 2.1(b)(iv)) that Brookfield and its designees or OCGH shall be required to purchase or acquire, respectively and in the aggregate, in any given Open Period shall not exceed (i) an amount equal to 20% of the Merger Closing Units Amount in the Open Period in 2022, (ii) an amount equal to 25% of the Merger Closing Units Amount in the Open Period in 2023, (iii) an amount equal to 30% of the Merger Closing Units Amount in the Open Period in 2024, and (iv) an amount equal to 35% of the Merger Closing Units Amount in the Open Period in 2025 and each Open Period thereafter (the “Applicable Maximum Amount”). In the event that the aggregate amount of the Exchangeable Units requested to be sold or exchanged in an Aggregate Exchange Notice in any given Open Period is greater than the Applicable Maximum Amount for such Open Period, OCGH shall re-allocate the Exchangeable Units among the Exchanging LPs in its sole discretion, such that only the Applicable Maximum Amount of the Exchangeable Units may be sold or exchanged, and OCGH shall notify Brookfield of the result of such re-allocation. Notwithstanding the foregoing, the limitations set forth in this Section 2.1(b)(ii) shall cease to apply immediately upon Brookfield’s delivery of a written notice to OCGH in accordance with Section 2.4 of its intention to discontinue any or all future Open Periods.

(iii)The parties hereto hereby acknowledge and agree that, notwithstanding anything herein to the contrary, no OCGH Limited Partner may participate in any Exchange pursuant hereto unless and until such OCGH Limited Partner shall have executed (including on their behalf by power of attorney, if applicable, and solely to the extent legally valid and binding) and delivered an effective counterpart to that certain TRA Amendment (as defined in the Merger Agreement).

(iv)Notwithstanding anything in this Section 2.1(b) or otherwise in this Agreement to the contrary, in no event shall Exchanging LPs be entitled to sell Exchangeable Units that were Former Oaktree Units (including Accelerated Former Oaktree Units) in any given Exchange if the aggregate Current Equity Value attributable to such Former Oaktree Units would exceed the Former Oaktree Unit Threshold.  In the event that the aggregate Current Equity Value of the Former Oaktree Units requested to be sold or exchanged in an Aggregate Exchange Notice in any given Open Period is greater than the Former Oaktree Unit Threshold for such Exchange, OCGH shall revise and re-allocate the Former Oaktree Units being included in the Exchange in its sole discretion, such that the applicable aggregate Current Equity Value for all participating Former Oaktree Units is equal to or less than the Former Oaktree Unit Threshold, and OCGH shall notify Brookfield of the result of such reallocation.

(c)Exchanges of OCGH Units. On the Exchange Date, each Exchanging LP shall receive an amount equal to the Exchange Consideration for each OCGH Unit being Exchanged by such Exchanging LP. To the extent the Exchange Consideration for the Exchange is (i) cash, Class A Shares or Atlas Notes, Brookfield shall purchase from each Exchanging LP the OCGH Units to be exchanged by such Exchanging LP for such cash, Class A Shares or Atlas Notes (such OCGH Units, the “Cash/Share/Note Exchange Units”) or (ii) ExchangeCo Units, OCGH shall acquire from the OCGH Limited Partners participating in an Exchange pursuant to this Agreement the OCGH Units to be exchanged for such ExchangeCo Units (such OCGH Units, the “ExchangeCo Exchange Units”) and such OCGH Limited Partner shall sell or transfer to Brookfield or, in the event the Exchange Consideration is ExchangeCo Units, to OCGH, the Exchanged Units. As consideration for the sale of Cash/Share/Note Exchange Units, Brookfield shall pay or cause to be paid to each Exchanging LP the portion of the Exchange Consideration payable to such Exchanging LP that is payable (at Brookfield’s election, subject to Section 2.1(f)(iii) and Article IV hereof) in cash, Class A Shares, Atlas Notes, or a combination of the foregoing.As consideration for the transfer of ExchangeCo Exchange Units, OCGH shall deliver to the Exchanging LP a number of ExchangeCo Units equal to the number of ExchangeCo Exchange Units, subject to Section 2.1(f)(iii) and Article IV hereof. Following the Exchange Date, to the extent not previously paid to an OCGH Limited Partner participating in an Exchange, OCGH shall pay such OCGH Limited Partner the aggregate Tax Distribution in respect of all OCGH Units exchanged by such Exchanging LP as and when paid to all other holders of OCGH.

(d)Redemption of OCGH Units. On the Exchange Date, immediately following the exchange of the Cash/Share/Note Exchange Units pursuant to Section 2.1(c) hereof, Brookfield shall tender for redemption, and OCGH shall redeem, each Cash/Share/Note Exchange Unit received by Brookfield pursuant to Section 2.1(c) and OCGH shall deliver to Brookfield a pro rata share of the partnership units of each OpCo, such that the aggregate number of OpCo Units delivered in the redemption comprises the Equivalent OpCo Units of the Cash/Share/Note Exchange Units being redeemed.

(e)Cancellation of Class B OCG Units, Class B AOH Units and OCGH Units. Pursuant to Section 4.4 of the Oaktree Operating Agreement and Section 4.4 of the AOH Operating Agreement, on the Exchange Date, a number of Class B OCG Units and Class B AOH Units, each equal to the number of OCGH Units sold or transferred pursuant to Section 2.1(c) (whether or not actually delivered) in connection with the Exchanges effected on such Exchange Date, shall be automatically canceled without any further action by any party. In addition, any OCGH Units sold or transferred to OCGH pursuant to Section 2.1(c) (whether or not actually delivered) in connection with the Exchanges effected on any Exchange Date shall be automatically canceled without any further action by any party.

(f)Determination of Form of Exchange Consideration.

(i)Notwithstanding anything to the contrary in this Agreement but subject to Section 2.1(i), on each Exchange Date, each Exchanging LP shall be entitled to receive Exchange Consideration in respect of all of its Exchanged Units to be Exchanged on such Exchange Date.

(ii)Notwithstanding anything to the contrary in this Agreement, (A) no later than five (5) Business Days following a written request from Brookfield (which request may be made no earlier than ten (10) Business Days following the expiration of the applicable Open Period), OCGH shall provide Brookfield with (I) a redacted version of the most recent Schedule K-1 for each Exchanging LP, (II) (1) during the Initial Period, for those Exchanging LPs that are current employees of a member of the Oaktree Operating Group (as defined in the Oaktree Operating Agreement), a written confirmation from an officer of the Oaktree Operating Group entity that is the employer for the Exchanging LPs who is also a licensed attorney or certified public accountant certifying that such officer took reasonable steps within the prior three months to verify that the Exchanging LPs are accredited investors and identifying any Exchanging LPs that are not accredited or for whom status as an accredited investor could not be confirmed and (2) for those Exchanging LPs who are not current employees of a member of the Oaktree Operating Group and otherwise after the Initial Period, such supporting information as is necessary to satisfy Rule 506(c) under Regulation D promulgated under the Securities Act, (III) a schedule listing each Exchanging LP’s current tax basis in their respective Exchanged Units as of such date, (IV) a schedule listing each Exchanging LP’s share of OCGH’s partnership liabilities as of such date, (V) the then-current capitalization table of OCGH, indicating the holders of OCGH Units and the number of OCGH Units held by each such holder, and (VI) any other information reasonably requested by Brookfield to allow Brookfield to determine whether to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing, (B) prior to the expiration of the Initial Period, each OpCo shall cooperate and provide responses with respect to any reasonable written request of Brookfield received no later than thirty (30) days following the later of (x) expiration of the applicable Open Period and (y) the date the Current Equity Valuation Calculation is delivered pursuant to Section 2.5(a) for information necessary for Brookfield to determine whether to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing and (C) it is understood and agreed that, prior to the expiration of the Initial Period, the issuance of ExchangeCo Notes or Atlas Notes will not be precluded due to the failure of any Oaktree Group Member to deliver any certificates or other documents required by, or to comply with any representation, warranty, covenant or other agreement contained in, an ExchangeCo Note Purchase Agreement or an Atlas Note Purchase Agreement, respectively, in each case other than any such failure that results from a Brookfield Consent Matter (as defined in the Oaktree Operating Agreement). Any information required to be provided by OCGH pursuant to this Section 2.1(f) initially may be provided in draft form based on the information reasonably available to OCGH.

(iii)Notwithstanding anything to the contrary in this Agreement or any other agreement to which any OCGH Limited Partner may from time to time be a party, no later than fifteen (15) Business Days prior to the applicable Exchange Date, Brookfield shall notify OCGH in writing of the anticipated Exchange Date and of Brookfield’s irrevocable determination whether to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing, including the allocation among each such form of consideration; provided, however, that (A) no more than 50% of the Exchange Consideration in respect of the first $500,000,000 in aggregate Current Equity Value of all OCGH Units entitled to receive Exchange Consideration in connection with the delivery of an Aggregate Exchange Notice during a particular Open Period shall take the form of ExchangeCo Units or Atlas Notes, (B) if Atlas Notes form part of the Exchange Consideration, then the amount of Exchange Consideration provided in the form of Class A Shares and cash in the applicable Exchange must be equal to or greater than, in the aggregate, the Atlas Note Minimum Amount, (C) with respect to any Exchanges occurring in fiscal years 2020 and 2021, the Exchange Consideration shall consist solely of cash, Class A Shares or a combination of the foregoing and (D) all Exchanging LPs on each Exchange Date shall receive the same form of Exchange Consideration (or, if Brookfield elects multiple forms of Exchange Consideration in any Exchange, each Exchanging LP shall receive its pro rata proportion of each form of Exchange Consideration); provided that if an Exchanging LP (1) is adversely and disproportionately affected by a Blackout Period (relative to other Exchanging LPs and whether due to possession of material non-public information or otherwise) as jointly determined by OCGH and Brookfield acting in good faith, then such Exchanging LP shall receive cash, Atlas Notes, ExchangeCo Units or any combination of the foregoing (subject to the preceding clauses (A), (B) and (C)) in lieu of Class A Shares, (2) is resident in Canada and it is not possible to issue free trading Class A Shares to such Exchanging LP in a manner that is exempt from the prospectus requirements of applicable securities laws in the applicable province or territory of Canada, then such Exchanging LP shall receive cash, Atlas Notes, ExchangeCo Units or any combination of the foregoing (subject to the preceding clauses (A), (B) and (C)) in lieu of Class A Shares or (3) is not eligible to receive ExchangeCo Units or Atlas Notes pursuant to Section 2.1(i), then such Exchanging LP shall instead receive cash, Class A Shares or a combination of the foregoing. Notwithstanding anything to the contrary in this Agreement, if all or any portion of the Exchange Consideration consists of Class A Shares and the representation and warranty in Section 3.1(c) would, on the date the closing of the Exchange would otherwise occur hereunder, not be true and correct in all respects, Brookfield shall not be permitted to pay the Exchange Consideration in Class A Shares and shall instead be required to substitute cash, Atlas Notes or ExchangeCo Units in lieu of Class A Shares;provided, that if the representation and warranty in Section 3.1(c) would not be true and correct in all respects solely as a result of the existence of a Blackout Period or the need for a reasonable additional period of time in order to comply with applicable securities laws, then the Exchange Date may be delayed to a date that, subject to compliance with Section 2.2(c), is no later than one hundred and ten (110) days following the conclusion of the Open Period (but will, in any event, occur on such earlier date when the representation and warranty in Section 3.1(c) would be true and correct in all respects); provided, further, that if the representation and warranty in Section 3.1(c) is true and correct in all respects (but would not be true and correct in all respects without the proviso to the first sentence thereof), then the provisions related to accredited investors set forth herein with respect to issuances of Atlas Notes and ExchangeCo Units shall apply to the initial issuances of such Class A Shares, mutatis mutandis.

(iv)To the extent any Exchange Consideration for an Exchange is in ExchangeCo Units, the parties hereto shall cause each of their respective Affiliates who is contemplated to be a party to, and who is not already a party to, the Put Agreement and/or the Call Agreement to enter into such agreement concurrently with the Closing of the applicable Exchange.

(g)Suspension of Liquidity Rights. Notwithstanding anything to the contrary herein, as of the earlier of (a) the expiration of the Initial Period, and (b) December 31, 2023, if the Required Closed-End Amendment Percentage is less than 80%, then the rights to initiate Exchanges pursuant to this Article II shall be suspended until such time as the Required Closed-End Amendment Percentage is at least 80%.

(h)Withholding. Brookfield or the Paying Agent shall be entitled to deduct and withhold, or cause to be deducted or withheld, from the amounts payable pursuant to this Agreement such amounts as are required to be deducted and withheld under the Code or other applicable Tax laws. Prior to withholding any amounts pursuant to this Section 2.1(h), Brookfield or Paying Agent (as applicable) will provide at least ten (10) Business Days prior written notice to the Person in respect of which such withholding is made, and shall cooperate with such Person to reduce or eliminate such withholding (including by providing such Person an opportunity to provide any applicable Tax forms); provided that no such prior notice will be required (i) for withholding pursuant to Section 1445 of the Code with respect to an Exchanging LP, if OCGH does not timely provide the certificate described in Section 2.2(d)(i)(B) of this Agreement or (ii) for withholding pursuant to Section 1446(f) of the Code with respect to an Exchanging LP, if such Exchanging LP does not timely provide the form described in Section 2.2(d)(i)(A)(I) of this Agreement. Any such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made; provided that such amounts are remitted to the applicable Governmental Entities. Any deductions or withholdings made from the Exchange Consideration payable pursuant to this Agreement shall be made (1) first from any Exchange Consideration payable in the form of cash (it being understood, for the avoidance of doubt, that the amount of any deduction or withholding shall not be limited to the amount of such cash), (2) second from any Exchange Consideration payable in the form of Class A Shares (it being understood, for the avoidance of doubt, that the amount of any deduction or withholding shall not be limited to the amount of such Class A Shares), and (3) last from any Exchange Consideration payable in the form of Atlas Notes or ExchangeCo Units.

(i)Exemptions. Any ExchangeCo Units or Atlas Notes issued pursuant to the terms of this Agreement have not been, and will not be, registered under the Securities Act and will be issued only in transactions exempt from such registration. In particular, any such ExchangeCo Units or Atlas Notes will be issued only to Exchanging LPs that are (A) non-U.S. persons in offshore transactions in compliance with Regulation S under the Securities Act, (B) accredited investors (as defined in Rule 501 under Regulation D promulgated under the Securities Act) in a manner complying with the conditions set forth in Rule 506(c) under Regulation D promulgated under the Securities Act and/or (C) resident in Canada in a manner that is exempt from the prospectus requirements of applicable securities laws in the applicable provinces and territories of Canada. The parties hereto agree to reasonably cooperate with each other in order to ensure compliance with the foregoing, including (w) making or obtaining appropriate written representations regarding the status of Exchanging LPs, (x) facilitating reasonable investigation into the status thereof as contemplated by Rule 506(c)(2) under Regulation D promulgated under the Securities Act, (y) making or obtaining other representations customary in private placement transactions, and (z) making available appropriate information and opportunities to conduct due diligence. The parties hereto agree that any OCGH Limited Partner that is unable to make necessary representations or make available necessary information may not be able to receive ExchangeCo Units or Atlas Notes in an Exchange, and shall instead receive cash, Class A Shares or a combination of the foregoing. OCGH hereby agrees to use commercially reasonable efforts to cause any such OCGH Limited Partners to become “accredited investors”, or otherwise eligible to participate in a private placement, including by appointing a “purchaser representative” (at Brookfield’s sole cost and expense) pursuant to Rule 506 (it being understood that the parties hereto will cooperate in good faith to establish eligibility of an OCGH Limited Partner to participate in a private placement). In the event that, notwithstanding the foregoing, there are OCGH Limited Partners participating in an Exchange who are not “accredited investors” and are ineligible to participate in a private placement, and the value of the OCGH Units in such Exchange owned by such OCGH Limited Partners exceeds $20,000,000, then OCGH and Brookfield shall cooperate in good faith to determine and implement an approach in respect of the OCGH Units owned by such OCGH Limited Partners in excess of such amount that would be economically equivalent to the Atlas Notes and/or ExchangeCo Units being received by the other Exchanging LPs.

Section 2.2Closing Procedures.

(a)Exchange Date. The closing of any sale or exchange of an OCGH Limited Partner’s OCGH Units hereunder shall occur on or prior to the ninety-fifth (95th) day following the expiration of the applicable Open Period (the date on which the closing of any such sale or exchange occurs, the “Exchange Date”), subject to delay pursuant to the penultimate proviso to Section 2.1(f)(iii) or to comply with Section 2.2(c); provided that, in the event the Valuation Firm has not completed its review and made its determination pursuant to Section 2.5 on or prior to the eighty-fifth (85th) day following expiration of the applicable Open Period, then the Exchange Date pursuant to this Section 2.2(a) shall be no earlier than the final determination by the Valuation Firm of the Current Equity Value, and no later than the date that is five (5) Business Days following the final determination by the Valuation Firm of the Current Equity Value; provided, however, that the final determination by such Valuation Firm shall not exceed the ninetieth (90th) day following the expiration of the applicable Open Period.

(b)Location. On the Exchange Date, the parties shall effect the closing (the “Closing”) of the transactions contemplated by Section 2.1 at the offices of Oaktree Capital Group, LLC, 333 South Grand Avenue, 28th Floor, Los Angeles, California 90071, in the manner set forth in this Section 2.2 or at such other time, at such other place and in such other manner as OCGH and Brookfield shall mutually agree.

(c)Absence of Injunctions or Decrees. The obligations of the parties to this Agreement to consummate an Exchange shall be subject to the condition that there shall be no law, rule, regulation, injunction, restraining order or decree of any nature of any Governmental Entity that is in effect that restrains or prohibits such Exchange.

(d)Exchange Deliveries.

(i)No later than five (5) Business Days following (x) the written request by Brookfield (which request may be made no earlier than ten (10) Business Days following the expiration of the applicable Open Period) or (y) notification by Brookfield of the Exchange Date pursuant to Section 2.1(f)(iii), with respect to each OCGH Limited Partner participating in such Closing:

A. each Exchanging LP participating in such Closing shall deliver, or shall instruct the delivery of on its behalf, to the Paying Agent either (I) an IRS Form W-9 or (II) a certification from OCGH dated as of the Exchange Date which complies with the requirements of Section 7.03 of IRS Notice 2018-29 or any corresponding requirements of any superseding Treasury Regulations or other official guidance, certifying the amount of the OCGH Limited Partner’s share of OCGH’s partnership liabilities (which certification, if OCGH is not the Paying Agent, OCGH may deliver directly to Brookfield on behalf of the Exchanging LP);

B. OCGH shall deliver, or shall instruct the delivery of on its behalf, to the Paying Agent a certificate from OCGH dated as of the Exchange Date which complies with the requirements of Treasury Regulation Section 1.1445-11T(d)(2), certifying that the transactions contemplated hereby are exempt from withholding under Section 1445 of the Code; and

C. the Paying Agent shall (or if the Paying Agent is not OCGH, the parties shall direct the Paying Agent to) deliver to Brookfield, upon receipt, the forms and/or certificates delivered by the OCGH Limited Partners and OCGH pursuant to Section 2.2(d)(i)(A) and/or Section 2.2(d)(i)(B).

(ii)At each Closing, with respect to each OCGH Limited Partner participating in such Closing:

A. each OCGH Limited Partner participating in such Closing shall deliver, or shall instruct the delivery of on its behalf, to the Paying Agent the number of OCGH Units to be sold by such OCGH Limited Partner;

B. Brookfield and OCGH, as applicable, shall deliver, or cause to be delivered, in each case to the extent applicable, (1) to the Paying Agent its pro rata portion of the Exchange Consideration (in cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing) for the number of OCGH Units being acquired by Brookfield or OCGH, as applicable and (2) to the applicable OCGH Limited Partner, as directed by OCGH, its pro rata portion of the Exchange Consideration in Class A Shares, in each case as determined pursuant to Section 2.1(f); and

C. OCGH shall deliver to the Paying Agent, to the extent certificated, the certificate or certificates representing a number of Class B OCG Units and Class B AOH Units in each case equal to the number of OCGH Units being acquired by Brookfield or OCGH.

(e)Additional Exchange Deliveries. In addition to the closing deliveries provided for with respect to each OCGH Limited Partner, on any Exchange Date if OCGH delivers to the Paying Agent a certificate or certificates that represent more Class B OCG Units or Class B AOH Units than the number of OpCo Units to be delivered to Brookfield in connection with all Exchanges occurring on such Exchange Date, each of Oaktree and Atlas OCM shall deliver to the Paying Agent a certificate or certificates registered in the name of OCGH representing a number of Class B OCG Units and Class B AOH Units, respectively, equal to such excess.

(f)Paying Agent. After receiving all required closing deliveries set forth in Sections 2.2(d) and 2.2(e) for all Closings occurring on an Exchange Date, the Paying Agent shall deliver (or if the Paying Agent is not OCGH, the parties hereto shall direct the Paying Agent to deliver):

(i)to each Exchanging LP, cash, ExchangeCo Units, Atlas Notes or any combination of the foregoing (as determined by Brookfield) representing the Exchange Consideration for the number of OCGH Units delivered by or on behalf of such OCGH Limited Partner on such Exchange Date;

(ii)to Brookfield or OCGH, as applicable, the portion of the OCGH Units being acquired by Brookfield or OCGH, as applicable on such Exchange Date;

(iii)to Oaktree, the certificates, if any, representing the number of Class B OCG Units and Class B AOH Units in each case equal to the number of OCGH Units being acquired by Brookfield or OCGH, as applicable; and

(iv)to OCGH, the certificates delivered by Oaktree pursuant to Section 2.2(e), if any.

Section 2.3Dispute Resolution. Subject to Section 2.5, to the extent that OCGH (on behalf of itself or any OCGH Limited Partner) or Brookfield has a reasonable, good faith dispute with regard to any determinations, interpretations, calculations or adjustments of Oaktree, Atlas OCM or Brookfield other than with respect to the calculation of the Current Equity Value (which shall be addressed solely pursuant to Section 2.5), OCGH or Brookfield shall provide the other party with written notice of such good faith dispute (the “Notice of Dispute”), together with a reasonably detailed explanation of such dispute. Promptly upon the delivery of the Notice of Dispute (but no later than three (3) days), each of OCGH and Brookfield shall appoint a member of its senior management, and such members of senior management will negotiate in good faith and attempt to resolve such dispute; provided that if such members of senior management are unable to resolve such dispute within twenty (20) days following the delivery of the Notice of Dispute, then the members of senior management shall submit such dispute to arbitration in accordance with the procedure set forth in Section 5.11.

Section 2.4Termination of Exchanges. At any time following the eighth (8^th) anniversary of the Merger Closing Date, Brookfield may provide written notice to each OCGH Limited Partner, pursuant to Section 5.1, of the termination of any Open Periods beginning no earlier than 36 months following the date of such notice.

Section 2.5Delivery of Valuation.

(a)Current Equity Value Calculation. As soon as reasonably practicable, but no later than sixty (60) days following the end of each calendar year (or ninety (90) days following the end of each of calendar years 2020 and 2021), Oaktree (which, solely for purposes of this Section 2.5, shall include Atlas OCM) shall prepare and deliver to Brookfield (or after the expiration of the Initial Period, to OCGH) (Brookfield, or after the expiration of the Initial Period, OCGH, the “Non-Control Party”, and OCGH, or, after the expiration of the Initial Period, Brookfield, the “Control Party”)) the consolidated audited financial statements of the OpCos prepared in accordance with GAAP, a calculation of each component of the Current Equity Value (other than clause (ii) of the definition thereof) for the immediately preceding calendar year and a bridge to GAAP for such components of the Current Equity Value Calculation that are non-GAAP, together with all of the components thereto (including all of the components of Total Equity Value), together with all reasonable supporting documentation (the “Current Equity Value Calculation”). Oaktree and its representatives shall make available or cause to be made available to the Non-Control Party and its representatives all work papers and other books and records used in preparing the Current Equity Value Calculation and provide reasonable access to members of its accounting and financial staff and outside auditors in connection with the Non-Control Party’s review thereof; provided, however, that the accountants of Oaktree shall not be obliged to make any work papers available to the Non-Control Party except in accordance with such accountants’ normal disclosure procedures and then only after such firm has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such accountants.

(b)Dispute Notice. The Non-Control Party shall have 30 days following receipt of the Current Equity Value Calculation to notify the Control Party in writing (a “Dispute Notice”) of any dispute of any item, calculation or other matter contained in the Current Equity Value Calculation, including in the event that insufficient supporting documentation was delivered to the Non-Control Party, which Dispute Notice shall set forth a description of the items, calculations or matter disputed. If the Non-Control Party delivers a Dispute Notice during such 30 day period, then the items, calculations and other matters that are specified in such Dispute Notice shall be deemed in dispute and all other items, calculations and matters set forth in the Current Equity Value Calculation shall be final and binding. If the Non-Control Party fails to deliver a Dispute Notice to the Control Party within such 30 day period or if the Non-Control Party at any time during such 30 day period notifies the Control Party in writing that the Non-Control Party agrees with the Current Equity Value Calculation in its entirety (or any particular items, calculations or matters set forth in the Current Equity Value Calculation), then the Current Equity Value Calculation (or such item, calculation or matter, as applicable) shall become final and binding.

(c)Valuation Dispute. In the event that the Non-Control Party delivers a Dispute Notice, then the Non-Control Party and the Control Party shall work in good faith to resolve the Non-Control Party’s objections set forth therein and the calculation of the Current Equity Value. In the event the Non-Control Party and the Control Party fail to agree on the Current Equity Value within thirty (30) days after delivery of the Dispute Notice, then the applicable disputed items shall be promptly referred for valuation to a nationally recognized valuation firm (which may be the valuation practice of a nationally-recognized investment bank or accounting firm) with experience valuating asset management firms (the “Valuation Firm”) which shall determine, no later than ninety (90) days following the expiration of the applicable Open Period, the computation of the items remaining in dispute and the resulting calculation of the Current Equity Value, in each case in accordance with the terms of this Agreement. In resolving any disputed item, the Valuation Firm (i) shall be bound by the Historic Principles and the provisions of this Agreement, (ii) may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party and (iii) shall take into account only the Dispute Notice and the information and documents provided to the Valuation Firm by or on behalf of the Non-Control Party or the Control Party (i.e., not on the basis of independent review). The Valuation Firm shall consider only the disputed matters that were included in the Dispute Notice and that the Non-Control Party and the Control Party were unable to resolve. Neither the Non-Control Party nor the Control Party shall meet or have any conversations separately with the Valuation Firm (other than conversations limited to the submission of a request for documents or information by the Valuation Firm to such party) without the other party’s prior written consent. Each of the Non-Control Party and the Control Party may also furnish to the Valuation Firm such other information and documents as it deems relevant or such information and documents as may be requested by the Valuation Firm; provided, that it delivers a copy thereof substantially simultaneously to the other party. The aggregate fees, costs and expenses of the Valuation Firm shall be borne by the Oaktree Operating Group (provided that each party will bear their own legal fees with respect to any of the matters pursuant to this Section 2.5). During the review by the Valuation Firm, each party agrees that it will, and agrees to direct its independent accountants to, reasonably cooperate and assist in the calculation of the Current Equity Value Calculation and in the conduct of the review by the Valuation Firm of any proposed calculations of the Current Equity Value Calculation or the components thereof, including the Total Equity Value, and the making reasonably available to the extent necessary, of books, records, work papers and personnel; provided, however, that the accountants of Oaktree, the Control Party and the Non-Control Party shall not be obliged to make any work papers available to the Valuation Firm except in accordance with such accountants’ normal disclosure procedures and then only after such firm has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such accountants. The Current Equity Value Calculation as determined by the Valuation Firm shall be final and binding on the parties hereto absent manifest error. For the avoidance of doubt, any disputes with respect to the Current Equity Value Calculation shall be resolved pursuant to the terms of this Section 2.5, to the exclusion of any other dispute resolution mechanism provided in this Agreement, including Sections 2.3 and 5.11. The Control Party and the Non-Control Party shall mutually agree on a Valuation Firm or absent such agreement, the Valuation Firm shall be selected through arbitration pursuant to Section 5.11. It is further understood and agreed that the Control Party shall cause Oaktree and Atlas OCM to comply with their obligations under this Agreement.

Section 2.6Total Equity Value.

(a)Acquisitions and Dispositions. With respect to any completed acquisition or disposition, OCGH and Brookfield agree to negotiate in good faith to adjust the Total Equity Value and the components thereof on a pro forma basis for (i) the preceding three year period to properly reflect the impact on (x) Base Fee Earnings and (y) Net Incentives Created or (ii) item “C” under the definition of “Total Equity Value”.

(b)Consolidation of DL Capital or Other Investment Manager. This Agreement assumes that the Oaktree Group’s interest in DL Capital is a minority interest. In the event that the Oaktree Group’s interest in DL Capital or any other investment manager increases after the date hereof such that DL Capital or such other investment manager is consolidated in the financial statements of the OpCos or controlled by the Oaktree Group under applicable law, the parties hereto agree to negotiate in good faith to adjust the Total Equity Value and the components thereof on a pro forma basis for (i) the preceding three year period to properly reflect the impact on (x) Base Fee Earnings and (y) Net Incentives Created or (ii) item “C” under the definition of “Total Equity Value”.

(c)LTIP. To the extent that, following the date hereof, OCGH issues additional OCGH Units in accordance with the OCGH Partnership Agreement that are not Exchangeable Units, then the parties hereto agree to negotiate in good faith to adjust the Total Equity Value and the components thereof.

Section 2.7Post-Closing Consents and Amendments.

(a)Formation of New Funds. With respect to each Company Fund formed during the Initial Period (and each Managed Account and sub-advisory relationship, the Investment Advisory Arrangement for which is entered into during the Initial Period), each Oaktree Group Member shall include in the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement (including a side letter) of such Company Fund (or the Investment Advisory Arrangement for such Managed Account or sub-advisory relationship), provisions that (i) provide for the advance approval of the assignment (within the meaning of the Advisers Act) of the applicable Investment Advisory Arrangement to Brookfield or its Affiliates and (ii) other than with respect to Registered Funds, modify the definition of “affiliate” contained therein such that no affiliate of Oaktree, any OpCo, or its or their direct and indirect subsidiaries in respect of which an actual or virtual information barrier is in place, or in respect of which there is no coordination or consultation in respect of investment decisions (in each case, as determined by Oaktree in its discretion based on the relevant facts and circumstances applicable to each particular situation) shall be deemed to be an “affiliate” of Oaktree, any OpCo, or its or their direct and indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement) or otherwise provide that none of BAM or any of its affiliates will be an “affiliate” of Oaktree, any OpCo, or its or their direct and indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement).

(b)Required Amendments.

(i)As soon as reasonably practicable following the Merger Closing Date, with respect to each Company Fund that does not require affirmative consent to approve amendments to such Company Fund’s partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement, the Oaktree Group shall amend such partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of such Company Fund to include the Required Amendment.

(ii)As soon as reasonably practicable following the Merger Closing Date, with respect to each Company Fund that requires affirmative consent to approve amendments to such Company Fund’s partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement, the Oaktree Group shall use reasonable best efforts to amend such partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of such Company Fund to include the Required Amendment.

(iii)As soon as reasonably practicable following the Merger Closing Date, with respect to each Managed Account or sub-advisory relationship for which a Negative Consent is not sufficient under the applicable Investment Advisory Arrangement for approval of an assignment (within the meaning of the Advisers Act) to Brookfield or its Affiliates, the Oaktree Group shall use reasonable best efforts to amend such Investment Advisory Arrangement of such Managed Account or such sub-advisory relationship to include the Required Amendment.

(iv)Brookfield shall have the reasonable opportunity to review drafts of, and Oaktree shall obtain Brookfield’s prior written consent (such consent not to be unreasonably withheld) to the form and substance of (i) the Required Amendment and any related notice and consent form for any Company Fund, Managed Account or sub-advisory relationship, and (ii) the provisions required to be included in the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement for each Company Fund formed during the Initial Period (or, in the case of a new Managed Account or new sub-advisory relationship, included in its Investment Advisory Arrangement) as contemplated by Section 2.7(a) hereof; provided, that, if Oaktree has previously obtained Brookfield’s consent to the form and substance of a Required Amendment or the required provisions contemplated by this Section 2.7, Oaktree shall not be required to obtain Brookfield’s consent to subsequent amendments if the form and substance of such amendments and related notices and consent forms are substantially the same as the Required Amendment (or required provisions) and related notice and consent form previously reviewed and approved by Brookfield.

Section 2.8Additional Payments. On each of the first (1st), second (2nd) and third (3rd) anniversary of the Merger Closing Date, Brookfield (on behalf of itself and on behalf of Oaktree LLC and Oaktree AIF) shall pay to OCGH as administrative agent on behalf of the limited partners of OCGH set forth in the books and records thereof (for the avoidance of doubt, regardless of whether they are a limited partner as of any applicable payment date) a cash payment of $66,000,000 in the aggregate (each such payment, an “Additional Payment”), which shall be allocated among such limited partners based on their percentage interests in such Additional Payment as determined by OCGH in its sole discretion; provided, that notwithstanding anything to the contrary in this Agreement, OCGH shall be permitted to offset any Additional Payment received on behalf of a Limited Partner by any Tax indemnity payments paid or payable by OCGH pursuant to the limited partnership agreement (or other organizational document) of an OpCo that are attributable to such Limited Partner to the extent such Tax indemnity payments did not reduce distributions to OCGH attributable to such Limited Partner or any other liabilities of OCGH that OCGH determines are attributable to such Limited Partner; provided, further, that nothing in this Agreement shall expand any obligations of OCGH to indemnify for Taxes pursuant to the limited partnership agreement (or other organizational document) of an OpCo. The parties agree that (x) a portion of each Additional Payment will be treated for U.S. federal (and applicable state and local) income Tax purposes as consideration for the exchange of OCGH Units on the Merger Closing Date and (y) a portion of each Additional Payment will be treated for U.S. federal (and applicable state and local) income Tax purposes as consideration for the future Exchanges following the Merger Closing Date (and any portion attributable to a future Exchange shall be treated as an open transaction for U.S. federal (and applicable state and local) income Tax purposes until such future Exchange occurs). The Additional Payments will be allocated between exchanges of OCGH Units on the Merger Closing Date and Exchanges after the Merger Closing Date in accordance with the methodology set forth in Exhibit I, whether or not future Exchanges occur in accordance with the timing assumptions reflected on Exhibit I. Prior to the first anniversary of the Merger Closing Date, OCGH may make one update to such allocation in a manner consistent with such methodology to take into account any updated information regarding the built-in gain of the limited partners as of the Merger Closing Date and will deliver an updated allocation schedule to Brookfield.

ARTICLE III
REPRESENTATIONS & WARRANTIES

Section 3.1Representations and Warranties of Brookfield. Brookfield represents and warrants to each OCGH Limited Partner, as of each Exchange Date, as follows:

(a)Existence and Power.

(i)Brookfield is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited liability company or other applicable power and authority to enter into this Agreement and to perform its obligations hereunder. Brookfield has all requisite corporate or other applicable power and authority to own, operate and lease its properties, rights and assets and to carry on its business as it is being conducted on the date of this Agreement.

(ii)Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on Brookfield, Brookfield has been duly qualified as a foreign corporation or other entity for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, rights and assets or conducts any business so as to require such qualification. Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on Brookfield, each subsidiary of Brookfield (other than the OpCos and their subsidiaries) has been duly organized and is validly existing in good standing (to the extent that the concept of “good standing” is recognized by the applicable jurisdiction) under the laws of its jurisdiction of organization.

(b)Authorization.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by Brookfield and, in the case of the issuance of any Class A Shares upon any Exchange in accordance with the terms of this Agreement, by BAM.  Assuming this Agreement constitutes the valid and binding obligation of the other parties hereto, this Agreement is a valid and binding obligation of Brookfield, enforceable against Brookfield in accordance with its terms, subject to the limitation of such enforcement by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to creditors’ rights generally or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law (the “Enforceability Exceptions”). 

(c)Valid Issuance of Class A Shares.  The Class A Shares to be issued in any Exchange have been duly authorized, and when issued in an Exchange, all such Class A Shares shall (i) be validly issued, fully paid, nonassessable and free of pre-emptive or similar rights, (ii) be issued to the applicable OCGH Limited Partners in a transaction registered under the Securities Act, (iii) be delivered without restrictive legends, via book-entry or, if so elected by the applicable OCGH Limited Partner, in certificated form or in street name, (iv) be listed on the New York Stock Exchange or NASDAQ and any other United States national securities exchange or Canadian securities exchange on which shares of the same class are then listed, (v) not be subject to any restriction on transfer imposed by any contractual obligation with BAM, Brookfield or any of their Affiliates, other than the Registration Rights Agreement, (vi) not be subject to (and that BAM reasonably believes at the Exchange Date will, continuously for the ten (10) consecutive Business Days immediately following the Exchange Date, remain free from) any restriction on transfer (including a Blackout Period) by the recipient thereof and (vii) if the applicable OCGH Limited Partner upon receipt of such Class A Shares holds Registrable Securities (as defined in the Registration Rights Agreement), resale of such Registrable Securities is covered by an effective registration statement that is Available (as defined in the Registration Rights Agreement); provided that if a Governmental Entity issues an order, decree, ruling or injunction to the effect that, or otherwise indicates verbally or in writing to BAM or its counsel that, the Securities Act does not permit the registration of Class A Shares to be issued in an Exchange, then (x) the representation and warranty set forth in the foregoing clauses (ii) and (iii) shall not apply and (y) the foregoing clause (v) shall not fail to be true and correct in all respects solely due to (1) the existence of an agreement containing customary restrictions on transferring privately placed Class A Shares in violation of securities laws or (2) the inclusion of a restrictive legend on the Class A Shares. Each Exchanging LP to which Class A Shares are issued shall, upon issuance, have good and valid title thereto, free and clear of any liens (other than transfer restrictions under securities laws).

(d)Non-Contravention/No Consents.  The execution, delivery and performance of the Agreement and the issuance of any Class A Share upon any Exchange in accordance with the terms of this Agreement does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, with respect to BAM: (i) the organizational documents of BAM, (ii) any credit agreement, mortgage, note, indenture, deed of trust, lease, license, loan agreement or other agreement binding upon BAM or any of its subsidiaries or (iii) any permit, government license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to BAM or any of its subsidiaries, other than in the cases of clauses (ii) and (iii) as would not, individually or in the aggregate, constitute a Material Adverse Effect on BAM.  Assuming the accuracy of the representations of the other parties set forth herein, other than as have been obtained prior to the applicable Exchange Date, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required on the part of BAM or any of its subsidiaries in connection with the issuance of any Class A Share upon any Exchange in accordance with the terms of this Agreement, except for any consent, approval, order, authorization, registration, declaration, filing, exemption or review the failure of which to be obtained or made would not, individually or in the aggregate, constitute a Material Adverse Effect on BAM

(e)Brokers and Finders.  Brookfield has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the transactions contemplated by this Agreement whose fees any of the other parties would be required to pay.

Section 3.2Representations and Warranties of ExchangeCo. ExchangeCo represents and warrants to each OCGH Limited Partner, as of each Exchange Date, as follows:

(a)Existence and Power.

(i)ExchangeCo is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to enter into this Agreement and to perform its obligations hereunder. ExchangeCo has all requisite corporate or other applicable power and authority to own, operate and lease its properties, rights and assets and to carry on its business as it is being conducted on the date of this Agreement.

(ii)Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on ExchangeCo, ExchangeCo has been duly qualified as a foreign corporation or other entity for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, rights and assets or conducts any business so as to require such qualification. Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on ExchangeCo, each subsidiary of ExchangeCo has been duly organized and is validly existing in good standing (to the extent that the concept of “good standing” is recognized by the applicable jurisdiction) under the laws of its jurisdiction of organization.

(b)Authorization.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, including the Exchange as well as issuance of any ExchangeCo Unit upon any Exchange in accordance with the terms of this Agreement, have been duly authorized by all other necessary action on the part of ExchangeCo.  Assuming this Agreement constitutes the valid and binding obligation of the other parties hereto, this Agreement is a valid and binding obligation of ExchangeCo, enforceable against ExchangeCo in accordance with its terms, subject to the limitation of such enforcement by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to creditors’ rights generally or (ii) the Enforceability Exceptions. 

(c)Valid Issuance of ExchangeCo Units.  The ExchangeCo Units to be issued in any Exchange have been duly authorized, and when issued in an Exchange, all such ExchangeCo Units shall be validly issued, fully paid, nonassessable and free of pre-emptive or similar rights. Each Exchanging LP to which ExchangeCo Units are issued shall, upon issuance thereof, have good and valid title thereto, free and clear of any liens other than transfer restrictions set forth in the organizational documents of ExchangeCo and under securities laws).

(d)Non-Contravention/No Consents.  The execution, delivery and performance of the Agreement and the issuance of any ExchangeCo Unit or underlying ExchangeCo Note upon any Exchange in accordance with the terms of this Agreement (the issuer thereof, an “Issuer”) does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, (i) the organizational documents of such Issuer, (ii) any credit agreement, mortgage, note, indenture, deed of trust, lease, license, loan agreement or other agreement binding upon such Issuer or any of its subsidiaries, or (iii) any permit, government license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to such Issuer or any of its subsidiaries, other than in the cases of clauses (ii) and (iii) as would not, individually or in the aggregate, constitute a Material Adverse Effect on such Issuer.  Assuming the accuracy of the representations of the other parties set forth herein, other than as have been obtained prior to the date of this Agreement, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required on the part of such Issuer or any of its subsidiaries in connection with the applicable issuance upon any Exchange in accordance with the terms of this Agreement, except for any consent, approval, order, authorization, registration, declaration, filing, exemption or review the failure of which to be obtained or made would not, individually or in the aggregate, constitute a Material Adverse Effect on such Issuer.

(e)Brokers and Finders.  ExchangeCo has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the transactions contemplated by this Agreement whose fees any of the other parties would be required to pay.

Section 3.3Representations and Warranties of OCGH. OCGH represents and warrants to Brookfield, as of the date of this Agreement, as follows:

(a)Existence and Power.

(i)OCGH is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to enter into this Agreement and to perform its obligations hereunder. OCGH has all requisite power and authority to own, operate and lease its properties, rights and assets and to carry on its business as it is being conducted on the date of this Agreement.

(ii)Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on OCGH, OCGH has been duly qualified as a foreign corporation or other entity for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, rights and assets or conducts any business so as to require such qualification. Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on OCGH, each subsidiary of OCGH has been duly organized and is validly existing in good standing (to the extent that the concept of “good standing” is recognized by the applicable jurisdiction) under the laws of its jurisdiction of organization.

(b)Authorization.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, have been duly authorized by all other necessary action on the part of OCGH.  Assuming this Agreement constitutes the valid and binding obligation of the other parties hereto, this Agreement is a valid and binding obligation of OCGH, enforceable against OCGH in accordance with its terms, subject to the limitation of such enforcement by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to creditors’ rights generally or (ii) the Enforceability Exceptions. 

(c)Non-Contravention/No Consents.  The execution, delivery and performance of the Agreement does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, (i) the organizational documents of OCGH, (ii) any credit agreement, mortgage, note, indenture, deed of trust, lease, license, loan agreement or other agreement binding upon OCGH or any of its subsidiaries, or (iii) any permit, government license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to OCGH or any of its subsidiaries, other than in the cases of clauses (ii) and (iii) as would not, individually or in the aggregate, constitute a Material Adverse Effect on OCGH.  Assuming the accuracy of the representations of the other parties set forth herein, other than as have been obtained prior to the date of this Agreement, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required on the part of OCGH or any of its subsidiaries in connection with any Exchange in accordance with the terms of this Agreement, except for any consent, approval, order, authorization, registration, declaration, filing, exemption or review the failure of which to be obtained or made would not, individually or in the aggregate, constitute a Material Adverse Effect on such Issuer.

(d)Brokers and Finders.  OCGH has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the transactions contemplated by this Agreement whose fees any of the other parties would be required to pay.

(e)Accredited Investors. To the best of OCGH’s knowledge, each limited partner of OCGH that is a current employee of a member of the Oaktree Operating Group is an accredited investor (as defined in Rule 501 under Regulation D promulgated under the Securities Act).

ARTICLE IV
PROTECTIVE PROVISIONS

Section 4.1Certain Events.

(a)Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence of any of the events set forth in clause (b) of this Section 4.1, the provisions set forth in this Section 4.1 shall apply. Brookfield shall provide OCGH with prompt written notice of the occurrence (or expected occurrence) of any of such events, and in any event within seven (7) Business Days of the occurrence thereof (and, in the case of any expected occurrence thereof, within seven (7) Business Days of the date on which Brookfield becomes aware or should have become aware of such expected occurrence thereof), in each case, specifying the nature and extent thereof and, if applicable, the corrective action taken or proposed to be taken with respect thereto.

(b)In the case of a Competitor Acquisition Event or in the event of a Bankruptcy Event (collectively, a “Buyback Event”), OCGH shall be entitled to require the Brookfield Group, upon delivery of a written notice (a “Buyback Notice”) to Brookfield within 30 days following notice to OCGH of the occurrence of a Buyback Event, to promptly sell (or cause to be sold) all of the OpCo Units that are directly or indirectly held by Brookfield Group Members (“Brookfield OpCo Units”) to OCGH or such other entity as designated by OCGH such that each of the OpCos would be wholly-owned, directly or indirectly, by OCGH (the “Buyback Right”), which sale may, solely at the election of Brookfield and in lieu of transferring the OpCo Units of the Brookfield Group directly, include the disposition of the Brookfield Group’s interests in Oaktree and Atlas OCM; provided that the purchase price per Brookfield OpCo Unit to be purchased by OCGH or such other entity as may be designated by OCGH will be the Current Equity Value based on the year end immediately prior to the Buyback Event. The closing of such Buyback Event shall occur no later than the later of (x) 60 days following the receipt of any regulatory approvals required in connection with such Buyback Right and (y) 60 days following the delivery of a Buyback Notice.

ARTICLE V
MISCELLANEOUS

Section 5.1Notices. Any notice to any Service Partner that is required or permitted hereunder to be given to such Service Partner shall be in writing and shall be delivered to such Service Partner at the principal office of OCGH or at such other place where such Service Partner may be found. Any notice to a Service Partner which is delivered to the principal office of OCGH when such Service Partner is absent from the office shall, if reasonable efforts have been made to deliver it to him or her elsewhere, be deemed delivered to him or her on the next succeeding Business Day, if he or she does not actually receive such notice sooner. Any notice to any OCGH Limited Partner who is not a Service Partner that is required or permitted hereunder to be given to such OCGH Limited Partner shall be in writing and shall be delivered to such OCGH Limited Partner at the address or facsimile number of such OCGH Limited Partner shown on the register of OCGH. Any notice to OCGH or the General Partner required or permitted hereunder to be given to OCGH or the General Partner shall be in writing and shall be delivered to OCGH or the General Partner at the principal office of OCGH. Any notice to Oaktree or Atlas OCM required or permitted hereunder to be given to Oaktree or Atlas OCM shall be in writing and shall be delivered to Oaktree or Atlas OCM, as applicable, at the principal office of Oaktree. Any notice to Brookfield shall be in writing and shall be delivered to Brookfield at the principal office of Brookfield. A written notice may be delivered by facsimile or electronic transmission.

Section 5.2Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. For the purposes of this Agreement, the words “he,” “his” or “himself” shall be interpreted to include the masculine, feminine and corporate, other entity or trust form. Whenever the words “included,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” Whenever in this Agreement or any other agreement contemplated hereby or otherwise a Person is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, then, to the fullest extent permitted by law, such Person may make such decision in its sole discretion (regardless of whether there is a reference to “sole discretion” or “discretion”), and shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting any other Person (other than a duty to act in good faith) and (ii) under another express standard, such Person shall act under such express standard and shall not be subject to any other or different standard. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. References to “days” are to calendar days; provided, however, that any action otherwise required to be taken on a day that is not a Business Day shall instead be taken on the next succeeding Business Day. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

Section 5.3Joinder.

(a)The General Partner shall (unless determined otherwise by the General Partner in its sole discretion) cause each OCGH Limited Partner and each Person receiving an award of OCGH equity under any Oaktree or Atlas OCM ownership plan to be joined as a party to this Agreement by either (i) executing a counterpart to this Agreement or (ii) otherwise agreeing to be bound by all of the terms of this Agreement, in either case for so long as such Person remains a limited partner of OCGH or holds an equity award.

(b)Any joinder of parties to this Agreement permitted or required by this Section 5.3 shall be effective notwithstanding Section 5.12.

Section 5.4Transaction Expenses. Except to the extent as otherwise provided in this Agreement or any Ancillary Agreement, all expenses incurred in connection with the Exchange, including fees and disbursements of counsel to Brookfield and OCGH, will be borne by Oaktree; provided,however, that all fees and expenses resulting from a registration under the Securities Act of 1933, as amended, will be borne by Brookfield, including all printing expenses, fees and disbursements of counsel to Brookfield and OCGH, the fees of independent certified accountants and the expenses of qualifying Class A Shares under blue sky laws; provided, further, that counsel fees and disbursements resulting from services to an OCGH Limited Partner in his or her personal capacity will be borne by such OCGH Limited Partner.

Section 5.5Reserved.

Section 5.6Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein, if the economic and legal substance of the arrangements contemplated hereby are not affected in any manner materially adverse to any party hereto. Upon such a determination, OCGH and Oaktree shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby shall be consummated as originally contemplated to the fullest extent possible.

Section 5.7Counterparts. This Agreement may be executed in one or more counterparts, all of which shall constitute one and the same instrument.

Section 5.8Entire Agreement; Third Party Beneficiaries. This Agreement and the OCGH Partnership Agreement collectively constitute the entire agreement and supersede all other prior agreements, both written and oral, among the parties with respect to the subject matter hereof; provided, that in the event of a conflict between this Agreement and the OCGH Partnership Agreement, the OCGH Partnership Agreement shall control; provided, further, that nothing herein shall be deemed to supersede any bona fide, ordinary course securities trading policy or other agreement binding on a Founding Co-Chairman in connection with his service as a member of the board of directors of BAM. This Agreement is not intended to confer upon any Person, other than the parties hereto, any rights or remedies hereunder.

Section 5.9Further Assurances. Each party shall execute, deliver, acknowledge and file such other documents and take such further actions as may be reasonably requested from time to time by the other party hereto to give effect to and carry out the transactions contemplated herein. In the event that the Closing would reasonably be expected to be delayed as a result of an injunction, restraining order or decree of any nature of any Governmental Entity, then the parties hereto shall use their reasonable best efforts to resist, vacate, modify, reverse, suspend, prevent, eliminate or remove such actual, anticipated or threatened injunction, restraining order or decree so as to permit the Closing to occur as promptly as practicable; provided that in no event shall any party hereto be forced to litigate with, or bring any claim against, a Governmental Entity to accomplish the same.

Section 5.10Governing Law. This Agreement shall be construed and enforced, along with any rights, remedies or obligations provided for hereunder, in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within the State of Delaware by residents of the State of Delaware; provided, that the enforceability of Section 5.11 shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 etseq., and not the laws of the State of Delaware.

Section 5.11Arbitration of Disputes.

(a)Except as provided in Section 2.5, any and all disputes, claims or controversies arising out of or relating to this Agreement, including any and all disputes, claims or controversies arising out of or relating to (i) OCGH, (ii) any OCGH Limited Partner’s rights and obligations hereunder, (iii) the validity or scope of any provision of this Agreement, (iv) whether a particular dispute, claim or controversy is subject to arbitration under this Section 5.11 and (v) the power and authority of any arbitrator selected hereunder, that are not resolved by mutual agreement shall be submitted to final and binding arbitration before Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 etseq. A party hereto may commence the arbitration process by filing a written demand for arbitration with JAMS and delivering a copy of such demand to the other party or parties to the arbitration in accordance with the notice procedures set forth in Section 5.1. The arbitration shall take place in Wilmington, Delaware, and shall be conducted in accordance with the provisions of JAMS Streamlined Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties to the arbitration shall cooperate with JAMS and with each other in selecting an arbitrator from JAMS’ panel of neutrals and in scheduling the arbitration proceedings. The arbitrator selected shall be neutral and a former Delaware chancery court judge or, if such judge is not available, a former U.S. federal judge with experience in adjudicating matters under the laws of the State of Delaware; provided, that if no such person is both willing and able to undertake such a role, the parties to the arbitration shall cooperate with each other and JAMS in good faith to select such other person as may be available from JAMS’ panel of neutrals with experience in adjudicating matters under the laws of the State of Delaware. The parties to the arbitration shall participate in the arbitration in good faith. Each party to the arbitration shall pay those costs, if any, of arbitration that it must pay to cause this Section 5.11 to be enforceable, and all other costs of arbitration shall be shared equally between the parties to the arbitration.

(b)No party to an arbitration shall be entitled to undertake discovery in the arbitration; provided, that, if discovery is required by applicable law, discovery shall not exceed (i) one witness deposition plus the depositions of any expert designated by the other party or parties, (ii) two interrogatories, (iii) ten document requests and (iv) ten requests for admissions; provided, further, that additional discovery may be permitted to the extent such additional discovery is required by applicable law for this Section 5.11 to be enforceable. The arbitrator shall have no power to modify any of the provisions of this Agreement, to make an award or impose a remedy that, in each case, is not available to the Delaware chancery court or to make an award or impose a remedy that was not requested by a party to the dispute, and the jurisdiction of the arbitrator is limited accordingly. To the extent permitted by law, the arbitrator shall have the power to order injunctive relief, and shall expeditiously act on any petition for such relief.

(c)The provisions of this Section 5.11 may be enforced by any court of competent jurisdiction, and, to the extent permitted by law, the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys’ fees, to be paid by the party against whom enforcement is ordered. Notwithstanding any provision of this Agreement to the contrary, any party to an arbitration pursuant to this Section 5.11 shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any violation of the provisions of this Agreement pending a final determination on the merits by the arbitrator, and each party hereby consents that such a restraining order or injunction may be granted without the necessity of posting any bond.

(d)The details of any arbitration pursuant to this Section 5.11, including the existence and/or outcome of such arbitration and any information obtained in connection with any such arbitration, shall be kept strictly confidential and shall not be disclosed or discussed with any person not a party to the arbitration; provided, that such party may make such disclosures as are required by applicable law or legal process; provided, further, that such party may make such disclosures to its, his or her attorneys, accountants or other agents and representatives who reasonably need to know the disclosed information in connection with any arbitration pursuant to this Section 5.11 and who are obligated to keep such information confidential to the same extent as such party. If a party to an arbitration receives a subpoena or other request for information from a third party that seeks disclosure of any information that is required to be kept confidential pursuant to the prior sentence, or otherwise believes that it, he or she may be required to disclose any such information, such party shall (i) promptly notify the other party to the arbitration and (ii) reasonably cooperate with such other party in taking any legal or otherwise appropriate actions, including the seeking of a protective order, to prevent the disclosure, or otherwise protect the confidentiality, of such information.

(e)For the avoidance of doubt, (i) any arbitration pursuant to this Section 5.11 shall not include any disputes, claims or controversies that do not arise out of or relate to this Agreement, and (ii) any arbitration pursuant to this Section 5.11 of disputes, claims or controversies arising out of or relating to this Agreement is intended to be separate and distinct proceeding from any arbitration or other adjudication of disputes, claims or controversies between parties to this Agreement that do not arise out of or relate to this Agreement.

Section 5.12Amendments; Waivers.

(a)This Agreement may be amended, modified or waived at any time in writing by agreement of Brookfield, Oaktree and OCGH without the approval or consent of any other party; provided, that if any such amendment, modification or waiver would adversely affect in any material respect any OCGH Limited Partner relative to all OCGH Limited Partners collectively as a group, such amendment, modification, or waiver shall also require the written consent of the OCGH Limited Partners holding a majority of the Percentage Interests held by the OCGH Limited Partners so adversely affected.

(b)No waiver by any party hereto of any default with respect to any provision, condition or requirement hereof shall be deemed to be a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party hereto to exercise any right hereunder in any manner impair the exercise of any such right accruing to it, him or her thereafter. Any default hereunder by a party hereto shall not excuse any obligation of any other party.

Section 5.13Assignment. Except as may be provided in the OCGH Partnership Agreement, neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of Brookfield, Oaktree and OCGH. Any assignment in violation of the foregoing shall be null and void ab initio. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns.

^{Section 5.14}Tax Treatment. To the extent this Agreement imposes obligations upon a particular OpCo or its general partner, this Agreement shall be treated as part of the partnership agreement of such OpCo as described in Section 761(c) of the Code, and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations. Unless otherwise required by the Code and the Treasury Regulations, for U.S. federal income tax purposes: (i) the parties shall report (A) an Exchange of Cash/Share/Note Exchange Units consummated hereunder as a taxable sale of OCGH Units by an OCGH Limited Partner to Brookfield; (B) an Exchange of ExchangeCo Exchange Units consummated hereunder (and any distributions on the ExchangeCo Units received in such Exchange) as distributions under Section 731 of the Code and (C) any redemption pursuant to Section 2.1(d) hereof as a redemption of Brookfield’s entire interest in OCGH and (ii) no party shall take a contrary position on any income tax return, amendment thereof or communication with a taxing authority.

Section 5.15Interference.

(a)Each Service Partner hereby agrees that for so long as the Service Partner provides services to an Oaktree Group Member, and for two years after the Service Partner ceases to provide such services for any reason, such Service Partner shall not directly or indirectly (i) solicit any customer or client of the Oaktree Group for a Competitive Business; provided that the foregoing clause (i) shall not be deemed to prohibit such Service Partner from participating in the normal marketing efforts of a Competitive Business, so long as such Service Partner does not solicit any client or customer known to such Service Partner as a result of his or her provision of services to an Oaktree Group Member to be a client or customer of the Oaktree Group, other than clients or customers of the Oaktree Group that, as of the date the Service Partner ceases to provide services to an Oaktree Group Member, are bona fide pre-existing clients or customers of such Competitive Business, (ii) induce or attempt to induce any employee of the Oaktree Group to leave the Oaktree Group or in any way interfere with the relationship between the Oaktree Group and any employee thereof or (iii) hire, engage, employ, retain or otherwise enter into any business affiliation with any person who was an employee of the Oaktree Group at any time during the twelve-month period prior to the date a Service Partner ceases to provide services to the Oaktree Group.

(b)Each Service Partner hereby agrees that for so long as the Service Partner provides services to an Oaktree Group Member and for the duration of the Restricted Period (as defined in the OCGH Partnership Agreement), the Service Partner shall not directly or indirectly:

(i)in any geographic location or area anywhere in the United States of America or any other country where an Oaktree Group Member conducts business, engage in a Competitive Business; or

(ii)invest in, own, manage, operate, finance, control, render services or participate (whether as an employee, consultant, independent contractor, officer, director, agent, security holder, creditor, or otherwise) in the ownership, management, operation, financing, or control of, or have any interest in, or be employed by, or be associated with or in any manner connected with, or render services, advice or aid to, or guarantee the obligations of, any Person that engages in or proposes to engage in a Competitive Business;

provided, in each case, that (x) nothing herein shall prohibit a Service Partner from being a passive owner of not more than one percent of the outstanding stock of any class of securities of a corporation or entity engaged in such business which is publicly traded so long as such Service Partner has no participation in the business of such corporation or entity (other than the exercise of his or her shareholder voting rights) and (y) nothing herein shall prohibit a Service Partner from engaging in any of the foregoing activities in respect of, or on behalf of, the Brookfield Group.

Section 5.16Contra Proferentem. In the event any claim is made by any party hereto relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its, his or her counsel.

Section 5.17Brookfield Asset Management Inc.

(a)Section 16 Matters. BAM will take such further actions as it determines in its discretion are required to cause any Exchange and all transactions related thereto or contemplated by this Agreement, directly or indirectly, by officers or directors of BAM (including “directors by deputization”) to be exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 16b-3 thereunder, if such persons are subject to Section 16 of the Securities Exchange Act of 1934, as amended, with respect to the equity securities of BAM.

(b)Delivery of Class A Shares. On each Exchange Date for which Brookfield has determined to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, BAM will issue and deliver the requisite number of Class A Shares to the applicable OCGH Limited Partners, as contemplated by this Agreement, including Section 3.1(c).

Section 5.18ExchangeCo Units. OCGH and Brookfield shall work together in good faith to draft a form redemption agreement to reflect the future transfer of equity interests in ExchangeCo to the OCGH Limited Partners who may receive Exchange Units in a future Exchange, within 60 days of date hereof.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.

ATLAS HOLDINGS, LLC

By:     /s/Joshua Zinn                Name: Joshua Zinn        Title: Vice President

ATLAS OCM HOLDINGS, LLC

By:     /s/Joshua Zinn                Name: Joshua Zinn        Title: Vice President

OAKTREE CAPITAL GROUP, LLC
By:     /s/ Todd Molz            Name: Todd Molz        Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting            Name: Richard Ting        Title: Managing Director            Associate General Counsel

OAKTREE CAPITAL GROUP HOLDINGS, L.P., for itself and as attorney-in-fact for the OCGH Limited Partners

By:        OAKTREE CAPITAL GROUP HOLDINGS             GP, LLC, its General Partner        By:     /s/ Todd Molz                Name: Todd Molz            Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting                Name: Richard Ting            Title: Managing Director            Associate General Counsel

OCM HOLDINGS I, LLC

By:     OAKTREE HOLDINGS, LLC, its Managing Member

By: OAKTREE CAPITAL GROUP, LLC, its Managing Member

        By:     /s/ Todd Molz                Name: Todd Molz            Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting                Name: Richard Ting            Title: Managing Director            Associate General Counsel

OAKTREE NEW HOLDINGS, LLC

By:     /s/Joshua Zinn                Name: Joshua Zinn        Title: Vice President

By:     /s/Mark Srulowitz                Name: Mark Srulowitz        Title: Vice President

OAKTREE HOLDINGS, LTD.

By: OAKTREE CAPITAL GROUP, LLC, its Director

        By:     /s/ Todd Molz                Name: Todd Molz            Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting                Name: Richard Ting            Title: Managing Director            Associate General Counsel

OAKTREE AIF HOLDINGS II, LLC

By:     /s/Joshua Zinn                Name: Joshua Zinn        Title: Vice President

By:     /s/Mark Srulowitz                Name: Mark Srulowitz        Title: Vice President

OAKTREE CAPITAL I, L.P.By:     /s/ Todd Molz            Name: Todd Molz        Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting            Name: Richard Ting        Title: Managing Director            Associate General Counsel

OAKTREE CAPITAL II, L.P.

By:     /s/ Todd Molz            Name: Todd Molz        Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting            Name: Richard Ting        Title: Managing Director            Associate General Counsel

OAKTREE CAPITAL MANAGEMENT (CAYMAN), L.P.

By:     /s/ Todd Molz            Name: Todd Molz        Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting            Name: Richard Ting        Title: Managing Director            Associate General Counsel

OAKTREE AIF INVESTMENTS, L.P.

By:     /s/ Todd Molz            Name: Todd Molz        Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting            Name: Richard Ting        Title: Managing Director            Associate General Counsel

OAKTREE INVESTMENT HOLDINGS, L.P.

By:     /s/ Todd Molz            Name: Todd Molz        Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting            Name: Richard Ting        Title: Managing Director            Associate General Counsel

OCGH EXCHANGECO, L.P.

By: OAKTREE CAPITAL GROUP HOLDINGS             GP, LLC, its General Partner

By:     /s/ Todd Molz            Name: Todd Molz        Title: General Counsel and Chief             Administrative Officer

By:     /s/ Richard Ting            Name: Richard Ting        Title: Managing Director            Associate General Counsel

Solely for purposes of Section 5.17:

BROOKFIELD ASSET MANAGEMENT INC.

        By:     /s/ Justin Beber                Name: Justin Beber            Title: Chief Legal Officer

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EX-10.2

Exhibit 10.2

Execution Version

MASTER RESTRUCTURING AGREEMENT

THIS RESTRUCTURING AGREEMENT (this “Agreement”) is entered into as of September 30, 2019 (the “Effective Date”) by and among (i) Brookfield Asset Management Inc., a corporation incorporated under the laws of the Province of Ontario (“BAM”), (ii) Oaktree Capital Group, LLC, a Delaware limited liability company (“OCG LLC”), (iii) Berlin Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of BAM (“Berlin Merger Sub”), (iv) Oslo Holdings LLC, a Delaware limited liability company (“Oslo Holdings”), (v) Oslo Holdings Merger Sub LLC, a Delaware limited liability company (“Oslo Holdings Merger Sub”), (vi) Brookfield Holdings Canada Inc., a corporation incorporated under the laws of the Province of Ontario and wholly-owned subsidiary of BAM (“BHCI”), (vii) Brookfield US Holdings, Inc., a corporation incorporated under the laws of the Province of Ontario and wholly-owned subsidiary of BHCI (“BUSHI”), (viii) Brookfield US Inc., a Delaware corporation and wholly-owned subsidiary of BUSHI (“BUSI”), (ix) Atlas Holdings, LLC, a Delaware limited liability company and wholly-owned subsidiary of BUSI (“Atlas Holdings”), (x) Atlas OCM Holdings, LLC, a Delaware limited liability company and wholly-owned subsidiary of BUSI (“Atlas OCM Holdings”), (xi) Oaktree Capital Group Holdings, L.P., a Delaware limited partnership (“OCGH”), for itself and as attorney-in-fact for each of the limited partners of OCGH (the “OCGH LPs”), and (xii) the other entities set forth on the signature pages hereto (each a “Party” and collectively, the “Parties”).

WHEREAS, BAM, Berlin Merger Sub, OCG LLC, Oslo Holdings and Oslo Holdings Merger Sub have entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated as of March 13, 2019, which provides that (i) BAM and OCG LLC shall cooperate with each other and use their reasonable best efforts to negotiate and agree upon the form of this Agreement prior to the Closing, (ii) concurrent with the Closing, each of OCG LLC, the subsidiaries of OCG LLC, BAM and Berlin Merger Sub shall cause itself or such of its affiliates that are contemplated to be a party to this Agreement, to enter into this Agreement and (iii) BAM and OCG LLC shall implement the restructuring steps set forth herein in accordance with this Agreement; capitalized terms used but not defined herein have the meanings given to them in the Merger Agreement.

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

I. RESTRUCTURING

1. Oslo Holdings Contribution (“Step 5”). Immediately prior to the Effective Time:

a. pursuant to one or more power of attorneys granted by such OCGH LP to OCGH, OCGH, on behalf of each OCGH LP, hereby contributes, transfers, assigns, conveys and delivers to Oslo Holdings, such OCGH LP’s right, title and interest in and to the number of OCGH units set forth on the books and records of OCGH, which in the aggregate represent 25.3 million OCGH units (each, a “Contributed OCGH Unit”), and as consideration therefor, Oslo Holdings hereby issues to such OCGH LP a number of “Common Units” (as defined in the limited liability company agreement of Oslo Holdings, an “Oslo Holdings Unit”) equal to the number of such OCGH LP’s Contributed OCGH Units, free and clear of all liens (other than liens under the organizational documents of Oslo Holdings and securities laws); and

b. pursuant to one or more power of attorneys granted by such OCGH LP to OCGH, OCGH, on behalf of each OCGH LP, hereby joins such OCGH LP to the Amended and Restated Limited Liability Agreement of Oslo Holdings LLC, dated as of September 30, 2019, as a “Member” thereof; and

c. OCGH hereby resigns as a member of Oslo Holdings and all of OCGH’s limited liability company interests (if any) in Oslo Holdings are hereby cancelled for no consideration and shall cease to exist.

2. Oslo Holdings Merger Sub Assignment (“Step 5b”). Effective as of immediately following the Effective Time but prior to Step 8 (as defined below):

a. Oaktree Holdings, LLC, a Delaware limited liability company (“Oaktree Holdings, LLC”), hereby contributes, transfers, assigns, conveys and delivers its right, title and interest in and to Oslo Holdings Merger Sub to OCM Holdings I, LLC, a Delaware limited liability company (“OCM Holdings I, LLC”) as a capital contribution increasing the paid in capital of Oaktree Holdings, LLC in OCM Holdings I, LLC.

b. Each of Oaktree Holdings, Ltd., a Cayman Islands company (“Oaktree Holdings, Ltd.”), Oaktree Holdings, Inc., a Delaware corporation (“Oaktree Holdings, Inc.”), Oaktree AIF Holdings, Inc., a Delaware corporation (“Oaktree AIF Holdings, Inc.”), and OCM Holdings I, LLC hereby, pursuant to the limited liability company agreement of Oslo Holdings Merger Sub, appoints OCM Holdings I, LLC as the “Manager” thereunder and removes Oaktree Holdings, LLC as the “Manager” thereunder.

3. Contribution of Cash & Issuance of Exchange Note (“Step 8”)

a. Contribution to Intermediate Holding Companies (“Step 8a”).Effective as of immediately following the Effective Time:

i. OCG LLC hereby contributes, transfers, assigns, conveys and delivers its right, title and interest in and to (each an “OCG Cash Contributed Amount”) (A) $211,002,439 in cash to Oaktree Holdings, LLC, (B) $23,444,715 in cash to Oaktree Holdings, Ltd., (C) $523,598,644 in cash to Oaktree Holdings, Inc. and (D) $23,444,715 in cash to Oaktree AIF Holdings, Inc., which in each case is a capital contribution increasing the paid in capital of OCG LLC in each entity set forth in clauses (A)-(D).

ii. Immediately following the consummation of clause (i) above, Oaktree Holdings, LLC hereby contributes, transfers, assigns, conveys and delivers the applicable OCG Cash Contributed Amount received by it to OCM Holdings I, LLC as a capital contribution increasing the paid in capital of Oaktree Holdings, LLC in OCM Holdings I, LLC.

b. Oslo Holdings Merger Sub Subscription (“Step 8b”). Effective immediately following the consummation of Step 8a, OCM Holdings I, LLC, Oaktree Holdings, Ltd., Oaktree Holdings, Inc. and Oaktree AIF Holding, Inc. (collectively, the “Intermediate Holding Companies”) hereby contribute all of the OCG Cash Contributed Amounts received by them in Step 8a above, representing an aggregate of $781,490,513, to Oslo Holdings Merger Sub as a capital contribution increasing the paid in capital of each such Person in Oslo Holdings Merger Sub, and Exhibit A of the limited liability company agreement of Oslo Holdings Merger Sub shall be updated to reflect initial “Membership Percentages” of 27%, 3%, 67% and 3%, respectively, for each such Intermediate Holding Company, which shall be updated within 60 days of the Effective Date to reflect such Membership Percentages as mutually agreed upon by BAM and OCG LLC .

c. Funding Agreement by and between Oslo Holdings Merger Sub and BAM (“Step 8c”). Effective immediately following the completion of Step 8b:

i. Oslo Holdings Merger Sub hereby issues a note (the “BAM Shares Exchange Note”), in the form attached hereto as Exhibit A, to BAM and BAM hereby acquires and accepts the BAM Shares Exchange Note;

ii. BAM hereby agrees to: (x) issue 10,072,152 class A limited voting shares of BAM (“BAM Class A Shares”), as fully paid and non-assessable shares, to American Stock Transfer & Trust Company and (y) direct American Stock Transfer & Trust Company to transfer the 10,072,152 BAM Class A Shares to the unitholders of Oslo Holdings, on behalf of Oslo Holdings Merger Sub, at the Subsequent Effective Time, in consideration for the issuance by Oslo Holdings Merger Sub to BAM of the BAM Shares Exchange Note; and

iii. the Parties hereto agree that the agreement by BAM to effect the issuance and transfer of the BAM Class A Shares set forth in this Step 8c constitutes full payment of the issuance price of the BAM Shares Exchange Note.

d. Cash Payment Direction Instructions. For ease of administration, the Parties agree that the OCG Cash Contributed Amount shall be paid by OCG LLC to American Stock Transfer & Trust Company, on behalf of Oslo Holdings Merger Sub, which payment shall be in satisfaction of the payments set forth in Step 8a and Step 8b.

4. Contribution of BAM Shares Exchange Note (“Step 9”)

a. Contribution to BUSI (“Step 9a”). Effective immediately following the completion of Step 8c, BAM hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the BAM Shares Exchange Note to BUSI and, as consideration therefor, BUSI hereby issues to BAM 537,993 shares of class A common stock, par value $0.01, of BUSI (the “BUSI Subscription Interests”).

b. Contribution to Atlas Holdings (“Step 9b”). Effective immediately following the completion of Step 9a, BUSI hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the BAM Shares Exchange Note to Atlas Holdings, and, as consideration therefor, Atlas Holdings hereby issues to BUSI 5,379,931 common shares of Atlas Holdings.

c. Contribution to OCG LLC (“Step 9c”). Effective immediately following the completion of Step 9b, Atlas Holdings hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the BAM Shares Exchange Note to OCG LLC and, as consideration therefor, OCG LLC hereby issues to Atlas Holdings 9,352,045 Class A Units of OCG LLC (the “OCG LLC Subscription Interests”).

d. Contribution to Intermediate Holding Companies (“Step 9d”). Effective immediately following the completion of Step 9c:

i. OCG LLC hereby contributes, transfers, assigns, conveys and delivers 27%, 3%, 67% and 3% of its right, title and interest in and to the BAM Shares Exchange Note to (A) Oaktree Holdings, LLC, (B) Oaktree Holdings, Ltd., (C) Oaktree Holdings, Inc. and (D) Oaktree AIF Holdings, Inc., respectively, as a capital contribution increasing the paid in capital of OCG LLC in each such Person.

ii. Effective immediately upon the consummation of clause (i) above, Oaktree Holdings, LLC hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the BAM Shares Exchange Note received in clause (i) above to OCM Holdings I, LLC as a capital contribution increasing the paid in capital of Oaktree Holdings, LLC in OCM Holdings I, LLC.

e. Contribution to Oslo Holdings Merger Sub (“Step 9e”). Effective immediately following the completion of Step 9d, each Intermediate Holding Company hereby contributes, transfers, assigns, conveys and delivers all of such Intermediate Holding Company’s right, title and interest in and to the BAM Shares Exchange Note to Oslo Holdings Merger Sub as a capital contribution increasing the paid in capital of each such Person in Oslo Holdings Merger Sub, thereby extinguishing the BAM Shares Exchange Note.

f. Contribution to BHCI (“Step 9f”). Effective immediately following the completion of Step 9e, BAM hereby contributes, transfers, assigns, conveys and delivers the BUSI Subscription Interests received in Step 9a to BHCI and, as consideration therefor, BHCI hereby issues to BAM 5,379,931 common shares in the capital of BHCI (the “BHCI Subscription Interests”)as fully paid and non-assessable shares.

g. Contribution to BUSHI (“Step 9g”).Effective immediately following the completion of Step 9f, BHCI hereby contributes, transfers, assigns, conveys and delivers the BUSI Subscription Interests received in Step 9f to BUSHI and, as consideration therefor, BUSHI hereby issues to BHCI 5,379,931 common shares in the capital of BUSHI (the “BUSHI Subscription Interests”) as fully paid and non-assessable shares.

h. Notwithstanding any provision of the BAM Shares Exchange Note, upon the contribution and transfer of the BAM Shares Exchange Note pursuant to Step 9a, Step 9b, Step 9c, Step 9d and Step 9e, the applicable transferee shall become the noteholder of the BAM Shares Exchange Note and such transferee shall be bound by the terms and conditions of the BAM Shares Exchange Note, and the Parties hereto hereby agree that (x) such contribution and transfer of the BAM Shares Exchange Note and (y) the applicable transferee becoming the noteholder of the BAM Shares Exchange Note shall, in either case of clauses (x) or (y), not cancel or otherwise affect the BAM Shares Exchange Note.

5. Liquidation of Oslo Holdings Merger Sub (“Step 11”)

a. Distribution of Contributed OCGH Units. Effective immediately following the Subsequent Merger Effective Time, the Intermediate Holding Companies hereby agree to wind up Oslo Holdings Merger Sub and, in furtherance thereof, Oslo Holdings Merger Sub hereby distributes to each Intermediate Holding Company, representing all of the members of Oslo Holdings Merger Sub, its pro rata portion of the Contributed OCGH Units received in Step 5, representing all of the assets held by Oslo Holdings Merger Sub.

b. Dissolution of Oslo Holdings Merger Sub. Following the consummation of the distribution set forth in clause (a) above, the Intermediate Holding Companies shall cause a certificate of cancellation in respect of Oslo Holdings Merger Sub to be filed with the Secretary of State of the State of Delaware.

6. Redemption of OCGH Units (“Step 12”). Effective immediately following the completion of Step 11:

a. OCM Holdings I, LLC. OCGH hereby transfers, assigns, conveys and delivers 6,830,760 limited partnership units of each of (i) Oaktree Capital I, LP, (ii) Oaktree Capital Management (Cayman), LP, (iii) Oaktree Capital II, LP, (iv) Oaktree Investment Holdings, LP, (v) Oaktree Capital Management, LP and (vi) Oaktree AIF Investments, LP to OCM Holdings I, LLC and, as consideration therefor, OCM Holdings I, LLC hereby transfers, assigns, conveys and delivers 6,830,760 OCGH Units to OCGH, representing all of the Contributed OCGH Units received by OCM Holdings I, LLC in Step 11.

b. Oaktree Holdings, Ltd.OCGH hereby transfers, assigns, conveys and delivers 758,973 limited partnership units of each of (i) Oaktree Capital I, LP, (ii) Oaktree Capital Management (Cayman), LP, (iii) Oaktree Capital II, LP, (iv) Oaktree Investment Holdings, LP, (v) Oaktree Capital Management, LP and (vi) Oaktree AIF Investments, LP to Oaktree Holdings, Ltd. and, as consideration therefor, Oaktree Holdings, Ltd. hereby transfers, assigns, conveys and delivers 758,973 OCGH Units to OCGH, representing all of the Contributed OCGH Units received by Oaktree Holdings, Ltd. in Step 11.

c. Oaktree Holdings, Inc.OCGH hereby transfers, assigns, conveys and delivers 16,950,404 limited partnership units of each of (i) Oaktree Capital I, LP, (ii) Oaktree Capital Management (Cayman), LP, (iii) Oaktree Capital II, LP, (iv) Oaktree Investment Holdings, LP, (v) Oaktree Capital Management, LP and (vi) Oaktree AIF Investments, LP to Oaktree Holdings, Inc. and, as consideration therefor, Oaktree Holdings, Inc. hereby transfers, assigns, conveys and delivers 16,950,404 OCGH Units to OCGH, representing all of the Contributed OCGH Units received by Oaktree Holdings, Inc. in Step 11.

d. Oaktree AIF Holdings, Inc.OCGH hereby transfers, assigns, conveys and delivers 758,973 limited partnership units of each of (i) Oaktree Capital I, LP, (ii) Oaktree Capital Management (Cayman), LP, (iii) Oaktree Capital II, LP, (iv) Oaktree Investment Holdings, LP, (v) Oaktree Capital Management, LP and (vi) Oaktree AIF Investments, LP to Oaktree AIF Holdings, Inc. and, as consideration therefor, Oaktree AIF Holdings, Inc. hereby transfers, assigns, conveys and delivers 758,973 OCGH Units to OCGH, representing all of the Contributed OCGH Units received by Oaktree AIF Holdings, Inc. in Step 11.

e. Cancellation of OCGH Units. Notwithstanding any provision of the limited partnership agreement of OCGH, upon the transfer, assignment, conveyance and delivery of the OCGH Units pursuant to this Step 12, each Intermediate Holding Company shall cease to be a limited partner of OCGH. To the extent permitted by applicable law, each Intermediate Holding Company hereby irrevocably appoints any officer of OCGH as its attorney-in-fact solely to cause the distribution and transfer of such OCGH Units on the books and records of OCGH with full power of substitution in the premises. Upon receipt of the OCGH units by OCGH pursuant to this Step 12, such OCGH Units shall be cancelled and shall cease to exist.

7. Rebalancing of Operating Group Units (“Step 13”)

a. OCM Holdings I, LLC. OCM Holdings I, LLC hereby transfers, assigns, conveys and delivers (i) 6,830,760 limited partnership units of Oaktree Capital Management (Cayman), LP to Oaktree Holdings, Ltd., (ii) 6,830,760 limited partnership units of each of (A) Oaktree Capital II, LP, (B) Oaktree Investment Holdings, LP, and (C) Oaktree Capital Management, LP to Oaktree Holdings, Inc. and (iii) 6,830,760 limited partnership units of Oaktree AIF Investments, LP to Oaktree AIF Holdings, Inc.

b. Oaktree Holdings, Ltd.Oaktree Holdings, Ltd. hereby transfers, assigns, conveys and delivers (i) 758,973 limited partnership units of Oaktree Capital I, LP to OCM Holdings I, LLC, (ii) 758,973 limited partnership units of each of (A) Oaktree Capital II, LP, (B) Oaktree Investment Holdings, LP, and (C) Oaktree Capital Management, LP to Oaktree Holdings, Inc., and (iii) 758,973 limited partnership units of Oaktree AIF Investments, LP to Oaktree AIF Holdings, Inc.

c. Oaktree Holdings, Inc.Oaktree Holdings, Inc. hereby transfers, assigns, conveys and delivers (i) 16,950,404 limited partnership units of Oaktree Capital I, LP to OCM Holdings I, LLC, (ii) 16,950,404 limited partnership units of Oaktree Capital Management (Cayman), LP to Oaktree Holdings, Ltd., and (iii) 16,950,404 limited partnership units of Oaktree AIF Investments, LP to Oaktree AIF Holdings, Inc.

d. Oaktree AIF Holdings, Inc.Oaktree AIF Holdings, Inc. hereby transfers, assigns, conveys and delivers (i) 758,973 limited partnership units of Oaktree Capital I, LP to OCM Holdings I, LLC, (ii) 758,973 limited partnership units of Oaktree Capital Management (Cayman), LP to Oaktree Holdings, Ltd., (iii) 758,973 limited partnership units of each of (A) Oaktree Capital II, LP, (B) Oaktree Investment Holdings, LP, (C) Oaktree Capital Management, LP to Oaktree Holdings, Inc.

8. Post-Closing Distribution (“Step 14”)

a. Distributions from Oaktree Capital I, LP to OCM Holdings I, LLC and OCGH (“Step 14a”). Immediately following Step 13:

i. Oaktree Capital I, LP hereby distributes to OCM Holdings I, LLC, and OCM Holdings I, LLC hereby accepts from Oaktree Capital I, LP, $122,467,424.

ii. Oaktree Capital I, LP hereby distributes to OCGH, and OCGH hereby accepts from Oaktree Capital I, LP, $77,532,576.

b. Distributions from Oaktree Capital II, LP to Oaktree Holdings, Inc. and OCGH (“Step 14b”). Immediately following Step 14a:

i. Oaktree Capital II, LP hereby distributes to Oaktree Holdings, Inc., and Oaktree Holdings, Inc. hereby accepts from Oaktree Capital II, LP, $97,973,938.

ii. Oaktree Capital II, LP hereby distributes to OCGH, and OCGH hereby accepts from Oaktree Capital II, LP, $62,026,062.

c. Distributions from Oaktree Investment Holdings LP to Oaktree Holdings, Inc. and OCGH (“Step 14c”). Immediately following Step 14b:

i. Oaktree Investment Holdings LP hereby distributes to Oaktree Holdings, Inc., and Oaktree Holdings, Inc. hereby accepts from Oaktree Investment Holdings LP, $24,493,485.

ii. Oaktree Investment Holdings LP hereby distributes to OCGH, and OCGH hereby accepts from Oaktree Investment Holdings LP, $15,506,515.

d. Distributions from Oaktree Capital Management LP to Oaktree Holdings, Inc. and OCGH (“Step 14d”). Immediately following Step 14c:

i. Oaktree Capital Management LP hereby distributes to Oaktree Holdings, Inc., and Oaktree Holdings, Inc. hereby accepts from Oaktree Capital Management LP, $30,616,856.

ii. Oaktree Capital Management LP hereby distributes to OCGH, and OCGH hereby accepts from Oaktree Capital Management LP, $19,383,144.

e. Distributions from Oaktree AIF Investments LP to Oaktree AIF Holdings, Inc. and OCGH (“Step 14e”). Immediately following Step 14d:

i. Oaktree AIF Investments LP hereby distributes to Oaktree AIF Holdings, Inc., and Oaktree AIF Holdings, Inc. hereby accepts from Oaktree AIF Investments LP, $30,616,856.

ii. Oaktree AIF Investments LP hereby distributes to OCGH, and OCGH hereby accepts from Oaktree AIF Investments LP, $19,383,144.

f. Distribution from OCM Holdings I, LLC to Oaktree Holdings LLC and distribution from Oaktree Holdings LLC to OCG LLC (“Step 14f”). Immediately following Step 14e:

i. OCM Holdings I, LLC hereby distributes to Oaktree Holdings LLC, and Oaktree Holdings LLC hereby accepts from OCM Holdings I, LLC, the $122,222,489 received by OCM Holdings I, LLC in Step 14a.

ii. OCM Holdings I, LLC hereby distributes to Oaktree Holdings, Ltd. and Oaktree Holdings, Ltd. hereby accepts from OCM Holdings I, LLC, the $244,935 received by OCM Holdings I, LLC in Step 14a.

iii. Oaktree Holdings LLC hereby distributes to OCG LLC, and OCG LLC hereby accepts from Oaktree Holdings LLC, the $122,222,489 received by Oaktree Holdings LLC in Step 14f.

iv. Oaktree Holdings, Ltd. hereby contributes to OCG LLC, and OCG LLC hereby accepts from Oaktree Holdings, Ltd., the $244,935 received by Oaktree Holdings Ltd. received in Step 14f.

g. Oaktree Holdings, Inc. transfers to OCG LLC the $153,084,279 received by Oaktree Holdings, Inc. in Steps 14b, 14c and 14d, as partial repayment of the Note issued by Oaktree Holdings, Inc. to OCG dated as of April 17, 2012, the Note issued by Oaktree Holdings, Inc. to OCG dated as of June 5, 2013, the Note issued by Oaktree Holdings, Inc. to OCG dated as of March 11, 2015, the Note issued by Oaktree Holdings, Inc. to OCG dated as of October 15, 2017, the Note issued by Oaktree Holdings, Inc. to OCG dated as of December 15, 2017, or the Note issued by Oaktree Holdings, Inc. to OCG dated as of February 12, 2018 (“Step 14g”).

h. Oaktree AIF Holdings, Inc. hereby distributes to OCG LLC, and OCG LLC hereby accepts from Oaktree AIF Holdings, Inc. as a distribution the $30,616,856 received by Oaktree AIF Holdings, Inc. in Step 14e (“Step 14h”).

i. Distribution from OCG LLC to Atlas Holdings (“Step 14i”). Immediately following Step 14h, OCG LLC hereby distributes to Atlas Holdings, and Atlas Holdings hereby accepts from OCG LLC the $306,168,559 received by OCG LLC in Steps 14f, 14g and 14h.

j. Transfer from Atlas Holdings to BUSHI (“Step 14j”). Immediately following Step 14i, Atlas Holdings hereby transfers to BUSHI, and BUSHI hereby accepts from Atlas Holdings the $306,168,559 received by Atlas Holdings in Step 14i, as partial repayment of the interest bearing demand loan issued by Atlas Holdings to BUSHI in the form attached hereto as Exhibit B (the “Intercompany Note”).

k. Distribution from BUSHI to BHCI as a return of capital (“Step 14k”). Immediately following Step 14j, BUSHI hereby transfers to BHCI, and BHCI hereby accepts and acknowledges receipt from BUSHI of the amount of $306,168,559, representing a return of capital declared by BUSHI on the issued common shares of BUSHI on the date hereof.

l. Transfer from BHCI to BAM (“Step 14l”). Immediately following Step 14k, BHCI hereby transfers toBAM, and BAM hereby accepts from BHCI, the $306,168,559 received by BHCI in Step 14k, as partial repayment of the Canadian Dollar denominated interest-free note in the form attached hereto as Exhibit C (the “BHCI Interest Free Note”).

m. Cash Payment Direction Instructions. For ease of administration, the Parties agree that the amounts set forth in Steps 14a through Step 14i, other than the amounts to be paid to OCGH in Steps 14a through 14e, shall be paid by Oaktree Capital I, LP, Oaktree Capital II, LP, Oaktree Investment Holdings LP, Oaktree Capital Management LP and Oaktree AIF Investments LP, respectively, directly to Atlas Holdings, which payment shall be in satisfaction of the payments set forth in Steps 14a through 14i, other than the amounts to be paid to OCGH in Steps 14a through 14e.

9. Governance Structuring (“Step 15”)

a. Contribution from BUSI to Atlas Holdings (“Step 15a”). Effective promptly following BAM’s and OCG LLC’s receipt of approval from the Federal Energy Regulatory Commission to the transfer of jurisdictional assets in the Contemplated Transaction pursuant to Section 203 of the Federal Power Act, as amended, and in no event before (i) the completion of Step 14 and (ii) 12:01 AM on October 1, 2019 , BUSI hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to all of the issued and outstanding equity interests of Atlas OCM Holdings (the “Atlas OCM Contributed Interests”) as a capital contribution increasing the paid in capital of BUSI to Atlas Holdings.

b. Contribution from Atlas Holdings to OCG LLC (“Step 15b”). Effective immediately following the completion of Step 15a, Atlas Holdings hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the Atlas OCM Contributed Interests to OCG LLC as a capital contribution increasing the paid in capital of Atlas Holdings to OCG LLC.

c. Contribution from OCG LLC to Oaktree Holdings, Inc. (“Step 15c”). Effective immediately following the completion of Step 15b, OCG LLC hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the Atlas OCM Contributed Interests to Oaktree Holdings, Inc., as a capital contribution increasing the paid in capital of OCG LLC in Oaktree Holdings, Inc.

d. Contribution of Oaktree Capital Management LP (“Step 15d”). Effective immediately following the completion of Step 15c, Oaktree Holdings, Inc. hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the general partnership interests and limited partnership interests in Oaktree Capital Management, LP (the “Oaktree Capital Management Contributed Interests”) to Atlas OCM Holdings, and, as consideration for the Oaktree Capital Management Contributed Interests, Atlas OCM Holdings hereby issues to Oaktree Holdings, Inc., a number of class A units of Atlas OCM Holdings equal to the number of Class A Units of OCG LLC held by Atlas Holdings after the Effective Time, which shall be duly and validly issued (the “Atlas OCM Class A Subscription Interests”).

e. Issuance of Atlas OCM Units (“Step 15e”). Effective immediately following the completion of Step 15d, Atlas OCM Holdings hereby issues a number of class B units of Atlas OCM Holdings equal to the number of Class B Units of OCG LLC held by OCGH (the “Atlas OCM Class B Subscription Interests”) to OCGH.

f. Amendment and Restatement of Operating Agreement (“Step 15f”). Concurrently with the completion of Step 15e, Atlas OCM Holdings shall amend and restate its operating agreement to be in the form attached hereto as Exhibit D.

g. Formation of New GPs (“Step 15g”). Concurrently with the completion of Step 15f, OCGH hereby transfers, assigns, conveys and delivers all of its right, title and interest in and to Oaktree Investment Holdings GP LLC, a Delaware limited liability company, to Atlas OCM Holdings for no consideration.

h. Contribution of Oaktree Capital Management LP (“Step 15h”). Immediately following the consummation of Step 15g, Atlas OCM Holdings hereby contributes, transfers, assigns, conveys and delivers all of its right, title and interest in and to the general partnership interests and limited partnership interests in Oaktree Capital Management LP to Oaktree Capital Management GP LLC;

i. Resignation of Oaktree Holdings, Inc. (“Step 15i”). Effective immediately following the completion of Step 15h, (i) Oaktree Holdings, Inc. hereby resigns as the general partner of Oaktree Capital II LP, and Oaktree Capital II GP LLC is hereby appointed as general partner of Oaktree Capital II LP and (ii) Oaktree Holdings, Inc. hereby resigns as the general partner of Oaktree Investment Holdings LP, and Oaktree Investment Holdings GP LLC is hereby appointed as general partner of Oaktree Investment Holdings LP.

j. Resignation of Oaktree AIF Holdings, Inc. (“Step 15j”). Effective immediately following the completion of Step 15i, Oaktree AIF Holdings, Inc. hereby resigns as the general partner of Oaktree AIF Investments LP, and Oaktree AIF Investment GP LLC is hereby appointed as general partner of Oaktree AIF Investments LP.

10. Distributions of U.S. Blockers (“Step 16”). Effective as of October 1, 2019, OCG LLC hereby distributes to Atlas Holdings all of the issued and outstanding shares of common stock of Oaktree Holdings, Inc., and all of the issued and outstanding shares of common stock of Oaktree AIF Holdings Inc., (the “Oaktree Holdings and Oaktree AIF Holdings Transferred Interests”), and Atlas Holdings hereby acquires and accepts the conveyance, transfer, assignment and delivery of, the Oaktree Holdings and Oaktree AIF Holdings Transferred Interests.

11. OCGH LP Transfer of Class B Voting Shares (“Step 17”). Effective immediately following the completion of Step 16, OCGH hereby transfers, assigns, conveys and delivers all of its right, title and interest in and to the class B interests of Oaktree AIF Holdings, Inc. to Atlas Holdings for no consideration.

12. Repayment of Intercompany Notes (“Step 18”). Effective immediately following the completion of Step 17, (i) OCG LLC hereby distributes to Atlas Holdings all of OCG LLC’s rights and obligations with respect to intercompany notes payable by Oaktree Holdings, Inc. and (ii) Atlas Holdings hereby transfers, assigns, conveys and delivers all of its right, title and interest in and to all of the class A units of OCG LLC to BUSHI in consideration for the partial repayment of the Intercompany Note issued by Atlas Holdings to BUSHI.

13. U.S. Blocker Restructuring (“Step 19”). Effective immediately following the completion of Step 18, the parties set forth therein shall enter into the Agreement and Plan of Merger attached hereto as Exhibits E and F and, upon the effectiveness of the mergers contemplated therein, (i) Oaktree New Holdings LLC hereby distributes all of its limited partnership interests in Oaktree Capital II LP and Oaktree Investment Holdings LP to Atlas Holdings and (ii) immediately thereafter, Atlas Holdings hereby contributes all of the equity interests of Oaktree New Holdings LLC to Atlas Holdings II LLC, a Delaware limited liability company (“Atlas Holdings II”) and, in consideration therefor, Atlas Holdings II hereby issues to Atlas Holdings (i) a number of common shares in the capital of Atlas Holdings II (the “Atlas Holdings II Subscription Interests”) as fully paid and non-assessable shares and (ii)a note in the form attached hereto as Exhibit G (the “Atlas Holdings Note”).

II. Miscellaneous.

1. Further Assurances.  Each Party will take any and all actions, including the execution of consents, certificates, documents or instruments, necessary or appropriate to give effect to the transactions contemplated by this Agreement.

2. Stock or Other Interest Power. To the extent permitted by applicable law, with respect to any conveyance or distribution of equity interests (the “Transferred Interests”) of a Person (the “Issuer”) pursuant to the provisions hereof having certificated or uncertificated equity, this Agreement constitutes an irrevocable stock or other interest power and power of attorney of the applicable transferor with respect to such Transferred Interests, and the applicable transferor hereby irrevocably appoints any officer of such Issuer as its attorney-in-fact solely to cause the distribution and/or transfer of the applicable Transferred Interests on the books and records of such Issuer, with full power of substitution in the premises. Upon receipt by such Issuer of (i) this Agreement and the certificate(s), if any, representing such Transferred Interests, (ii) this Agreement and an affidavit of lost stock or other interest certificate for such Transferred Interests, if applicable, or (iii) this Agreement, if such Transferred Interests are uncertificated, the distribution and/or transfer of such Transferred Interests shall be recorded on the books and records of the applicable Issuer.

3. Assignment and Admission. Notwithstanding any provision of the governing documents of any Issuer, upon the transfer and/or distribution of the applicable Transferred Interests in an Issuer which is a limited partnership or limited liability company, the applicable transferee as set forth herein shall be admitted to such as a partner or member, as applicable, of such Issuer and shall be bound by the terms and conditions of the governing documents of such Issuer, and the applicable transferor shall cease to be a partner or member, as applicable, of such Issuer and shall cease to have or exercise any right or power as a partner or member, as applicable, of such Issuer. The Parties hereto agree that (i) the assignment of any Transferred Interests, (ii) the admission of any transferee as provided herein as a partner or member, as applicable, and (iii) the cessation of the transferor as a partner or member, as applicable, shall not dissolve the Issuer and such Issuer shall continue its legal existence. Subject to the terms of the governing documents of such Issuer, the governing documents of such Issuer shall be amended to reflect the assignment of the applicable Transferred Interests hereunder.

4. Amendments and Waivers.  (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each Party or, in the case of a waiver, by each Party against whom the waiver is to be effective. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the Parties hereto.

(b)    No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law.

5. Binding Effect; Benefit; Assignment.

(a) The provisions of this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the Parties and their respective successors and assigns.

(b)    No Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each of the other Parties. Any purported assignment, delegation or other transfer without such consent shall be void.

6. No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal or equitable rights hereunder.

7. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law that would cause the application of the laws of any jurisdiction other than the State of Delaware. The Parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any Party or any of its affiliates or against any Party or any of its affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the Parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court.

8. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

9. Counterparts; Effectiveness. This Agreement may be executed in one or more counterparts (including by facsimile or other electronic means), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each Party shall have received a counterpart hereof signed by all of the other Parties. Until and unless each Party has received a counterpart hereof signed by each other Party, this Agreement shall have no effect and no Party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

10. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other governmental authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

11. Entire Agreement. This Agreement is being executed and delivered pursuant to the Merger Agreement and effects the restructuring contemplated therein. This Agreement (including any exhibits and schedules attached hereto) and the Merger Agreement represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings between the parties hereto with respect to such subject matter. In the event of a conflict between any provision of this Agreement and any provision of the Merger Agreement, the provisions of the Merger Agreement shall prevail; provided, however, that this Agreement shall control with respect to the determination of assets that are transferred, exchanged, contributed, distributed, assigned and conveyed between the parties hereto.

12. Interpretation. Capitalized terms used and not defined herein shall have the meanings ascribed to them in the Merger Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified. All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any applicable law shall be deemed to refer to such applicable law as amended from time to time and, if applicable, to any rules or regulations promulgated thereunder. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References to “$” and “dollars” are to the currency of the United States.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the date set forth above.

BROOKFIELD ASSET MANAGEMENT INC.

By: /s/ Justin Beber                

Name: Justin Beber

Title: Chief Legal Officer

OAKTREE CAPITAL GROUP, LLC

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel    

BERLIN MERGER SUB, LLC

By:    /s/ Joshua Zinn                

Name: Joshua Zinn

Title: Vice President

OSLO HOLDINGS LLC

By: Oaktree Capital Group Holdings, L.P., its sole member

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OSLO HOLDINGS MERGER SUB LLC

By: Oaktree Holdings, LLC, its Managing Member

By: OAKTREE CAPITAL GROUP, LLC, its Managing Member

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

BROOKFIELD HOLDINGS CANADA INC.

By:    /s/Kathy Sarpash            

Name: Kathy Sarpash

Title: Vice President and Secretary

BROOKFIELD US HOLDINGS INC.

By: /s/Kathy Sarpash            

Name: Kathy Sarpash

Title: Vice President and Secretary

BROOKFIELD US INC.

By: /s/Mark Srulowitz            

Name: Mark Srulowitz

Title: President

ATLAS HOLDINGS, LLC

By:    /s/Joshua Zinn            

Name: Joshua Zinn

Title: Vice President

ATLAS OCM HOLDINGS, LLC

By: /s/Mark Srulowitz            

Name: Mark Srulowitz

Title: Vice President

OAKTREE CAPITAL GROUP HOLDINGS, L.P. for itself and as attorney-in-fact for each of the OCGH LPs

By: OAKTREE CAPITAL GROUP HOLDINGS GP, LLC, its General Partner

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE HOLDINGS, LLC

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OCM HOLDINGS I, LLC

By: OAKTREE HOLDINGS, LLC, its Managing Member

By: OAKTREE CAPITAL GROUP, LLC its Managing Member

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE HOLDINGS, LTD.

By: OAKTREE CAPITAL GROUP, LLC, its Director

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE HOLDINGS, INC.

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE AIF HOLDINGS, INC.

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE CAPITAL I, LP.

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE CAPITAL MANAGEMENT (CAYMAN), LP.

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE CAPITAL II, LP

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE INVESTMENT HOLDINGS LP

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE CAPITAL MANAGEMENT LP

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

OAKTREE AIF INVESTMENTS LP

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

ATLAS HOLDINGS II LLC

By: /s/Joshua Zinn            

Name: Joshua Zinn

Title: Vice President

OAKTREE NEW HOLDINGS LLC

By:/s/ Joshua Zinn                

Name: Joshua Zinn

Title: Vice President

OAKTREE AIF HOLDINGS II LLC

By:    /s/Joshua Zinn                

Name: Joshua Zinn

Title: Vice President

OAKTREE CAPITAL II GP LLC

By:    /s/ Joshua Zinn                

Name: Joshua Zinn

Title: Vice President

OAKTREE CAPITAL MANAGEMENT GP LLC

By:    /s/Mark Srulowitz            

Name: Mark Srulowitz

Title: Vice President

OAKTREE AIF INVESTMENT GP LLC

By:    /s/ Joshua Zinn                

Name: Joshua Zinn

Title: Vice President

OAKTREE INVESTMENT HOLDINGS GP LLC

By:    /s/ Todd Molz                

Name: Todd Molz

Title: General Counsel and Chief Administrative Officer

By:/s/Richard Ting                

Name: Richard Ting

Title: Managing Director

Associate General Counsel

EX-10.3

Exhibit 10.3

EXECUTION VERSION

THIRD AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT

This THIRD AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”), dated as of September 30, 2019 (the “Closing Date”), is hereby entered into by and among Brookfield Asset Management Inc., a corporation incorporated under the laws of the Province of Ontario (“Parent”), Oaktree Holdings, Inc., a Delaware corporation (“Holdings Inc.”), Oaktree AIF Holdings, Inc. (f/k/a Oaktree Media Holdings, Inc.), a Delaware corporation (“AIF Holdings Inc.”) (each of Holdings Inc. and AIF Holdings Inc. (including, for the avoidance of doubt, each successor thereto) a “Corporation” and collectively, the “Corporations”), Oaktree Capital II, L.P., a Delaware limited partnership (“Oaktree Capital II”), Oaktree Capital Management, L.P., a Delaware limited partnership (“OCM”), Oaktree Investment Holdings, L.P. a Delaware limited partnership (“Investment Holdings”), Oaktree AIF Investments, L.P. (f/k/a Oaktree Media Investments, L.P.), a Delaware limited partnership (“Oaktree AIF”), the entities set forth on the signature pages hereto (together with all other Persons (as defined herein) in which the Corporations acquire a partnership interest, limited liability company interest or similar interest after the date hereof and who execute and deliver a joinder contemplated in Section 7.12, the “Partnerships”), Oaktree Capital Group Holdings, L.P., a Delaware limited partnership (“OCGH”), and each of the limited partners of OCGH (the “Limited Partners”).

RECITALS

WHEREAS, the Limited Partners hold or held limited partnership interests (“OCGH Units”) in OCGH;

WHEREAS, OCGH holds limited partnership interests (“Partnership Units”) in each of the Partnerships, each of which is treated as a partnership for U.S. federal income tax purposes;

WHEREAS, the Limited Partners have, prior to the Signing Date, exchanged OCGH Units with the Corporations for cash, Class A Units or other consideration and the right to receive payments under this Agreement;

WHEREAS, in connection with an exchange of OCGH Units by certain Limited Partners, certain other Limited Partners (each such other Limited Partner with respect to such exchange, a “Surplus Partner”) were entitled to receive payments from the Corporations in exchange for certain equity interests of OCGH (“Surplus Interests”) pursuant to Section 6.3(b)(iii) of the Prior OCGH Partnership Agreement;

WHEREAS, following such exchanges, OCGH distributed Partnership Units to the Corporations in redemption of the OCGH Units acquired in such exchanges and each Corporation exchanged certain of such Partnerships Units with the other Corporation and the other general partners of the Partnerships in exchange for Partnership Units of the Partnerships of which such Corporation and other general partners were the general partners (any such subsequent exchange, an “OCGH Exchange”);

WHEREAS, OCGH and the Partnerships have had in effect an election under Section 754 of the Internal Revenue Code of 1986, as amended (the “Code”), for each Taxable Year in which a taxable exchange of OCGH Units (and, if applicable, Surplus Interests) for cash, Class A Units or other consideration prior to the Signing Date occurred, which election resulted in an adjustment to the tax basis of the assets owned by the Partnerships at the time of such exchanges of OCGH Units (and, if applicable, Surplus Interests) for cash, Class A Units or other consideration (collectively, an “Exchange”) (such time, the “Exchange Date”) (any such exchanges occurring on an Exchange Date prior to the Signing Date, a “Pre-Signing Exchange”) (such assets and any asset whose tax basis is determined, in whole or in part, by reference to the adjusted basis of any such asset, the “Reference Assets”) by reason of such Exchange, the OCGH Exchange immediately following such Exchange and the receipt of payments under this Agreement;

WHEREAS, the income, gain, loss, expense and other Tax items of (i) the Partnerships solely with respect to the Corporations may be affected by the Basis Adjustment (defined below) and (ii) the Corporations may be affected by the Imputed Interest (as defined below);

WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Basis Adjustment and Imputed Interest on the actual liability for Taxes of the Corporations;

WHEREAS, the parties executed a Tax Receivable Agreement, dated as of May 25, 2007 (the “Original Agreement”);

WHEREAS, the Original Agreement was amended and restated in its entirety by the execution of an Amended and Restated Tax Receivable Agreement, dated as of March 28, 2008 (the “First Amended Agreement”);

WHEREAS, the First Amended Agreement was amended and restated in its entirety by the execution of a Second Amended and Restated Tax Receivable Agreement on March 29, 2012;

WHEREAS, Oaktree Capital Group, LLC, a Delaware limited liability company (“Oaktree”), Oslo Holdings LLC, a Delaware limited liability company, Oslo Holdings Merger Sub LLC, Parent, and Berlin Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”), entered into an Agreement and Plan of Merger, dated as of the Signing Date (as may be amended, supplemented or waived from time to time in accordance with its terms, the “Merger Agreement”), pursuant to which, among other things, Merger Sub merged with and into Oaktree with Oaktree continuing as the surviving company in accordance with the terms set forth in the Merger Agreement;

WHEREAS, the parties intend (i) for the terms of this Agreement to continue to apply to Pre-Signing Exchanges and (ii) to terminate any rights to payments under this Agreement for exchanges of OCGH Units occurring on or following the Signing Date (any such exchanges occurring on an Exchange Date on or following the Signing Date, the “Post-Signing Exchanges”);

WHEREAS, Section 7.06 of the Second Amended Agreement provides that the Agreement may be amended in writing by each of the Corporations, on behalf of themselves and the respective Partnerships they Control, and by Senior Executives who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all Senior Executives hereunder if each of the Corporations had exercised its right of early termination on the date of the most recent Exchange prior to such amendment (excluding, for purposes of this sentence, all payments made to any Senior Executive pursuant to this Agreement since the date of such most recent Exchange) (the “Amending Parties”), unless such amendment would have a disproportionate effect on the payment certain Limited Partners will or may receive under this Agreement;

WHEREAS, the Amending Parties desire to amend and restate the Second Amended Agreement in a manner that would not have a disproportionate effect on the payment certain Limited Partners will or may receive under this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree to amend and restate the Second Amended Agreement in its entirety as follows:

Article I
DEFINITIONS

Section 1.01Definitions. As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

“Additional Payment” has the meaning set forth in the Exchange Agreement.

“Advisory Firm” means Simpson Thacher & Bartlett LLP, Munger, Tolles & Olson LLP, Pricewaterhouse Coopers LLP, Ernst & Young, LLP, or any other accounting firm or law firm that is nationally recognized as being expert in the relevant Tax matters.

“Advisory Firm Letter” shall mean a letter from the Advisory Firm stating that the relevant schedule, notice or other information to be provided or made available by the Corporations to the Limited Partners or Senior Executives’ Representative, as the case may be, and all supporting schedules and work papers were prepared in a manner consistent with the terms of this Agreement and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the facts and law in existence on the date such schedule, notice or other information is delivered or made available to the Limited Partners or Senior Executives’ Representative, as the case may be.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

“Agreed Rate” means LIBOR plus 100 basis points.

“Agreement” is defined in the preamble of this Agreement.

“AIF Holdings Inc.” is defined in the preamble of this Agreement.

“Amended Schedule” is defined in Section 2.04(b) of this Agreement.

“Amending Parties” is defined in the Recitals of this Agreement.

“Basis Adjustment” means the adjustment to the tax basis of a Reference Asset under Sections 1012, 732, 734(b), 743(b) and 754 of the Code and, in each case, comparable sections of state, local and foreign tax laws (as calculated under Section 2.01 of this Agreement) as a result of a Pre-Signing Exchange, the OCGH Exchange immediately following such Pre-Signing Exchange and the payments made pursuant to this Agreement. In the case of an interest in a Partnership that owns a Reference Asset and that has been the subject of a Pre-Signing Exchange and OCGH Exchange, if at any time after such Pre-Signing Exchange and OCGH Exchange the interest is transferred to (i) a Corporation or (ii) any entity that is owned directly or indirectly in whole or in part by a Corporation, the Basis Adjustment for such Reference Asset shall include, to the extent reasonably determined to be appropriate by such Corporation, any adjustment to the tax basis of the Reference Asset under Sections 1012, 732, 734(b), 743(b) and 754 of the Code and, in each case, comparable sections of state, local and foreign tax laws (as calculated under Section 2.01 of this Agreement) as a result of such transfer to the extent such adjustment does not exceed the unamortized Basis Adjustment for the Reference Asset as determined immediately before such transfer. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment resulting from a Pre-Signing Exchange and any corresponding OCGH Exchange immediately following such Exchange of one or more OCGH Units shall be determined separately for each exchanging Limited Partner and Surplus Partners, if any, with respect to such Pre-Signing Exchange and without regard to any Pre-Exchange Transfer of such OCGH Units and as if any such Pre-Exchange Transfer had not occurred.

A “Beneficial Owner” of a security is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose, or to direct the disposition of, such security. The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

“BUSI” means Brookfield US Inc., a Delaware corporation and an indirectly wholly-owned subsidiary of Parent.

“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.

“Change of Control” means the occurrence of any of the following events:

(i)any Person or any group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Securities and Exchange Act of 1934, or any successor provisions thereto, is or becomes the Beneficial Owner, directly or indirectly, of securities of Parent representing more than fifty percent (50%) of the combined voting power of Parent’s then outstanding voting securities; provided that in no event shall a Change of Control be deemed to occur if, following any such transaction or transactions, both (x) a majority of the Class B Limited Voting Shares are owned, beneficially or otherwise, by individuals who were, immediately prior to the consummation of such transaction, existing or former officers, directors and employees of Parent or their respective Related Parties and (y) a majority of the Class B Limited Voting Shares continue to have the right to elect at least 50% of the board of directors of Parent;

(ii)either (A) a majority of the Class B Limited Voting Shares cease to be owned, beneficially or otherwise, by existing or former officers, directors or employees of Parent or their respective Related Parties or (B) the Class B Limited Voting Shares cease to have the right to elect at least 50% of the board of directors of Parent;

(iii)Parent consummates any merger, amalgamation, scheme or plan of arrangement or consolidation or similar business combination transaction as a result of which (A) the holders of Parent’s capital stock issued and outstanding immediately prior to such transaction do not Beneficially Own, immediately after giving effect to such transaction, more than 50% of the combined voting power of the surviving or resulting entity; provided that in no event shall a Change of Control be deemed to occur if, following any such transaction or transactions, a majority of the Class B Limited Voting Shares are owned, beneficially or otherwise, by individuals who were, immediately prior to the consummation of such transaction, existing or former officers, directors and employees of Parent or their respective Related Parties or (B) the holders of a majority of the Class B Limited Voting Shares immediately prior to such transaction do not, immediately after giving effect to such transaction, have the right to elect at least 50% of the surviving or resulting entity’s board of directors; or

(iv)the date, after the expiration of the Initial Period, when the Permitted Oaktree Holders (as defined in the Oaktree Operating Agreement) no longer Beneficially Own (as defined in the Oaktree Operating Agreement) at least the Minimum Threshold (as defined in the Oaktree Operating Agreement.

Notwithstanding the foregoing, (A) except with respect to clause (ii) and clause (iii) above, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of Parent’s capital stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Parent immediately following such transaction or series of transactions, and (B) the parties agree that the transactions contemplated by the Merger Agreement shall not constitute a Change of Control for purposes of this Agreement.

“Class A Units” means Class A units of Oaktree.

“Class B Limited Voting Shares” means Class B limited voting shares of Parent.

“Closing Date” is defined in the preamble of this Agreement.

“Code” is defined in the Recitals of this Agreement.

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise, including as deemed hereunder.

“Corporation” and “Corporations” are defined in the preamble of this Agreement.

“Corporation Return” means the federal Tax Return and/or state and/or local and/or foreign Tax Return, as applicable, of either Holdings Inc. or AIF Holdings Inc. filed with respect to Taxes of any Taxable Year.

“Default Rate” means LIBOR plus 100 basis points.

“Determination” has the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state, local and foreign tax law, as applicable, or any other event (including the execution of a Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax.

“Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

“Early Termination Notice” is defined in Section 4.02 of this Agreement.

“Early Termination Schedule” is defined in Section 4.02 of this Agreement.

“Early Termination Payment” is defined in Section 4.03(b) of this Agreement.

“Early Termination Rate” means the lesser of (i) 6.5% and (ii) LIBOR plus 100 basis points.

“Exchange” is defined in the Recitals of this Agreement.

“Exchange Agreement” means that certain Third Amended and Restated Exchange Agreement, dated as of September 30, 2019, by and among Atlas Holdings, LLC, Atlas OCM Holdings, LLC, Oaktree, OCM Holdings I, LLC, Oaktree New Holdings, LLC, Oaktree AIF Holdings II, LLC, Oaktree Holdings, Ltd., OCGH, Oaktree Capital I, Oaktree Capital II, OCM, Oaktree Capital Management (Cayman), L.P., Oaktree AIF, Investment Holdings, OCGH ExchangeCo, L.P., the OCGH Limited Partners (as defined therein), (solely for certain limited purposes) Parent, and the other parties thereto from time to time.

“Exchange Basis Schedule” is defined in Section 2.02 of this Agreement.

“Exchange Date” is defined in the Recitals of this Agreement.

“Exchange Payment” means any Tax Benefit Payment or Early Termination Payment required to be made by a Corporation to the Limited Partners under this Agreement.

“Exchange Price” is the amount of cash, Class A Units or other consideration transferred to a Limited Partner and each applicable Surplus Partner, if any, pursuant to the Exchange as payment for the exchanged OCGH Units (and, if applicable, Surplus Interests), other than amounts payable pursuant to this Agreement.

“Excluded Items” means each of the following:

(i)any items of loss or deduction resulting from intercompany transactions between a Corporation and any Affiliate of such Corporation entered into after the Closing Date, other than the Interest Expense;

(ii)pre-existing net operating losses and other tax attributes of entities acquired after the Closing Date to which a Corporation becomes entitled as a result of an acquisition after the Closing Date, and

(iii)any net losses generated after the Closing Date by entities or businesses acquired after the Closing Date (calculated on a standalone basis for each such acquisition) to which a Corporation becomes entitled (other than by reason of an acquisition by any Oaktree Operating Group entities or any of their Subsidiaries).

“Expert” is defined in Section 7.09 of this Agreement.

“First Amended Agreement” is defined in the Recitals of this Agreement.

“Holdings Inc.” is defined in the preamble of this Agreement.

“Imputed Interest” means any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state, local and foreign tax law with respect to a Corporation’s payment obligations under this Agreement.

“Interest Amount” is defined in Section 3.01(b) of this Agreement.

“Interest Expense” is defined in Section 7.11(a) of this Agreement.

“Investment Holdings” is defined in the preamble of this Agreement.

“IRS” means the United States Internal Revenue Service.

“JAMS” is defined in Section 7.08 of this Agreement.

“LIBOR” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two days prior to the first day of such month, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as reported on Reuters Screen page “LIBO” or by any other publicly available source of such market rate) for London interbank offered rates for U.S. dollar deposits for such month (or portion thereof).

“Limited Partners” is defined in the preamble of this Agreement. The term “Limited Partner” shall include any applicable Surplus Partner as the context requires.

“Material Objection Notice” is defined in Section 4.02 of this Agreement.

“Merger Agreement” is defined in the Recitals of this Agreement.

“Merger Sub” is defined in the Recitals of this Agreement.

“Net Tax Benefit” is defined in Section 3.01(b) of this Agreement.

“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the tax basis that such asset would have had at such time if no Basis Adjustment had been made.

“Non-Stepped Up Tax Liability” means, with respect to any Taxable Year, the liability for Taxes of a Corporation or any Partnership in which such Corporation owns an interest, but only with respect to Taxes imposed on such Partnership and allocable to such Corporation using the same methods, elections, conventions and similar practices used on the relevant Corporation Return, but using the Non-Stepped Up Tax Basis instead of the tax basis of the Reference Assets and excluding any deduction attributable to the Imputed Interest.

“Oaktree” is defined in the Recitals of this Agreement.

“Oaktree AIF” is defined in the preamble of this Agreement.

“Oaktree Capital I” is defined in the definition of Oaktree Operating Group.

“Oaktree Capital II” is defined in the Recitals of this Agreement.

“Oaktree (Cayman)” is defined in the definition of Oaktree Operating Group.

“Oaktree Operating Agreement” means the operating agreement of Oaktree, as it may be amended or modified from time to time.

“Oaktree Operating Group” means, collectively, Oaktree Capital I, L.P., a Delaware limited partnership (“Oaktree Capital I”), Oaktree Capital II, OCM, Investment Holdings, Oaktree AIF and Oaktree Capital Management (Cayman), L.P., a Cayman Islands exempted limited partnership (“Oaktree (Cayman)”).

“Objection Notice” is defined in Section 2.04(a) of this Agreement.

“OCGH” is defined in the Recitals of this Agreement.

“OCGH Exchange” is defined in the Recitals of this Agreement.

“OCGH Partnership Agreement” means the limited partnership agreement of OCGH, as it may be amended or modified from time to time.

“OCGH Units” is defined in the Recitals of this Agreement.

“OCM” is defined in the preamble of this Agreement.

“Original Agreement” is defined in the Recitals of this Agreement.

“Parent” is defined in the Recitals of this Agreement.

“Partnership Agreement” means, with respect to a Partnership, the Amended and Restated Limited Partnership Agreement, Amended and Restated Limited Liability Company Agreement or similar agreement of such Partnership.

“Partnership Units” is defined in the Recitals of this Agreement.

“Partnerships” is defined in the Recitals of this Agreement.

“Payment Date” means any date on which a payment is required to be made pursuant to this Agreement.

“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

“Post-Signing Exchanges” is defined in the Recitals of this Agreement.

“Pre-Exchange Transfer” means any transfer (including upon the death of a Limited Partner) of one or more OCGH Units (i) that occurred prior to a Pre-Signing Exchange of such OCGH Units, and (ii) to which Section 734(b) or 743(b) of the Code applied.

“Pre-Signing Exchange” is defined in the Recitals of this Agreement.

“Prior OCGH Partnership Agreement” means the limited partnership agreement of OCGH, as amended, prior to the Sixth Amended and Restated Limited Partnership Agreement, dated September 30, 2019.

“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Non-Stepped Up Tax Liability over the actual liability (as determined under this Agreement) for Taxes of a Corporation or any Partnership in which such Corporation owns, or is deemed to own (pursuant to Section 7.11 hereunder), an interest, using the “with or without” methodology. If all or a portion of such actual tax liability for Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

“Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the actual liability (as determined under this Agreement) for Taxes of a Corporation or any Partnership in which such Corporation owns, or is deemed to own (pursuant to Section 7.11 hereunder), an interest over the Non-Stepped Up Tax Liability for such Taxable Year using the “with or without” methodology. If all or a portion of such actual tax liability for Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

“Receivable” of a Limited Partner means such Limited Partner’s rights, interests, and entitlements hereunder as of the date of this Agreement.

“Reconciliation Dispute” is defined in Section 7.09 of this Agreement.

“Reconciliation Procedures” is defined in Section 2.04(a) of this Agreement.

“Reference Assets” is defined in the Recitals of this Agreement.

“Related Parties” has the meaning set forth in the Exchange Agreement.

“Schedule” means any Exchange Basis Schedule, Tax Benefit Schedule and the Early Termination Schedule.

“Senior Executives” means John B. Frank, Bruce A. Karsh, Howard S. Marks, Sheldon M. Stone, Jay S. Wintrob and any additional individuals who may from time to time be designated by the general partner of OCGH as senior executives of OCGH, in each case for so long as such individual remains an officer or employee of OCGH or any Oaktree Operating Group entity.

“Senior Executives’ Representative” means Todd Molz or such other Person as designated in writing by OCGH.

“Service Partner” has the meaning set forth in the OCGH Partnership Agreement.

“Signing Date” means March 13, 2019.

“Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, or is deemed to own (pursuant to Section 7.11 hereunder), directly or indirectly, or otherwise controls, or is deemed to control, more than 50% of the voting shares or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

“Successor Funds” is defined in Section 7.11(a) of this Agreement.

“Surplus Interest” is defined in the Recitals of this Agreement.

“Surplus Partner” is defined in the Recitals of this Agreement.

“Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.

“Tax Benefit Schedule” is defined in Section 2.03 of this Agreement.

“Tax Return” means any return, declaration, report or similar statement required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

“Taxable Year” means a taxable year as defined in Section 441(b) of the Code or comparable section of state, local or foreign tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made), ending on or after the Exchange Date in which there is a Basis Adjustment due to a Pre-Signing Exchange.

“Taxes” means any and all U.S. federal, state, local and foreign taxes, assessments or similar charges measured with respect to net income or profits and any interest related to such Tax.

“Taxing Authority” means any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

“Treasury Regulations” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

“Valuation Assumptions” means, as of an Early Termination Date, with respect to a Corporation, the assumptions that (1) in each Taxable Year ending on or after such Early Termination Date, the Corporation will have taxable income sufficient to fully utilize the deductions arising from the Basis Adjustment and the Imputed Interest during such Taxable Year, (2) the federal income tax rates and state, local and foreign income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, (3) any loss carryovers generated by the Basis Adjustment or the Imputed Interest and available as of the date of the Early Termination Schedule will be utilized by the Corporation on a pro rata basis from the date of the Early Termination Schedule through the scheduled expiration date of such loss carryovers, and (4) any non-amortizable assets are deemed to be disposed of (A) with respect to fund related assets, pro-rata over the number of years remaining under the original fund agreement until expected liquidation (without extensions) of the applicable fund (or, (y) if such expected liquidation date has passed, on the Early Termination Date and (z) if with respect to evergreen funds, after eighteen (18) months) and (B) with respect to all other assets, on the fifteenth anniversary of the earlier of the Basis Adjustment and the Early Termination Date.

ARTICLE IIDETERMINATION OF REALIZED TAX BENEFIT

Section 2.01Basis Adjustment. The Corporations and the Partnerships, on the one hand, and each Limited Partner and Surplus Partner with respect to such Pre-Signing Exchange, if any, on the other hand, acknowledge that, as a result of a Pre-Signing Exchange by such Limited Partner and the OCGH Exchange following such Exchange, each Corporation’s basis in the applicable Reference Assets was increased, if at all, as provided in the definition of Basis Adjustment. For the avoidance of doubt, payments made under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as Imputed Interest.

Section 2.02Exchange Basis Schedule. The schedule attached hereto as Exhibit A (the “Exchange Basis Schedule”) shall apply with respect to all Pre-Signing Exchanges. For the avoidance of doubt, no additional Exchange Basis Schedule shall be required to be delivered for any Taxable Year following the Taxable Year that includes the Signing Date.

Section 2.03Tax Benefit Schedule. Within sixty (60) calendar days after the filing of the U.S. federal income tax return of a Corporation for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, such Corporation shall notify the Senior Executives’ Representative that the Corporation shall, at a Senior Executive’s request, make available to the Senior Executives’ Representative a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year setting forth the Realized Tax Benefit or Realized Tax Detriment, as the case may be, for each Limited Partner (a “Tax Benefit Schedule”). The Schedule will become final as provided in Section 2.04(a) and may be amended as provided in Section 2.04(b) (subject to the procedures set forth in Section 2.04(b)). For periods after the Closing Date, the Tax Benefit Schedule shall be prepared by OCGH but shall be subject to review and comment by Parent in accordance with procedures equivalent to Section 2.04(a) (after treating references to a “Corporation” or the “Corporations” as references to “OCGH”, and references to a “Senior Executive”, the “Senior Executives”, or the “Senior Executives’ Representative” as references to “Parent”). Any disputes between OCGH and Parent shall be resolved in accordance with Section 7.08 and the Reconciliation Procedures (as defined below) (after treating references to a “Corporation” or the “Corporations” as references to “OCGH”, and references to a “Senior Executive”, the “Senior Executives”, or the “Senior Executives’ Representative” as references to “Parent”).

Section 2.04Procedures, Amendments

(a)Procedure. Every time a Corporation makes available to the Senior Executives’ Representative an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.04(b), but excluding any Early Termination Schedule or amended Early Termination Schedule, such Corporation shall also (x) make available to the Senior Executives’ Representative schedules and work papers providing reasonable detail regarding the preparation of the Schedule and an Advisory Firm Letter supporting such Schedule and (y) allow the Senior Executives reasonable access at no cost to the appropriate representatives at each of such Corporation and the Advisory Firm in connection with a review of such Schedule. The applicable Schedule shall become final and binding on all parties unless a Senior Executive, within thirty (30) calendar days after receiving notice that an Exchange Basis Schedule or amendment thereto is available or thirty (30) calendar days after receiving notice that a Tax Benefit Schedule or amendment thereto is available, provides such Corporation with notice of a material objection to such Schedule (“Objection Notice”) made in good faith; provided, for the sake of clarity, only Senior Executives shall have the right to object to any Schedule or Amended Schedule pursuant to this Section 2.04. If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within thirty (30) calendar days of receipt by such Corporation of an Objection Notice, if with respect to an Exchange Basis Schedule, or thirty (30) calendar days of receipt by such Corporation of an Objection Notice, if with respect to a Tax Benefit Schedule, after such Schedule was made available to the Senior Executives’ Representative, such Corporation and such Senior Executive shall employ the reconciliation procedures as described in Section 7.09 of this Agreement (the “Reconciliation Procedures”).

(b)Amended Schedule. The applicable Schedule for any Taxable Year may be amended from time to time by a Corporation (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was made available to the Senior Executives’ Representative, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year, or (vi) to adjust the Exchange Basis Schedule to take into account payments made pursuant to this Agreement (such Schedule, an “Amended Schedule”).

ARTICLE IIITAX BENEFIT PAYMENTS

Section 3.01Payments

(a)Payments. Within five (5) calendar days of a Tax Benefit Schedule becoming final in accordance with Section 2.04(a), the applicable Corporation shall pay to OCGH, as administrative agent on behalf of each applicable Limited Partner (including, if applicable, Surplus Partners), for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.01(b). The portion of such Tax Benefit Payment that is payable to OCGH on behalf of a particular Limited Partner (or Surplus Partner) shall be determined taking into account the portion of the Tax Benefit Payment attributable to such Limited Partner’s Exchanges for such Taxable Year relative to the aggregate Tax Benefit Payments attributable to all Limited Partners’ Exchanges for such Taxable Year (as determined in the reasonable discretion of the Corporation). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to a bank account of OCGH previously designated by OCGH to such Corporation. OCGH shall pay any Tax Benefit Amounts received on behalf of a Limited Partner to a bank account of such Limited Partner previously designated by such Limited Partner to OCGH; provided that notwithstanding anything to the contrary in this Agreement, OCGH shall be permitted to offset any Tax Benefit Payment received on behalf of a Limited Partner (or any Early Termination Payment pursuant to Section 4.01) by any Tax indemnity payments paid or payable by OCGH pursuant to a Partnership Agreement that are attributable to such Limited Partner to the extent such Tax indemnity payments did not reduce distributions to OCGH attributable to such Limited Partner; provided, further, that nothing in this Agreement shall expand any obligations of OCGH to indemnify for Taxes pursuant to a Partnership Agreement. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, federal income tax payments. Notwithstanding anything herein to the contrary, in no event shall the Aggregate Tax Benefit Payments attributable to a Limited Partner (other than amounts treated as interest under the Code) in respect of any Exchange under this Agreement exceed an amount equal to 85% of the portion of the Exchange Price paid to the Limited Partner in the Exchange or, at the option of the Limited Partner, an amount to be determined on the Exchange Date as agreed to by the Corporation and the Limited Partner.

(b)A “Tax Benefit Payment” means an amount, not less than zero, equal to 85% of the sum of the Net Tax Benefit and the Interest Amount. The “Net Tax Benefit” shall equal: (1) each Corporation’s Realized Tax Benefit, if any, for a Taxable Year plus (2) the excess of the Realized Tax Benefit reflected on an amended Tax Benefit Schedule for a previous Taxable Year over the Realized Tax Benefit (or Realized Tax Detriment (expressed as a negative number)) reflected on the Tax Benefit Schedule for such previous Taxable Year, minus (3) an amount equal to each Corporation’s Realized Tax Detriment (if any) for the current or any previous Taxable Year, minus (4) the excess of the Realized Tax Benefit reflected on a Tax Benefit Schedule for a previous Taxable Year over the Realized Tax Benefit (or Realized Tax Detriment (expressed as a negative number)) reflected on the amended Tax Benefit Schedule for such previous Taxable Year; provided, however, that to the extent the amounts described in 3.01(b)(2), (3) and (4) were taken into account in determining any Tax Benefit Payment in a preceding Taxable Year, such amounts shall not be taken into account in determining a Tax Benefit Payment attributable to any other Taxable Year; provided, further, for the avoidance of doubt, no Limited Partner shall be required to return any portion of any previously made Tax Benefit Payment. The “Interest Amount” shall equal the interest on the Net Tax Benefit calculated at the Agreed Rate from the due date (without extensions) for filing the Corporation Return with respect to Taxes for such Taxable Year until the Payment Date. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control (for the avoidance of doubt, other than the transactions contemplated by the Merger Agreement), all Tax Benefit Payments, whether paid with respect to OCGH Units that were exchanged (i) prior to the date of such Change of Control or (ii) on or after the date of such Change of Control, shall be calculated by utilizing Valuation Assumptions (1), (3), and (4), substituting in each case the terms “the closing date of a Change of Control” for an “Early Termination Date”. For the avoidance of doubt, no Tax Benefit Payment shall be payable with respect to any Post-Signing Exchange.

Section 3.02No Duplicative Payments. It is intended that the above provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement provide that 85% of each Corporation’s Realized Tax Benefit and Interest Amount is paid to OCGH on behalf of the Limited Partners pursuant to this Agreement. The provisions of this Agreement shall be construed in the appropriate manner as such intentions are realized.

Section 3.03Pro Rata Payments. For the avoidance of doubt, to the extent each of the Corporations’ deductions with respect to the Basis Adjustments are limited in a particular Taxable Year or such Corporation lacks sufficient funds to satisfy its obligations to make all Tax Benefit Payments due in a particular taxable year, the limitation on the deduction, or the Tax Benefit Payments that may be made, as the case may be, shall be taken into account or made to OCGH on behalf of each Limited Partner on a pro rata basis reflecting the proportion of the total amount of deductions attributable to such Limited Partner with respect to Pre-Signing Exchanges relative to the aggregate deductions for all of the Limited Partners with respect to such Pre-Signing Exchanges (using such methodology as determined in the reasonable discretion of such Corporation). For purposes of calculating the Tax Benefit Payments, if there is insufficient taxable income to fully utilize amortization and depreciation deductions attributable to Post-Signing Exchanges and Pre-Signing Exchanges, the amortization and depreciation deductions attributable to Post-Signing Exchanges shall be taken into account in determining Tax Benefit Payments on a pro rata basis with the amortization and depreciation deductions attributable to the Pre-Signing Exchanges. For example, if there is $100 of taxable income for a tax year (without regard to Exchanges), $100 of deductions attributable to Post-Signing Exchanges and $200 of deductions attributable to Pre-Signing Exchanges, $66.67 of the deductions attributable to Pre-Signing Exchanges shall be taken into account in calculating the Tax Benefit Payments.

ARTICLE IV
TERMINATION

Section 4.01Early Termination.

A Corporation may terminate its obligations under this Agreement with respect to all of the Pre-Signing Exchanges at any time by paying to OCGH on behalf of all of the Limited Partners the Early Termination Payment; provided, however, that this Agreement shall only terminate upon the receipt of the Early Termination Payment by all Limited Partners, and provided, further, that a Corporation may withdraw any notice to execute its termination rights under this Section 4.01 prior to the time at which any Early Termination Payment has been paid. Upon payment of the Early Termination Payments by a Corporation, such Corporation shall not have any further payment obligations under this Agreement in respect of such Limited Partners, other than for any (a) Tax Benefit Payment agreed to by such Corporation and the Senior Executives as due and payable but unpaid as of the Early Termination Notice and (b) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in clause (b) is included in the Early Termination Payment). For the avoidance of doubt, if a Corporation exercises its termination rights under this Section 4.01, it shall have no impact on its obligations with respect to the Additional Payment.

Section 4.02Early Termination Notice. If a Corporation chooses to exercise its right of early termination under Section 4.01 above, such Corporation shall deliver to the Limited Partners notice of such intention to exercise such right (“Early Termination Notice”) and shall deliver to the Senior Executives’ Representative a schedule (the “Early Termination Schedule”) specifying such Corporation’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment. The applicable Early Termination Schedule shall become final and binding on all parties unless a Senior Executive, within 30 calendar days after receiving the Early Termination Schedule thereto provides such Corporation with notice of a material objection to such Schedule made in good faith (“Material Objection Notice”); provided, for the sake of clarity, only a Senior Executive shall have the right to object to any Schedule or Amended Schedule pursuant to this Section 4.02. If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within 30 calendar days after receipt by such Corporation of the Material Objection Notice, such Corporation and a Senior Executive shall employ the Reconciliation Procedures as described in Section 7.09 of this Agreement.

Section 4.03Payment upon Early Termination. (a) Within three calendar days after agreement between the Senior Executives and a Corporation of the Early Termination Schedule, such Corporation shall pay to OCGH, as administrative agent on behalf of a Limited Partner an amount equal to the Early Termination Payment. Such payment shall be made by wire transfer of immediately available funds to a bank account designated by OCGH. OCGH shall pay any Early Termination Payment received on behalf of a Limited Partner to a bank account of such Limited Partner previously designated by such Limited Partner to OCGH, subject to its right to offset any such payment pursuant to Section 3.01(b).

(a)The “Early Termination Payment” as of the date of the delivery of an Early Termination Schedule shall equal with respect to a Limited Partner the present value, discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would be required to be paid by a Corporation to OCGH on behalf of such Limited Partner beginning from the Early Termination Date assuming the Valuation Assumptions are applied.

ARTICLE V
LATE PAYMENTS

Section 5.01Late Payments by a Corporation. The amount of all or any portion of any Exchange Payment not made to OCGH on behalf of the Limited Partners when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Exchange Payment was due and payable.

ARTICLE VINO DISPUTES; CONSISTENCY; COOPERATION

Section 6.01Senior Executive Participation in the Corporations’ and Partnerships’ Tax Matters. Except as otherwise provided herein, each Corporation shall have full responsibility for, and sole discretion over, all Tax matters concerning such Corporation and the Partnerships, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, each Corporation shall notify the Senior Executives’ Representative of, and keep the Senior Executives’ Representative reasonably informed with respect to the portion of any audit of such Corporation and the Partnerships by a Taxing Authority the outcome of which is reasonably expected to affect any Senior Executive’s rights and obligations under this Agreement, and shall provide to the Senior Executives reasonable opportunity to provide information and other input to such Corporation, the Partnerships and their respective advisors concerning the conduct of any such portion of such audit; provided, however, that each Corporation and the Partnerships shall not be required to take any action that is inconsistent with any provision of any of the Partnership Agreements.

Section 6.02Consistency. Except upon the written advice of an Advisory Firm, each Corporation and the Limited Partners agree to report and cause to be reported for all purposes, including federal, state, local and foreign Tax purposes and financial reporting purposes, all Tax-related items (including without limitation the Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that provided herein or (if not otherwise provided herein) specified by each Corporation in any Schedule required to be provided by or on behalf of such Corporation under this Agreement.

Section 6.03Cooperation. The Limited Partners shall (a) furnish to each Corporation in a timely manner such information, documents and other materials as such Corporation may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to each Corporation and its representatives to provide explanations of documents and materials and such other information as such Corporation or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and each Corporation shall reimburse the Limited Partners for any reasonable third-party costs and expenses incurred pursuant to this Section 6.03.

ARTICLE VII
MISCELLANEOUS

Section 7.01Notices. Any notice to any Service Partner that is required or permitted hereunder to be given to such Service Partner shall be in writing and shall be delivered to such Service Partner at the principal office of OCGH or at such other place where such Service Partner may be found. Any notice to a Service Partner which is delivered to the principal office of OCGH when such Service Partner is absent from the office shall, if reasonable efforts have been made to deliver it to him or her elsewhere, be deemed delivered to him or her on the next succeeding business day, if he or she does not actually receive such notice sooner. Any notice to any Limited Partner who is not a Service Partner that is required or permitted hereunder to be given to such Limited Partner shall be in writing and shall be delivered to such Limited Partner at the address or facsimile number of such Limited Partner shown on the register of OCGH. Any notice to a Corporation, Oaktree Capital II, OCM, Investment Holdings or Oaktree AIF required or permitted hereunder to be given to a Corporation, Oaktree Capital II, OCM, Investment Holdings or Oaktree AIF shall be in writing and shall be delivered to such Corporation, Oaktree Capital II, OCM, Investment Holdings or Oaktree AIF at the principal office of BUSI. A written notice may be delivered by facsimile transmission.

Section 7.02Counterparts. This Agreement may be executed in one or more counterparts, all of which shall constitute one and the same instrument.

Section 7.03Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.04Governing Law. This Agreement shall be construed and enforced, along with any rights, remedies, or obligations provided for hereunder, in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within the State of Delaware by residents of the State of Delaware; provided, that the enforceability of Section 7.08 shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and not the laws of the State of Delaware.

Section 7.05Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein, if the economic and legal substance of the arrangements contemplated hereby are not affected in any manner materially adverse to any party hereto. Upon such a determination, each of the Corporations and Senior Executives who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all Senior Executives hereunder if a Corporation had exercised its right of early termination on the date of the most recent Exchange shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby shall be consummated as originally contemplated to the fullest extent possible.

Section 7.06Successors; Assignment; Amendments; Waivers. No Limited Partner may assign this Agreement to any person without the prior written consent of each Corporation; provided, however, (i) that, except with respect to a transfer of OCGH Units in connection with an Exchange, to the extent OCGH Units are effectively transferred in accordance with the terms of the OCGH Partnership Agreement, the transferring Limited Partner shall have the option to assign to the transferee of such OCGH Units the transferring Limited Partner’s rights under this Agreement with respect to the OCGH Units, as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to each Corporation, agreeing to become an “Limited Partner” for all purposes of this Agreement, except as otherwise provided in such joinder, and (ii) that, once an Exchange has occurred, any and all payments that may become payable to a Limited Partner pursuant to this Agreement with respect to such Exchange may be assigned to any Person or Persons, as long as any such Person has executed and delivered, or, in connection with such assignment, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to each Corporation. For the avoidance of doubt, to the extent a Senior Executive or other Person transfers OCGH Units to a Senior Executive, the Senior Executive receiving such OCGH Units shall have all rights under this Agreement with respect to such transferred OCGH Units as such Senior Executive has, under this Agreement, with respect to the other OCGH Units held by him.

No provision of this Agreement may be amended unless such amendment is approved in writing by each of the Corporations, on behalf of themselves and the respective Partnerships they Control, and by Senior Executives who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all Senior Executives hereunder if each of the Corporations had exercised its right of early termination on the date of the most recent Exchange prior to such amendment (excluding, for purposes of this sentence, all payments made to any Senior Executive pursuant to this Agreement since the date of such most recent Exchange); provided, that no such amendment shall be effective if such amendment will have a disproportionate effect on the payments certain Limited Partners will or may receive under this Agreement unless all such Limited Partners disproportionately effected consent in writing to such amendment. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. Each Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of such Corporation or interests in a Partnership held by such Corporation, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that such Corporation would be required to perform if no such succession had taken place. Notwithstanding anything to the contrary herein, in the event a Senior Executive transfers his OCGH Units to a transferee as permitted under the OCGH Partnership Agreement, excluding any other Senior Executive, such Senior Executive shall have the right, on behalf of such transferee, to enforce the provisions of Sections 2.04, 4.02 or 6.01 with respect to such transferred OCGH Units.

Section 7.07Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.08Resolution of Disputes. (a) Any and all disputes, claims or controversies arising out of or relating to this Agreement, including any and all disputes, claims or controversies arising out of or relating to (i) the parties to this Agreement, (ii) any party’s rights and obligations hereunder, (iii) the validity or scope of any provision of this Agreement, (iv) whether a particular dispute, claim or controversy is subject to arbitration under this Section 7.08, and (v) the power and authority of any arbitrator selected hereunder, that are not resolved by mutual agreement shall be submitted to final and binding arbitration before Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. A party to this Agreement may commence the arbitration process by filing a written demand for arbitration with JAMS and delivering a copy of such demand to the other in accordance with the notice procedures set forth in Section 7.01. The arbitration shall take place in Wilmington, Delaware, and shall be conducted in accordance with the provisions of JAMS Streamlined Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties to the arbitration will cooperate with JAMS and with each other in selecting an arbitrator from JAMS’ panel of neutrals and in scheduling the arbitration proceedings. The arbitrator selected shall be neutral and a former Delaware chancery court judge or, if such judge is not available, a former U.S. federal judge with experience in adjudicating matters under the law of the State of Delaware; provided that if no such person is both willing and able to undertake such a role, the parties to the arbitration shall cooperate with each other and JAMS in good faith to select such other person as may be available from a JAMS’ panel of neutrals with experience in adjudicating matters under the law of the State of Delaware. The parties to the arbitration shall participate in the arbitration in good faith. Each party to the arbitration shall share the payment of those costs, if any, of arbitration that it must pay to cause this Section 7.08 to be enforceable, and all other costs of arbitration shall be shared equally between the parties to the arbitration.

(a)Neither party to the arbitration shall be entitled to undertake discovery in the arbitration; provided that, if discovery is required by applicable law, discovery shall not exceed (i) one witness deposition plus the depositions of any expert designated by the other party or parties, (ii) two interrogatories, (iii) ten document requests, and (iv) ten requests for admissions; provided further that additional discovery may be permitted to the extent such additional discovery is required by applicable law for this Section 7.08 to be enforceable. The arbitrator shall have no power to modify any of the provisions of this Agreement, to make an award or impose a remedy that, in each case, is not available to the Delaware chancery court or to make an award or impose a remedy that was not requested by a party to the dispute, and the jurisdiction of the arbitrator is limited accordingly. To the extent permitted by law, the arbitrator shall have the power to order injunctive relief, and shall expeditiously act on any petition for such relief.

(b)The provisions of this Section 7.08 may be enforced by any court of competent jurisdiction, and, to the extent permitted by law, the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys’ fees, to be paid by the party against whom enforcement is ordered. Notwithstanding any provision of this Agreement to the contrary, a party to an arbitration pursuant to this Section 7.08 shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any violation of the provisions of this Agreement pending a final determination on the merits by the arbitrator, and each party hereby consents that such a restraining order or injunction may be granted without the necessity of posting any bond.

(c)The details of any arbitration pursuant to this Section 7.08, including the existence and/or outcome of such arbitration and any information obtained in connection with any such arbitration, shall be kept strictly confidential and shall not be disclosed or discussed with any person not a party to the arbitration; provided that such party may make such disclosures as are required by applicable law or legal process; provided further that such party may make such disclosures to its, his or her attorneys, accountants or other agents and representatives who reasonably need to know the disclosed information in connection with any arbitration pursuant to this Section 7.08 and who are obligated to keep such information confidential to the same extent as such party. If either party to the arbitration, as the case may be, receives a subpoena or other request for information from a third party that seeks disclosure of any information that is required to be kept confidential pursuant to the prior sentence, or otherwise believes that it, he or she may be required to disclose any such information, such the party to the arbitration, as the case may be, shall (i) promptly notify the other party to the arbitration and (ii) reasonably cooperate with such other party in taking any legal or otherwise appropriate actions, including the seeking of a protective order, to prevent the disclosure, or otherwise protect the confidentiality, of such information.

(d)For the avoidance of doubt, (i) any arbitration pursuant to this Section 7.08 shall not include any disputes, claims or controversies that do not arise out of or relate to this Agreement, and (ii) any arbitration pursuant to this Section 7.08 of disputes, claims or controversies arising out of or relating to this Agreement is intended to be separate and distinct proceeding from any arbitration or other adjudication of disputes, claims or controversies between the parties to the arbitration, that do not arise out of or relate to this Agreement.

Section 7.09Reconciliation. In the event that a Corporation and a Senior Executive are unable to resolve a disagreement with respect to the matters governed by Sections 2.04, 4.02 and 6.02 within the relevant period designated in this Agreement (“Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with either such Corporation or such Senior Executive or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement is due or any Tax Return reflecting the subject of a disagreement is due, such payment shall be made on the date prescribed by this Agreement and such Tax Return may be filed as prepared by such Corporation, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by the Corporation; except as provided in the next sentence. Each participating Corporation and each Senior Executive shall bear their own costs and expenses of such proceeding, unless the Senior Executive has a prevailing position that is more than 10% of the payment at issue, in which case such Corporation shall reimburse such Senior Executive for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall be binding on such Corporation and such Senior Executive and may be entered and enforced in any court having jurisdiction.

Section 7.10Withholding. Each Corporation shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as such Corporation is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by the Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to OCGH on behalf of such Limited Partner.

Section 7.11Calculation of Tax Benefit Payments Attributable to Pre-Signing Exchanges. Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, for periods after the Closing Date, the parties intend for the Tax Benefit Payments to be determined as follows:

(a)As if (i) the Corporations were corporations or associations taxable as corporations for U.S. federal income tax purposes, (ii) the Corporations were a stand-alone affiliated group, (iii) the Corporations were not part of any other affiliated group (including any affiliated group of which BUSI is the parent) (for the avoidance of doubt, disregarding any losses, deductions, net operating loss carryovers, tax credit carryovers or any other tax attributes of any members of such group other than the Corporations), (iv) the Corporations have no other assets, holdings, liabilities or activities other than (x) the Oaktree Operating Group entities they directly or indirectly own or (y) assets, holdings, liabilities or activities of any successor funds to any fund currently operated by the Oaktree Operating Group entities that are currently directly or indirectly owned by the Corporations (the “Successor Funds”), and (v) the Corporations incur interest expense in an amount equal to $40 million annually (the “Interest Expense”) (it being understood that no interest income of Parent or any of its Affiliates that corresponds to the Interest Expense shall be treated as income of the Corporations).

(b)The effects of any Excluded Items shall not be taken into account to the extent that giving effect to such Excluded Items would result in a reduction or delay in any payment required to be made under this Agreement, unless such items are items of the Oaktree Operating Group entities or any of their Subsidiaries.

(c)Transfers (directly or indirectly, including by way of merger and including transfers of assets that are deemed to occur for U.S. federal income tax purposes) of interests in or assets of the Oaktree Operating Group entities or the Successor Funds or the Reference Assets to Affiliates of Parent or Affiliates of the Corporations shall be ignored for purposes of calculating the Tax Benefit Payments and such interests in or assets of the Oaktree Operating Group entities or the Successor Funds or the Reference Assets shall be treated for all purposes of this Agreement as having been retained or held by the applicable Corporation or Oaktree Operating Group entity. If any entity obligated to make a payment under this Agreement transfers (directly or indirectly, including by way of merger and including transfers of assets that are deemed to occur for U.S. federal income tax purposes) one or more Reference Assets or interests in or assets of the Oaktree Operating Group entities or the Successor Funds to an entity that is both not a corporation and not an Affiliate of Parent or an Affiliate of the Corporations, the entity will be treated as having disposed of the Reference Assets or interests in or assets of Oaktree Operating Group entities or the Successor Funds in a fully taxable transaction on the date of such transfer for purposes of determining Tax Benefit Payments under this Agreement.

Section 7.12Partnerships. Each Corporation hereby agrees that, to the extent it acquires a general partnership interest, managing member interest or similar interest in any Person after the date hereof, it shall cause such Person to execute and deliver a joinder to this Agreement and become a “Partnership” for all purposes of this Agreement.

Section 7.13Conclusive Nature of Calculations. All determinations, interpretations, calculations, adjustments and other actions of a Corporation or any Partnership or a designee of any of the foregoing that are within such Person’s authority hereunder (including, without limitation, in connection with the preparation of any Schedule) shall be made in good faith by such Person and shall be binding and conclusive absent manifest error. In connection with any such determination, interpretation, calculation, adjustment or other action, each Corporation or any Partnership or the designee of any of the foregoing shall be entitled to resolve any ambiguity with respect to the manner in which such determination, interpretation, calculation, adjustment or other action is to be made or taken, and shall be entitled to interpret the provisions of this Agreement, in such a manner as it determines to be fair and equitable, and such resolution or interpretation shall be binding and conclusive absent manifest error.

[Signatures on following pages]

IN WITNESS WHEREOF, each of the Corporations and the Senior Executives have duly executed this Agreement as of the date first written above.

BROOKFIELD ASSET MANAGEMENT INC.

By: /s/ Justin Beber                    Name: Justin Beber
Title: Chief Legal Officer

OAKTREE HOLDINGS, INC.
(on its own behalf and on behalf of Oaktree Capital II, OCM and Investment Holdings)

By: /s/ Todd Molz        
Name: Todd Molz
Title: General Counsel and Chief Administrative Officer

By: /s/ Richard Ting                    
Name: Richard Ting
Title: Managing Director Associate General Counsel

OAKTREE AIF HOLDINGS, INC.
(on its own behalf and on behalf of Oaktree AIF)

By: /s/ Todd Molz        
Name: Todd Molz
Title: General Counsel and Chief Administrative Officer

By: /s/ Richard Ting                    
Name: Richard Ting
Title: Managing Director Associate General Counsel

OAKTREE CAPITAL GROUP HOLDINGS, L.P., for itself and as attorney-in-fact for all the limited partners of OCGH

By: OAKTREE CAPITAL GROUP HOLDINGS GP, LLC, its General partner

By: /s/ Todd Molz        
Name: Todd Molz
Title: General Counsel and Chief Administrative Officer

By: /s/ Richard Ting                    
Name: Richard Ting
Title: Managing Director Associate General Counsel

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jay S. Wintrob, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 of Oaktree Capital Group, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2019

/s/ Jay S. Wintrob

Jay S. Wintrob

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Daniel D. Levin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 of Oaktree Capital Group, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2019

/s/ Daniel D. Levin

Daniel D. Levin

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Oaktree Capital Group, LLC (the “Company”) for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jay S. Wintrob, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented.

Date: November 7, 2019

/s/ Jay S. Wintrob

Jay S. Wintrob

Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Oaktree Capital Group, LLC (the “Company”) for the quarter ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel D. Levin, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented.

Date: November 7, 2019

/s/ Daniel D. Levin

Daniel D. Levin

Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

XML

Condensed Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Series A Preferred Units
Preferred units, issued (in shares)	7,200,000	7,200,000
Preferred units, outstanding (in shares)	7,200,000	7,200,000
Series B Preferred Units
Preferred units, issued (in shares)	9,400,000	9,400,000
Preferred units, outstanding (in shares)	9,400,000	9,400,000
Class A Units
Common units, par value (in dollars per share)	$ 0	$ 0
Common units, authorized (in shares)	Unlimited	Unlimited
Common units, issued (in shares)	97,967,255	71,661,623
Common units, outstanding (in shares)	97,967,255	71,661,623
Class B Units
Common units, par value (in dollars per share)	$ 0	$ 0
Common units, authorized (in shares)	Unlimited	Unlimited
Common units, issued (in shares)	62,145,608	85,471,937
Common units, outstanding (in shares)	62,145,608	85,471,937
Oaktree Capital Group Excluding Consolidated Funds
Investments, at fair value	$ 50,461	$ 74,899

XML

Condensed Consolidated Statements of Changes in Unitholders' Capital (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2018
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period	$ 2,423,663	$ 2,150,416	$ 2,487,717	$ 2,020,617
Cumulative-effect adjustment from adoption of accounting guidance					$ 48,709
Issuance of units	0	226,915	0	620,334
Repurchase and cancellation of units	(2,239)	(1,362)	(12,191)	(231,720)
Purchase of non-controlling interests in subsidiary		0		(2,916)
Deferred tax effect resulting from the purchase of units	212,017		212,017	6,051
Equity reallocation between controlling and non-controlling interests	0	0	0	0
Capital increase related to equity-based compensation	26,680	14,651	60,685	43,095
Distributions declared	(507,895)	(97,491)	(818,857)	(409,900)
Net income	(16,690)	128,901	202,796	327,850
Foreign currency translation adjustment, net of tax	(5,780)	773	(2,411)	683
Unitholders' capital, end of period	2,129,756	2,422,803	2,129,756	2,422,803
Paid-in Capital
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period	937,880	871,776	893,043	788,413
Issuance of units		0		219,750
Repurchase and cancellation of units	(941)	(962)	(8,378)	(228,469)
Purchase of non-controlling interests in subsidiary				(1,320)
Deferred tax effect resulting from the purchase of units	212,017		212,017	6,051
Equity reallocation between controlling and non-controlling interests	267,715	4,514	304,280	78,269
Capital increase related to equity-based compensation	12,699	6,654	28,408	19,288
Distributions declared	(262,761)		(262,761)
Unitholders' capital, end of period	1,166,609	881,982	1,166,609	881,982
Retained Earnings
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period	60,056	62,579	100,683	80,128
Cumulative-effect adjustment from adoption of accounting guidance					20,355
Distributions declared	(43,408)	(39,126)	(173,733)	(160,883)
Net income	(16,648)	52,750	73,050	136,603
Unitholders' capital, end of period	0	76,203	0	76,203
Accumulated Other Comprehensive Income (Loss)
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period	2,404	420	1,053	443
Foreign currency translation adjustment, net of tax	(3,926)	344	(2,575)	321
Unitholders' capital, end of period	(1,522)	764	(1,522)	764
Non-controlling Interests in Consolidated Subsidiaries
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period	1,022,739	1,035,253	1,092,354	1,121,237
Cumulative-effect adjustment from adoption of accounting guidance					$ 28,354
Repurchase and cancellation of units	(1,298)	(400)	(3,813)	(3,251)
Purchase of non-controlling interests in subsidiary				(1,596)
Equity reallocation between controlling and non-controlling interests	(267,715)	(4,514)	(304,280)	(78,269)
Capital increase related to equity-based compensation	13,981	7,997	32,277	23,807
Distributions declared	(194,897)	(54,456)	(361,876)	(222,275)
Net income	(6,871)	72,005	109,259	187,945
Foreign currency translation adjustment, net of tax	(1,854)	429	164	362
Unitholders' capital, end of period	$ 564,085	1,056,314	$ 564,085	1,056,314
Non-controlling Interests in Consolidated Funds
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period		6,719		30,396
Distributions declared				(22,833)
Net income		237		(607)
Unitholders' capital, end of period		$ 6,956		$ 6,956
Class A Units | Common Units
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period (in shares)	75,649,000	71,175,000	71,662,000	65,310,000
Issuance of units (in shares)	25,529,000	384,000	29,713,000	6,534,000
Cancellation of units (in shares)	(3,122,000)	(27,000)	(3,149,000)	(112,000)
Repurchase and cancellation of units (in shares)	(89,000)	(21,000)	(259,000)	(221,000)
Unitholders' capital, end of period (in shares)	97,967,000	71,511,000	97,967,000	71,511,000
Class B Units | Common Units
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period (in shares)	84,001,000	86,007,000	85,472,000	90,976,000
Issuance of units (in shares)	3,675,000	68,000	5,113,000	182,000
Cancellation of units (in shares)	(200,000)	(428,000)	(3,036,000)	(428,000)
Repurchase and cancellation of units (in shares)	(25,330,000)	(21,000)	(25,403,000)	(5,104,000)
Unitholders' capital, end of period (in shares)	62,146,000	85,626,000	62,146,000	85,626,000
Series A Preferred Units | Preferred Stock
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period	$ 173,669	$ 173,669	$ 173,669	$ 0
Issuance of units (in shares)				173,669,000
Distributions declared	(2,981)	(3,909)	(8,943)	$ (3,909)
Net income	2,981	3,909	8,943	3,909
Unitholders' capital, end of period	173,669	173,669	173,669	173,669
Series B Preferred Units | Preferred Stock
Increase (decrease) in Stockholders' Equity:
Unitholders' capital, beginning of period	226,915	$ 0	226,915	$ 0
Issuance of units (in shares)		226,915,000		226,915,000
Distributions declared	(3,848)		(11,544)
Net income	3,848		11,544
Unitholders' capital, end of period	$ 226,915	$ 226,915	$ 226,915	$ 226,915

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DERIVATIVES AND HEDGING (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Net Forward Currency Sell Contracts Under Freestanding Derivatives

The fair value of freestanding derivatives consisted of the following:

	Assets				Liabilities
	Notional		Fair Value		Notional			Fair Value
As of September 30, 2019
Foreign-currency forward contracts	$	184,856	$	3,856	$	(65,140	)	$	(2,071	)
Cross-currency swap	232,827		13,074		—			—
Total	$	417,683	$	16,930	$	(65,140	)	$	(2,071	)
As of December 31, 2018
Foreign-currency forward contracts	$	58,254	$	1,654	$	(77,156	)	$	(2,318	)
Cross-currency swap	242,450		2,384		—			—
Total	$	300,704	$	4,038	$	(77,156	)	$	(2,318	)

Summary of Impact of Freestanding Derivative Instruments on Condensed Consolidated Statement of Operations

The following tables summarize net gains (losses) from derivatives held by the consolidated funds:

	Three Months Ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments
Foreign-currency forward contracts	$	(4,300	)	$	(276	)	$	1,496	$	1,193
Options and futures	—			—			185		(152		)
Total	$	(4,300	)	$	(276	)	$	1,681	$	1,041

	Nine Months Ended September 30,
	2019					2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments		Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments
Foreign-currency forward contracts	$	(1,960	)	$	412	$	428	$	17
Total-return and interest-rate swaps	—			—		858		29
Options and futures	—			—		232		(265		)
Total	$	(1,960	)	$	412	$	1,518	$	(219	)

Realized and unrealized gains and losses arising from freestanding derivatives were recorded in the condensed consolidated statements of operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Investment income	$	16,206	$	419	$	11,429	$	(1,898	)
General and administrative expense (1)	5,274		929		5,287		(374		)
Total	$	21,480	$	1,348	$	16,716	$	(2,272	)

(1)

To the extent that the Company’s freestanding derivatives are utilized to hedge its foreign-currency exposure to investment income and management fees earned from consolidated funds, the related hedged items are eliminated in consolidation, with the derivative impact (a positive number reflects a reduction in expenses) reflected in consolidated general and administrative expense.

Balance Sheet Offsetting Assets

The table below sets forth the setoff rights and related arrangements associated with derivatives held by the Company. The “gross amounts not offset in statements of financial condition” columns represent derivatives that management has elected not to offset in the consolidated statements of financial condition even though they are eligible to be offset in accordance with applicable accounting guidance.

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of September 30, 2019				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	3,856		$	2,071		$	—	$	1,785
Cross-currency swap	13,074			—			—		13,074
Subtotal	16,930			2,071			—		14,859
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,447			—			—		2,447
Total	$	19,377		$	2,071		$	—	$	17,306
Derivative Liabilities:
Foreign-currency forward contracts	(2,071		)	(2,071		)	—		—
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(1,536		)	—			—		(1,536		)
Total	$	(3,607	)	$	(2,071	)	$	—	$	(1,536	)

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of December 31, 2018				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	1,654		$	1,497		$	—	$	157
Cross-currency swap	2,384			—			—		2,384
Subtotal	4,038			1,497			—		2,541
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,275			—			—		2,275
Options and futures	189			—			—		189
Subtotal	2,464			—			—		2,464
Total	$	6,502		$	1,497		$	—	$	5,005
Derivative Liabilities:
Foreign-currency forward contracts	$	(2,318	)	$	(1,497	)	$	—	$	(821	)
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(643		)	—			—		(643		)
Total	$	(2,961	)	$	(1,497	)	$	—	$	(1,464	)

Balance Sheet Offsetting Liabilities

The table below sets forth the setoff rights and related arrangements associated with derivatives held by the Company. The “gross amounts not offset in statements of financial condition” columns represent derivatives that management has elected not to offset in the consolidated statements of financial condition even though they are eligible to be offset in accordance with applicable accounting guidance.

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of September 30, 2019				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	3,856		$	2,071		$	—	$	1,785
Cross-currency swap	13,074			—			—		13,074
Subtotal	16,930			2,071			—		14,859
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,447			—			—		2,447
Total	$	19,377		$	2,071		$	—	$	17,306
Derivative Liabilities:
Foreign-currency forward contracts	(2,071		)	(2,071		)	—		—
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(1,536		)	—			—		(1,536		)
Total	$	(3,607	)	$	(2,071	)	$	—	$	(1,536	)

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of December 31, 2018				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	1,654		$	1,497		$	—	$	157
Cross-currency swap	2,384			—			—		2,384
Subtotal	4,038			1,497			—		2,541
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,275			—			—		2,275
Options and futures	189			—			—		189
Subtotal	2,464			—			—		2,464
Total	$	6,502		$	1,497		$	—	$	5,005
Derivative Liabilities:
Foreign-currency forward contracts	$	(2,318	)	$	(1,497	)	$	—	$	(821	)
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(643		)	—			—		(643		)
Total	$	(2,961	)	$	(1,497	)	$	—	$	(1,464	)

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LEASES (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Components of Lease Expense

The components of lease expense included in general and administrative expense were as follows:

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost	$	4,739		$	14,226
Sublease income	(278		)	(535		)
Total lease cost	$	4,461		$	13,691

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	14,628
Weighted average remaining lease term for operating leases (in years)	9.5
Weighted average discount rate for operating leases	4.4		%

Maturities of Operating Lease Liabilities

As of September 30, 2019, maturities of operating lease liabilities were as follows:

Remainder of 2019	$	4,874
2020	18,717
2021	17,702
2022	17,135
2023	16,554
Thereafter	84,617
Total lease payments	159,599
Less: imputed interest	(28,317		)
Total operating lease liabilities	$	131,282

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LEASES

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

LEASES

LEASES

The Company has operating leases related to office space and certain equipment with remaining lease terms expiring within one year through 2031, some of which include options to extend the leases for up to five years and some of which include options to terminate the leases within one year. As of September 30, 2019, there were no finance leases outstanding and no additional operating leases that have not yet commenced.

The components of lease expense included in general and administrative expense were as follows:

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost	$	4,739		$	14,226
Sublease income	(278		)	(535		)
Total lease cost	$	4,461		$	13,691

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	14,628
Weighted average remaining lease term for operating leases (in years)	9.5
Weighted average discount rate for operating leases	4.4		%

As of September 30, 2019, maturities of operating lease liabilities were as follows:

Remainder of 2019	$	4,874
2020	18,717
2021	17,702
2022	17,135
2023	16,554
Thereafter	84,617
Total lease payments	159,599
Less: imputed interest	(28,317		)
Total operating lease liabilities	$	131,282

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DERIVATIVES AND HEDGING

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING

DERIVATIVES AND HEDGING

The fair value of freestanding derivatives consisted of the following:

	Assets				Liabilities
	Notional		Fair Value		Notional			Fair Value
As of September 30, 2019
Foreign-currency forward contracts	$	184,856	$	3,856	$	(65,140	)	$	(2,071	)
Cross-currency swap	232,827		13,074		—			—
Total	$	417,683	$	16,930	$	(65,140	)	$	(2,071	)
As of December 31, 2018
Foreign-currency forward contracts	$	58,254	$	1,654	$	(77,156	)	$	(2,318	)
Cross-currency swap	242,450		2,384		—			—
Total	$	300,704	$	4,038	$	(77,156	)	$	(2,318	)

Realized and unrealized gains and losses arising from freestanding derivatives were recorded in the condensed consolidated statements of operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Investment income	$	16,206	$	419	$	11,429	$	(1,898	)
General and administrative expense (1)	5,274		929		5,287		(374		)
Total	$	21,480	$	1,348	$	16,716	$	(2,272	)

(1) To the extent that the Company’s freestanding derivatives are utilized to hedge its foreign-currency exposure to investment income and management fees earned from consolidated funds, the related hedged items are eliminated in consolidation, with the derivative impact (a positive number reflects a reduction in expenses) reflected in consolidated general and administrative expense.

There were no derivatives outstanding that were designated as hedging instruments for accounting purposes as of September 30, 2019 and December 31, 2018.

Derivatives Held By Consolidated Funds

Certain consolidated funds utilize derivatives in their ongoing investment operations. These derivatives primarily consist of foreign-currency forward contracts and options utilized to manage currency risk, interest-rate swaps to hedge interest-rate risk, options and futures used to hedge certain exposures for specific securities, and total-return swaps utilized mainly to obtain exposure to leveraged loans or to participate in foreign markets not readily accessible. The primary risk exposure for options and futures is price, while the primary risk exposure for total-return swaps is credit. None of the derivative instruments are accounted for as a hedging instrument utilizing hedge accounting.

The following tables summarize net gains (losses) from derivatives held by the consolidated funds:

	Three Months Ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments
Foreign-currency forward contracts	$	(4,300	)	$	(276	)	$	1,496	$	1,193
Options and futures	—			—			185		(152		)
Total	$	(4,300	)	$	(276	)	$	1,681	$	1,041

	Nine Months Ended September 30,
	2019					2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments		Net Realized Gain (Loss) on Investments		Net Change in Unrealized Appreciation (Depreciation) on Investments
Foreign-currency forward contracts	$	(1,960	)	$	412	$	428	$	17
Total-return and interest-rate swaps	—			—		858		29
Options and futures	—			—		232		(265		)
Total	$	(1,960	)	$	412	$	1,518	$	(219	)

Balance Sheet Offsetting

The Company recognizes all derivatives as assets or liabilities at fair value in its condensed consolidated statements of financial condition. In connection with its derivative activities, the Company generally enters into agreements subject to enforceable master netting arrangements that allow the Company to offset derivative assets and liabilities in the same currency by specific derivative type or, in the event of default by the counterparty, to offset derivative assets and liabilities with the same counterparty. While these derivatives are eligible to be offset in accordance with applicable accounting guidance, the Company has elected to present derivative assets and liabilities based on gross fair value in its condensed consolidated statements of financial condition. The table below sets forth the setoff rights and related arrangements associated with derivatives held by the Company. The “gross amounts not offset in statements of financial condition” columns represent derivatives that management has elected not to offset in the consolidated statements of financial condition even though they are eligible to be offset in accordance with applicable accounting guidance.

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of September 30, 2019				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	3,856		$	2,071		$	—	$	1,785
Cross-currency swap	13,074			—			—		13,074
Subtotal	16,930			2,071			—		14,859
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,447			—			—		2,447
Total	$	19,377		$	2,071		$	—	$	17,306
Derivative Liabilities:
Foreign-currency forward contracts	(2,071		)	(2,071		)	—		—
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(1,536		)	—			—		(1,536		)
Total	$	(3,607	)	$	(2,071	)	$	—	$	(1,536	)

	Gross and Net Amounts of Assets (Liabilities) Presented			Gross Amounts Not Offset in Statements of Financial Condition					Net Amount
As of December 31, 2018				Derivative Assets (Liabilities)			Cash Collateral Received (Pledged)
Derivative Assets:
Foreign-currency forward contracts	$	1,654		$	1,497		$	—	$	157
Cross-currency swap	2,384			—			—		2,384
Subtotal	4,038			1,497			—		2,541
Derivative assets of consolidated funds:
Foreign-currency forward contracts	2,275			—			—		2,275
Options and futures	189			—			—		189
Subtotal	2,464			—			—		2,464
Total	$	6,502		$	1,497		$	—	$	5,005
Derivative Liabilities:
Foreign-currency forward contracts	$	(2,318	)	$	(1,497	)	$	—	$	(821	)
Derivative liabilities of consolidated funds:
Foreign-currency forward contracts	(643		)	—			—		(643		)
Total	$	(2,961	)	$	(1,497	)	$	—	$	(1,464	)

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REVENUES

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

REVENUES

REVENUES

Revenues disaggregated by fund structure is set forth below. Revenues are affected by economic factors related to the asset class composition of the holdings and the contractual terms such as the basis for calculating the management fees and investors’ ability to redeem.

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Management Fees
Closed-end	$	120,462	$	112,415	$	345,091	$	353,225
Open-end	29,990		34,942		90,480		109,051
Evergreen	29,309		27,838		89,227		76,430
Total	$	179,761	$	175,195	$	524,798	$	538,706
Incentive Income
Closed-end	$	25,335	$	65,661	$	257,778	$	249,447
Evergreen	94		371		2,512		3,678
Total	$	25,429	$	66,032	$	260,290	$	253,125

Contract Balances

The Company receives management fees monthly or quarterly in accordance with its contracts with customers. Incentive income is received when the fund makes a distribution. Contract assets relate to the Company’s conditional right to receive payment for its performance completed under the contract. Receivables are recorded when the right to consideration becomes unconditional (i.e., only requires the passage of time). Contract liabilities (i.e., deferred revenues) relate to payments received in advance of performance under the contract. Contract liabilities are recognized as revenues when the Company provides investment management services.

The table below sets forth contract balances for the periods indicated:

	As of
	September 30, 2019			December 31, 2018
Receivables (1)	$	76,106		$	74,795
Contract assets (1)	—			288,176
Contract liabilities (2)	(26,383		)	(26,549		)

(1) The changes in the balances primarily related to accruals, net of payments received.

(2)

Revenue recognized in the three months and nine months ended September 30, 2019 from amounts included in the contract liability balance were $5.4 million and $17.1 million.

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NON-CONTROLLING REDEEMABLE INTERESTS IN CONSOLIDATED FUNDS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Non-Controlling Redeemable Interests in Consolidated Funds [Abstract]
Beginning balance	$ 961,622	$ 860,548
Initial consolidation of a fund	54,964	0
Deconsolidation of a fund	(424,603)	0
Contributions	519,684	107,962
Distributions	(107,071)	(214,096)
Net income	82,234	18,399
Change in distributions payable	4,652	(75,196)
Foreign currency translation and other	(10,020)	(1,310)
Ending balance	$ 1,081,462	$ 696,307

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DEBT OBLIGATIONS AND CREDIT FACILITIES - Debt Obligations (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Less: Debt issuance costs	$ (4,616,000)	$ (5,569,000)
Total debt obligations, net	971,854,000	864,529,000
Oaktree Capital Group Excluding Consolidated Funds
Debt Instrument [Line Items]
Total remaining principal	750,000,000	750,000,000
Less: Debt issuance costs	(3,657,000)	(4,055,000)
Total debt obligations, net	746,343,000	745,945,000
Oaktree Capital Group Excluding Consolidated Funds | Senior secured notes | $250,000, 3.78%, issued in December 2017, payable on December 18, 2032
Debt Instrument [Line Items]
Total remaining principal	250,000,000	250,000,000
Face amount	$ 250,000,000
Stated percentage	3.78%
Oaktree Capital Group Excluding Consolidated Funds | Senior secured notes | $50,000, 3.91%, issued in September 2014, payable on September 3, 2024
Debt Instrument [Line Items]
Total remaining principal	$ 50,000,000	50,000,000
Face amount	$ 50,000,000
Stated percentage	3.91%
Oaktree Capital Group Excluding Consolidated Funds | Senior secured notes | $100,000, 4.01%, issued in September 2014, payable on September 3, 2026
Debt Instrument [Line Items]
Total remaining principal	$ 100,000,000	100,000,000
Face amount	$ 100,000,000
Stated percentage	4.01%
Oaktree Capital Group Excluding Consolidated Funds | Senior secured notes | $100,000, 4.21%, issued in September 2014, payable on September 3, 2029
Debt Instrument [Line Items]
Total remaining principal	$ 100,000,000	100,000,000
Face amount	$ 100,000,000
Stated percentage	4.21%
Oaktree Capital Group Excluding Consolidated Funds | Senior secured notes | $100,000, 3.69%, issued in July 2016, payable on July 12, 2031
Debt Instrument [Line Items]
Total remaining principal	$ 100,000,000	100,000,000
Face amount	$ 100,000,000
Stated percentage	3.69%
Oaktree Capital Group Excluding Consolidated Funds | Credit Agreement | $250,000, variable-rate term loan, issued in March 2014, payable on March 29, 2023
Debt Instrument [Line Items]
Total remaining principal	$ 150,000,000	$ 150,000,000
Face amount	$ 250,000,000
Unused commitment fee	1.00%
Oaktree Capital Group Excluding Consolidated Funds | Credit Agreement | Revolving credit facility
Debt Instrument [Line Items]
Credit facility	$ 500,000,000
Unused commitment fee	0.10%
Borrowings under credit facilities	$ 0

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DEBT OBLIGATIONS AND CREDIT FACILITIES - Debt Obligations of CLOs (Details) - Consolidated Funds - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Fair Value	$ 5,553,144	$ 4,127,994
Senior secured notes
Debt Instrument [Line Items]
Fair Value	$ 5,354,638	$ 3,976,602
Weighted Average Interest Rate	2.95%	2.69%
Weighted Average Remaining Maturity (years)	9 years 1 month 6 days	9 years 10 months 24 days
Subordinated note
Debt Instrument [Line Items]
Fair Value	$ 198,506	$ 151,392
Weighted Average Remaining Maturity (years)	8 years 7 months 6 days	9 years 8 months 12 days

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EARNINGS PER UNIT - Computations of Net Income (Loss) Per Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Net income (loss) attributable to OCG Class A unitholders	$ (16,648)	$ 52,750	$ 73,050	$ 136,603
Weighted average number of Class A units outstanding (basic and diluted) (in shares)	75,995	71,369	74,005	70,167
Basic and diluted net income (loss) per Class A unit (in dollars per share)	$ (0.22)	$ 0.74	$ 0.99	$ 1.95

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EQUITY-BASED COMPENSATION - Equity Value Units (Details) - USD ($) $ in Millions		9 Months Ended
	Apr. 26, 2017	Sep. 30, 2019
Equity Value Units, Equity Settled
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards outstanding (in shares)		1,000,000
Equity Value Units, Cash Settled
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards outstanding (in shares)		1,000,000
Equity Value Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recapitalization percentage		33.33%
Number of units granted (in shares)	225,000
Unrecognized compensation cost		$ 0.3
Weighted average remaining service term		3 months

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LEASES - Supplemental Cash Flow Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Leases [Abstract]
Operating cash flows used for operating leases	$ 14,628
Weighted average remaining lease term for operating leases (in years)	9 years 6 months
Weighted average discount rate for operating leases	4.40%

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INVESTMENTS - Net Gains (Losses) from Investment Activities of Consolidated Funds (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Gain (Loss) on Securities [Line Items]
Net realized gain (loss) on consolidated funds’ investments	$ (3,664)	$ (9,812)	$ (9,036)	$ (12,509)
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments	(40,964)	10,552	17,967	(34,939)
Consolidated Funds | Not Designated as Hedging Instrument
Gain (Loss) on Securities [Line Items]
Net realized gain (loss) on consolidated funds’ investments	(3,664)	(9,812)	(9,036)	(12,509)
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments	(40,964)	10,552	17,967	(34,939)
Net Realized Gain (Loss) on Investments	(4,300)	1,681	(1,960)	1,518
Net Change in Unrealized Appreciation (Depreciation) on Investments	(276)	1,041	412	(219)
Consolidated Funds | Investments and other financial instruments | Not Designated as Hedging Instrument
Gain (Loss) on Securities [Line Items]
Net realized gain (loss) on consolidated funds’ investments	636	(11,493)	(7,076)	(14,027)
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments	(14,910)	51,969	137,322	(25,119)
Consolidated Funds | CLO Liabilities | Not Designated as Hedging Instrument
Gain (Loss) on Securities [Line Items]
Net realized gain (loss) on consolidated funds’ investments	0	0	0	0
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments	(25,778)	(42,458)	(119,767)	(9,601)
Consolidated Funds | Foreign-currency forward contracts | Not Designated as Hedging Instrument
Gain (Loss) on Securities [Line Items]
Net Realized Gain (Loss) on Investments	(4,300)	1,496	(1,960)	428
Net Change in Unrealized Appreciation (Depreciation) on Investments	(276)	1,193	412	17
Consolidated Funds | Total-return and interest-rate swaps | Not Designated as Hedging Instrument
Gain (Loss) on Securities [Line Items]
Net Realized Gain (Loss) on Investments			0	858
Net Change in Unrealized Appreciation (Depreciation) on Investments			0	29
Consolidated Funds | Options and futures | Not Designated as Hedging Instrument
Gain (Loss) on Securities [Line Items]
Net Realized Gain (Loss) on Investments	0	185	0	232
Net Change in Unrealized Appreciation (Depreciation) on Investments	$ 0	$ (152)	$ 0	$ (265)

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INVESTMENTS - Equity-method Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Schedule of Equity Method Investments [Line Items]
Revenues / investment income	$ 353,289	$ 489,240	$ 1,584,552	$ 1,423,993
Interest expense	(54,329)	(70,803)	(185,227)	(203,418)
Other expenses	(157,878)	(210,752)	(639,180)	(628,109)
Net realized and unrealized gain (loss) on investments	(204,820)	832,725	916,097	2,178,524
Net income (loss)	$ (63,738)	$ 1,040,410	$ 1,676,242	$ 2,770,990
Maximum
Schedule of Equity Method Investments [Line Items]
Ownership percentage	2.50%		2.50%
Double Line
Schedule of Equity Method Investments [Line Items]
Ownership percentage	20.00%		20.00%

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FIXED ASSETS FIXED ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment
Fixed assets	$ 172,927	$ 167,594
Accumulated depreciation	(68,457)	(61,879)
Fixed assets, net	104,470	105,715
Furniture, equipment and capitalized software
Property, Plant and Equipment
Fixed assets	28,781	26,345
Leasehold improvements
Property, Plant and Equipment
Fixed assets	72,724	70,270
Corporate aircraft
Property, Plant and Equipment
Fixed assets	66,120	66,120
Other
Property, Plant and Equipment
Fixed assets	$ 5,302	$ 4,859

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RELATED-PARTY TRANSACTIONS - Amounts Due from and Due to Affiliates (Details) - Oaktree Capital Group Excluding Consolidated Funds - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Due from affiliates:
Loans	$ 6,416	$ 3,857
Amounts due from unconsolidated funds	66,490	72,588
Management fees and incentive income due from unconsolidated funds	76,106	362,971
Payments made on behalf of unconsolidated entities	3,220	3,469
Non-interest bearing advances made to certain non-controlling interest holders and employees	0	27
Total due from affiliates	152,232	442,912
Due to affiliates:
Due to OCGH unitholders in connection with the tax receivable agreement (please see note 16)	178,040	187,872
Amounts due to senior executives, certain non-controlling interest holders and employees	1,438	495
Total due to affiliates	$ 179,478	$ 188,367

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DERIVATIVES AND HEDGING - Fair Value of Freestanding Derivatives (Details) - Not Designated as Hedging Instrument - Oaktree Capital Group Excluding Consolidated Funds - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Derivative [Line Items]
Assets, Notional	$ 417,683	$ 300,704
Assets, Fair Value	16,930	4,038
Liabilities, Notional	(65,140)	(77,156)
Liabilities, Fair Value	(2,071)	(2,318)
Foreign-currency forward contracts
Derivative [Line Items]
Assets, Notional	184,856	58,254
Assets, Fair Value	3,856	1,654
Liabilities, Notional	(65,140)	(77,156)
Liabilities, Fair Value	(2,071)	(2,318)
Cross-currency swap
Derivative [Line Items]
Assets, Notional	232,827	242,450
Assets, Fair Value	13,074	2,384
Liabilities, Notional	0	0
Liabilities, Fair Value	$ 0	$ 0

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FAIR VALUE - Consolidated Funds Valuation of Investments and Other Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	$ 19,377	$ 6,502
Total derivatives	(3,607)	(2,961)
Consolidated Funds
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	8,266,799	6,531,385
Total derivatives		2,464
Deb obligations	(5,553,144)	(4,127,994)
Equity securities	0	(2,609)
Consolidated Funds | Options and futures
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives		189
Consolidated Funds | Level III
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	559,039	325,922
Consolidated Funds | Fair Value, Measurements, Recurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	8,266,799	6,531,385
Total derivatives	2,447	2,464
Total assets	8,269,246	6,533,849
Total derivatives	(1,536)	(643)
Total liabilities	(5,554,680)	(4,131,246)
Consolidated Funds | Fair Value, Measurements, Recurring | Equity securities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Equity securities	0	(2,609)
Consolidated Funds | Fair Value, Measurements, Recurring | CLO Debt Obligations
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	(5,553,144)	(4,127,994)
Consolidated Funds | Fair Value, Measurements, Recurring | CLO Debt Obligations | Senior secured notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	(5,354,638)	(3,976,602)
Consolidated Funds | Fair Value, Measurements, Recurring | CLO Debt Obligations | Subordinated notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	(198,506)	(151,392)
Consolidated Funds | Fair Value, Measurements, Recurring | Foreign-currency forward contracts
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	2,447	2,275
Total derivatives	(1,536)	(643)
Consolidated Funds | Fair Value, Measurements, Recurring | Options and futures
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	0	189
Consolidated Funds | Fair Value, Measurements, Recurring | Corporate debt – bank debt
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	6,914,924	5,352,978
Consolidated Funds | Fair Value, Measurements, Recurring | Corporate debt – all other
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	939,558	1,149,435
Consolidated Funds | Fair Value, Measurements, Recurring | Equities – common stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	199,246	27,546
Consolidated Funds | Fair Value, Measurements, Recurring | Equities – preferred stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	2,129	1,426
Consolidated Funds | Fair Value, Measurements, Recurring | Real estate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	210,942	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level I
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	3,022	25,117
Total derivatives	116	189
Total assets	3,138	25,306
Total derivatives	0	0
Total liabilities	0	(2,609)
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Equity securities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Equity securities	0	(2,609)
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | CLO Debt Obligations
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | CLO Debt Obligations | Senior secured notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | CLO Debt Obligations | Subordinated notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Foreign-currency forward contracts
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	116	0
Total derivatives	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Options and futures
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	0	189
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Corporate debt – bank debt
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Corporate debt – all other
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	0	634
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Equities – common stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	3,022	24,483
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Equities – preferred stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments		0
Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Real estate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level II
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	7,704,738	6,180,346
Total derivatives	2,331	2,275
Total assets	7,707,069	6,182,621
Total derivatives	(1,536)	(643)
Total liabilities	(5,554,680)	(4,128,637)
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Equity securities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Equity securities	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | CLO Debt Obligations
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	(5,553,144)	(4,127,994)
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | CLO Debt Obligations | Senior secured notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	(5,354,638)	(3,976,602)
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | CLO Debt Obligations | Subordinated notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	(198,506)	(151,392)
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Foreign-currency forward contracts
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	2,331	2,275
Total derivatives	(1,536)	(643)
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Options and futures
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Corporate debt – bank debt
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	6,758,814	5,216,923
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Corporate debt – all other
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	896,826	963,423
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Equities – common stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Equities – preferred stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Real estate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	49,098	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	559,039	325,922
Total derivatives	0	0
Total assets	559,039	325,922
Total derivatives	0	0
Total liabilities	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Equity securities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Equity securities	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | CLO Debt Obligations
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | CLO Debt Obligations | Senior secured notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | CLO Debt Obligations | Subordinated notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Deb obligations	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Foreign-currency forward contracts
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	0	0
Total derivatives	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Options and futures
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total derivatives	0	0
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Corporate debt – bank debt
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	156,110	136,055
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Corporate debt – all other
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	42,732	185,378
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Equities – common stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	196,224	3,063
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Equities – preferred stock
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	2,129	1,426
Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Real estate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total investments	$ 161,844	$ 0

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EQUITY-BASED COMPENSATION - Deferred Equity Units (Details) - OCGH Units $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exchange ratio	1
Vesting period	10 years
Nonvested units outstanding (in shares)	807,307,000
Unrecognized compensation cost | $	$ 1.4
Awards expected to vest (in shares)	39,808,000
Weighted average period of recognition non-vested equity-based awards	5 years 6 months
Lack-of-marketability discount	17.50%

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RELATED-PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Amounts Due from and Due to Affiliates

Amounts due from and to affiliates are set forth below. The fair value of amounts due from and to affiliates is a Level III valuation and was valued based on a discounted cash-flow analysis. The carrying value of amounts due from affiliates approximated fair value due to their short-term nature or because their average interest rate approximated the Company’s cost of debt. The fair value of amounts due to affiliates approximated $94,043 and $95,953 as of September 30, 2019 and December 31, 2018, respectively, based on a discount rate of 10.0%.

	As of
	September 30, 2019		December 31, 2018
Due from affiliates:
Loans	$	6,416	$	3,857
Amounts due from unconsolidated funds	66,490		72,588
Management fees and incentive income due from unconsolidated funds	76,106		362,971
Payments made on behalf of unconsolidated entities	3,220		3,469
Non-interest bearing advances made to certain non-controlling interest holders and employees	—		27
Total due from affiliates	$	152,232	$	442,912
Due to affiliates:
Due to OCGH unitholders in connection with the tax receivable agreement (please see note 16)	$	178,040	$	187,872
Amounts due to senior executives, certain non-controlling interest holders and employees	1,438		495
Total due to affiliates	$	179,478	$	188,367

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REVENUES - Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Receivables	$ 76,106	$ 76,106	$ 74,795
Contract assets	0	0	288,176
Contract liabilities	(26,383)	(26,383)	$ (26,549)
Revenue recognized from amounts included in contract liability balance	$ 5,400	$ 17,100

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SEGMENT REPORTING	9 Months Ended
	Sep. 30, 2019
Segment Reporting [Abstract]
SEGMENT REPORTING	SEGMENT REPORTINGAs a global investment manager, the Company provides investment management services through funds and separate accounts. The Company earns revenues from the management fees and incentive income generated by the funds that it manages. Management uses a consolidated approach to assess performance and allocate resources. As such, the Company’s business is comprised of one segment, the investment management business. The Company conducts its investment management business primarily in the United States, where substantially all of its revenues are generated.

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EQUITY-BASED COMPENSATION

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement, Noncash Expense [Abstract]

EQUITY-BASED COMPENSATION

EQUITY-BASED COMPENSATION

Restated Exchange Agreement

At the closing of the Mergers, Oaktree entered into a Third Amended and Restated Exchange Agreement that will, among other things, allow limited partners of OCGH to exchange (“Exchanges”) certain vested limited partnership units of OCGH (“OCGH Units”) for cash, Brookfield Class A Shares, notes issued by a Brookfield subsidiary or equity interests in a subsidiary of OCGH that will entitle such limited partners to the proceeds from a note, or a combination of the foregoing. Either of such notes will have a three-year maturity and will accrue interest at the then-current 5-year treasury note rate plus 3%. Only Converted Class A Units, OCGH Units issued and outstanding at the time of the closing of the Mergers, OCGH Units issued after the closing of the Mergers pursuant to agreements in effect on March 13, 2019, OCGH Units issuable upon vesting of certain phantom equity awards (“Phantom Units”) and other OCGH Units consented-to by Brookfield will be, when vested, eligible to participate in an Exchange. The form of the consideration in an Exchange is generally in the discretion of Brookfield, subject to certain limitations.

In general, OCGH limited partners will be entitled to provide an election notice to participate in an Exchange with respect to eligible vested OCGH Units during the first 60 calendar days of each year beginning January 1, 2022 (an “Open Period”). However, holders of Converted Class A Units and Phantom Units will be eligible to provide an election notice with respect to their vested units beginning as early as 2020 and each year thereafter subject to certain limitations. Each Exchange will thereafter be consummated within the first 155 days of such calendar year, subject to extension in certain circumstances.

Valuation

Except as described below, each OCGH Unit will be valued (i) by applying a 13.5x multiple to the trailing three-year average (or two-year average for Exchanges in 2022) of fee-related earnings less stock-based compensation at grant value and excluding depreciation and amortization and a 6.75x multiple to the trailing three-year average of net incentives created, and (ii) adding 100% of the value of net cash (defined as cash less the face value of debt and preferred stock, other than certain preferred stock issued in connection with certain Exchanges), 100% of the value of corporate investments and 75% of fund-level net accrued incentives as of December 31 of the prior year, in each case subject to certain adjustments. Amounts received in respect of each OCGH Unit will be reduced by the amount of any non-tax related distributions received in the calendar year in which the Exchange occurs, but increased by an amount accruing daily from January 1 of such year to the date of the closing of the Exchange at a rate per annum equal to the 5-year treasury note rate as of December 31 of the prior year plus 3%. However, in 2020 and 2021, Converted Class A Units and Phantom Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. Thereafter any such Converted Class A Units and Phantom Units will be valued using the same methodology applied to all other OCGH Units.

Annual Limits

Exchanges of OCGH Units, other than Converted Class A Units and Phantom Units, will be subject to certain annual caps and limitations as follows:

• Messrs. Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson and Larry Keele can, for the Open Period beginning in 2022, exchange up to 20% of the OCGH Units held by them at the closing of the Mergers (or issued pursuant to agreements in place on March 19, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 20% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges), such that they will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2026 (subject to yearly caps and inclusive of any prior exchanges).

• Current employees other than those included in the group named in the preceding bullet can, for the Open Period beginning in 2022, sell up to 12.5% of the OCGH Units held by them at the closing (or issued pursuant to agreements in place on March 13, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 12.5% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges) so long as they are employed by Oaktree or its subsidiaries at the

time of the exchange. They will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2029 (subject to yearly caps).

• Brookfield is not obligated to permit Exchanges that, in the aggregate together with Exchanges requested by all other OCGH limited partners, exceed certain maximum amounts per year. These maximum amounts are: 20% of the exchangeable OCGH Units in calendar year 2022, 25% in 2023, 30% in 2024, and 35% in 2025 and each year thereafter.

• In the event that OCGH limited partners wish to sell or exchange units in excess of the maximum amount for a given year, OCGH will reallocate the exchangeable units among the OCGH limited partners in its sole discretion so that the amount exchanged does not exceed the maximum amount for such year.

With respect to Exchanges of Converted Class A Units and Phantom Units, OCGH limited partners will not be entitled to exchange such units to the extent the aggregate exchange consideration payable in respect thereof, in any given Exchange, would exceed an amount equal to (i) the amount of exchange consideration that would have been payable in respect of Converted Class A Units and Phantom Units that were eligible for participation in the applicable Open Period in accordance with their original vesting schedule as of the date the notice for such Exchange was delivered plus (ii) $20 million; and in the event that OCGH limited partners deliver election notices that would result in such excess, OCGH will reallocate such units among the OCGH limited partners in its sole discretion.

In the event that OCGH limited partners would, following an Exchange, beneficially own less than 1% of the equity of the Oaktree Operating Group (as defined in the operating agreement of Oaktree, as amended from time to time), Brookfield can require that all remaining OCGH Units be exchanged on 36-months’ notice. In addition, following the 8th anniversary of the Closing Date, Brookfield can discontinue the Exchange rights on 36-months’ notice. In the event that OCGH limited partners would, following the final Exchange pursuant to a discontinuation notice, beneficially own less than 5% of the equity of the Oaktree Operating Group, Brookfield can require that all remaining OCGH Units be exchanged in such final Exchange. As a result of the foregoing, the earliest the exchange rights can be terminated is the 11th anniversary of the Closing Date. Following the delivery of a discontinuation notice, the caps and limits set forth above will cease to be in effect.

Revisions to the terms of the exchange agreement governing post-vesting restrictions and exchange consideration described above and to the terms of the operating agreement of the Company and the partnership agreement of OCGH resulted in a Type I modification of unvested Class A and OCGH units.  There was no incremental compensation cost resulting from the modifications.

Class A and OCGH Unit Awards

During the nine months ended September 30, 2019, the Company granted 1,494,324 Class A units and 1,873,155 restricted OCGH units to its employees and directors, subject to annual vesting over a weighted average period of approximately 5.9 years. The grant date fair value of OCGH units awarded during the nine months ended September 30, 2019 was determined by applying a 17.5% discount to the Class A unit trading price on the New York Stock Exchange as of the grant date. With respect to forfeitures, the Company has made an accounting policy election to account for forfeitures when they occur. Accordingly, no forfeitures have been assumed in the calculation of compensation expense.

As of September 30, 2019, the Company expected to recognize compensation expense on its unvested OCGH unit awards of $217.1 million over a weighted average period of 4.4 years.  

A summary of the status of the Company’s unvested OCGH unit awards and changes for the period presented are set forth below (actual dollars per unit):

	Converted Class A Units (1)				OCGH Units
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
Balance as of December 31, 2018	2,700,585		$	42.76	1,864,049		$	39.83
Granted	1,494,324		49.56		1,873,155		41.34
Vested	(975,072	)	43.06		(434,674	)	35.11
Forfeited	(98,301	)	44.53		—		—
Balance as of September 30, 2019	3,121,536		$	45.87	3,302,530		$	41.31

(1) At the Effective Time, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted Class A Unit”) and will thereafter be subject to the terms and conditions of the OCGH limited partnership agreement. The Converted Class A Units will (i) be subject to the same vesting terms that were applicable to such units prior to the Effective Time, (ii) be entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. However, in 2020 and 2021, Converted Class A Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. No unvested Class A Units or Converted Class A Units vested in connection with the Mergers.

Equity Value Units

OCGH equity value units (“EVUs”) represent special limited partnership units in OCGH that entitle the holder the right to receive special distributions that will be settled in OCGH units, based on value created during a specified period in excess of a fixed “Base Value.” The value created will be measured on a per unit basis, based on the appreciation of the Class A units and certain components of quarterly distributions with respect to OCGH units over the period beginning on January 1, 2015 and ending on each of December 31, 2019, December 31, 2020 and December 31, 2021, with one-third of the EVUs recapitalizing on each such date. As of September 30, 2019, the value created did not exceed the Base Value. EVUs also give the holder the right, subject to service vesting and Oaktree performance relative to the accreting Base Value, to receive certain quarterly distributions from OCGH. EVUs do not entitle the holder to any voting rights.

The value received under the EVUs will be reduced by (i) distributions received by the holder on 225,000 OCGH units granted to the holder on April 26, 2017, (ii) the value of the portion of profit sharing payments received by the holder attributable to the net incentive income received from certain funds, and (iii) the full value of the OCGH units granted to the holder on April 26, 2017. To the extent that the reduction relates to the value of any such OCGH units that are unvested at the time of the reduction, such OCGH units will vest at that time.

Certain EVUs provide the holder with liquidity rights in respect of the special distributions, if any, that will be settled in OCGH units. The Company accounts for EVUs with liquidity rights as liability-classified awards. As of September 30, 2019, there were 1,000,000 equity-classified EVUs and 1,000,000 liability-classified EVUs outstanding. As of September 30, 2019, the Company expected to recognize $0.3 million of compensation expense on its unvested EVUs over the next 0.25 years. Equity-classified EVUs that require future service are expensed on a straight-line basis over the requisite service period. Liability-classified EVUs are remeasured at the end of each quarter.

The fair value of EVUs was determined using a Monte Carlo simulation model. The fair value is affected by the Class A unit trading price and assumptions regarding certain complex and subjective variables, including the expected Class A unit trading price volatility, distributions and exercise timing, and the risk-free interest rate.

Deferred Equity Units

A deferred equity unit represents a special unit award that, when vested, will be settled with an unvested OCGH unit on a one-for-one basis. The number of deferred equity units that will vest is based on the achievement of certain performance targets measured through 2024. Once a performance target has been met, the applicable number of OCGH units will be issued and begin to vest over periods of up to 10.0 years. The holder of a deferred equity unit is not entitled to any distributions until settled by the issuance of an OCGH unit. As of September 30, 2019, there were 807,307 deferred equity units outstanding. As of September 30, 2019, the Company expected to recognize compensation expense of $1.4 million on 39,808 deferred equity units over a weighted average period of 5.5 years.

The fair value of the deferred equity units issued in the nine months ended September 30, 2019 was determined at the grant date based on the then-prevailing Class A unit trading price and reflected a 17.5% lack-of-marketability discount for the OCGH units that will be issued upon vesting.

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SEGMENT REPORTING (Details)	9 Months Ended
	Sep. 30, 2019 segment
Segment Reporting [Abstract]
Number of segments	1

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DERIVATIVES AND HEDGING - Summary of Freestanding Derivative Instruments on Income (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Gains and losses from freestanding derivative instruments	$ 21,480	$ 1,348	$ 16,716	$ (2,272)
Investment income
Derivative Instruments, Gain (Loss) [Line Items]
Gains and losses from freestanding derivative instruments	16,206	419	11,429	(1,898)
General and administrative expense
Derivative Instruments, Gain (Loss) [Line Items]
Gains and losses from freestanding derivative instruments	$ 5,274	$ 929	$ 5,287	$ (374)

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FAIR VALUE - Consolidated Funds Summary of Changes in Fair Value of Level III Investments (Details) - Consolidated Funds - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 226,689	$ 263,985	$ 325,922	$ 287,402
Deconsolidation of funds	(16,657)		(163,016)	(121,087)
Transfers into Level III	16,372	7,698	35,179	38,016
Transfers out of Level III	0	(11,549)	(68,428)	(26,189)
Purchases	353,767	90,607	481,106	231,363
Sales	(9,980)	(39,909)	(38,461)	(100,093)
Realized gains (losses), net	170	268	197	985
Unrealized appreciation (depreciation), net	(11,322)	(390)	(13,460)	313
Ending balance	559,039	310,710	559,039	310,710
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	(8,536)	188	18,048	336
Corporate debt – bank debt
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	101,494	83,529	136,055	86,999
Deconsolidation of funds	(5,441)		(54,895)	0
Transfers into Level III	9,853	7,698	32,711	36,627
Transfers out of Level III		(11,549)	(16,658)	(25,041)
Purchases	67,093	49,347	94,865	58,534
Sales	(8,763)	(22,253)	(25,937)	(51,577)
Realized gains (losses), net	(443)	144	(319)	612
Unrealized appreciation (depreciation), net	(7,683)	975	(9,712)	1,737
Ending balance	156,110	107,891	156,110	107,891
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	(5,455)	1,140	21,502	1,566
Corporate debt – all other
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	23,209	123,936	185,378	75,388
Deconsolidation of funds	(11,216)		(108,121)	0
Transfers into Level III	6,490	0	89	899
Transfers out of Level III	0	0	(51,770)	(490)
Purchases	25,102	41,063	27,489	119,328
Sales	(71)	(17,580)	(10,452)	(47,628)
Realized gains (losses), net	26	65	(100)	314
Unrealized appreciation (depreciation), net	(808)	(921)	219	(1,248)
Ending balance	42,732	146,563	42,732	146,563
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	(389)	(508)	(25)	(1,054)
Equities – common stock
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	42,972	54,934	3,063	3,427
Deconsolidation of funds	0		0	0
Transfers into Level III	29	0	2,379	490
Transfers out of Level III	0	0	0	(658)
Purchases	154,446	197	194,304	52,253
Sales	(1,146)	(76)	(2,072)	(387)
Realized gains (losses), net	587	59	616	59
Unrealized appreciation (depreciation), net	(664)	(273)	(2,066)	(343)
Ending balance	196,224	54,841	196,224	54,841
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	(525)	(273)	(1,528)	(343)
Preferred Stock
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	1,934	1,586	1,426	0
Deconsolidation of funds	0		0	0
Transfers into Level III	0	0	0	0
Transfers out of Level III	0	0	0	0
Purchases	80	0	322	1,248
Sales		0	0	0
Realized gains (losses), net		0	0	0
Unrealized appreciation (depreciation), net	115	(171)	381	167
Ending balance	2,129	1,415	2,129	1,415
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	115	(171)	381	167
Real Estate
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	57,080	0	0	121,588
Deconsolidation of funds	0		0	(121,087)
Transfers into Level III	0	0	0	0
Transfers out of Level III	0	0	0	0
Purchases	107,046	0	164,126	0
Sales		0	0	(501)
Realized gains (losses), net		0	0	0
Unrealized appreciation (depreciation), net	(2,282)	0	(2,282)	0
Ending balance	161,844	0	161,844	0
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$ (2,282)	$ 0	$ (2,282)	$ 0

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INCOME TAXES AND RELATED PAYMENTS (Details) $ in Thousands	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($) company	Sep. 30, 2019 USD ($) company	Sep. 30, 2018 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2040 USD ($)	Dec. 31, 2037 USD ($)	Dec. 31, 2036 USD ($)	Dec. 31, 2035 USD ($)	Dec. 31, 2034 USD ($)	Dec. 31, 2029 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)
Income Tax Disclosure [Abstract]
Number of wholly-owned subsidiaries | company	2	2
Percentage of cash savings		85.00%
Tax Receivable Agreement [Line Items]
Deferred tax effect resulting from the purchase of units	$ 212,017	$ 212,017	$ 6,051
Amount paid to unitholders under tax receivable agreement		$ 10,000
Forecast
Tax Receivable Agreement [Line Items]
Decreases resulting from settlements with taxing authorities				$ 3,000
Expected payments to unitholders under tax receivable agreement					$ 178,040
Brookfield Asset Management Inc. Merger Agreement, OCGH Unitholders | Forecast
Tax Receivable Agreement [Line Items]
Expected payments to unitholders under tax receivable agreement				$ 66,000							$ 66,000	$ 66,000
2007 private offering | Forecast
Tax Receivable Agreement [Line Items]
Expected payments to unitholders under tax receivable agreement										$ 11,987
Initial public offering | Forecast
Tax Receivable Agreement [Line Items]
Expected payments to unitholders under tax receivable agreement									$ 30,525
Offering | Forecast
Tax Receivable Agreement [Line Items]
Expected payments to unitholders under tax receivable agreement					$ 31,281	$ 28,093	$ 32,919	$ 43,235

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GOODWILL AND INTANGIBLES GOODWILL AND INTANGIBLES - Carrying Value of Intangible Assets (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, Impairment Loss	$ 0
Goodwill	69,300,000	$ 69,300,000
Carrying Value of Intangible Assets
Contractual rights	347,452,000	347,452,000
Accumulated amortization	(45,755,000)	(33,173,000)
Intangible assets, net	$ 301,697,000	$ 314,279,000

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INCOME TAXES AND RELATED PAYMENTS (Tables)

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Expected Estimated Future Payments to OCGH Agreements

Assuming no further material changes in the relevant tax law and that the Company earns sufficient taxable income to realize the full tax benefit of the increased amortization of the assets, the expected estimated future payments to OCGH unitholders under the Original TRA, as of September 30, 2019, are set forth below:

Transaction	Total Future Payments		Payments Through Fiscal Year
2007 private offering	$	11,987	2029
Initial public offering	30,525		2034
May 2013 offering	43,235		2035
March 2014 offering	32,919		2036
March 2015 offering	28,093		2037
February 2018 offering	31,281		2040
Total	$	178,040

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REVENUES - Revenues Disaggregated by Fund Structure (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 205,190	$ 241,227	$ 785,088	$ 791,831
Management Fees
Disaggregation of Revenue [Line Items]
Revenues	179,761	175,195	524,798	538,706
Closed-end
Disaggregation of Revenue [Line Items]
Revenues	120,462	112,415	345,091	353,225
Open-end
Disaggregation of Revenue [Line Items]
Revenues	29,990	34,942	90,480	109,051
Evergreen
Disaggregation of Revenue [Line Items]
Revenues	29,309	27,838	89,227	76,430
Incentive Income
Disaggregation of Revenue [Line Items]
Revenues	25,429	66,032	260,290	253,125
Closed-end
Disaggregation of Revenue [Line Items]
Revenues	25,335	65,661	257,778	249,447
Evergreen
Disaggregation of Revenue [Line Items]
Revenues	$ 94	$ 371	$ 2,512	$ 3,678

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Class A Unit Distribution

A distribution of $0.03 per Class A unit will be paid on November 12, 2019 to holders of record at the close of business on October 31, 2019.

Preferred Unit Distributions

A distribution of $0.414063 per Series A preferred unit will be paid on December 16, 2019 to Series A preferred unitholders of record at the close of business on December 1, 2019.

A distribution of $0.409375 per Series B preferred unit will be paid on December 16, 2019 to Series B preferred unitholders of record at the close of business on December 1, 2019.

Restructuring Transaction

On September 30, 2019, Oaktree and certain other entities entered into a Restructuring Agreement (the "Restructuring") pursuant to which Oaktree’s direct and indirect ownership of general partner and limited partner interests in certain Oaktree Operating Group entities were transferred to newly-formed, indirect subsidiaries of Brookfield as of October 1, 2019. As a result, as of October 1, 2019, the Oaktree Operating Group entities included in the Company’s financial statements after the Restructuring are Oaktree Capital I, which includes the majority of Oaktree’s investments in its funds, and OCM Cayman, which represents Oaktree’s non-U.S. fee business. The four other Oaktree Operating Group entities that are no longer controlled directly by OCG and deconsolidated as a result of the Restructuring are: (i) Oaktree Capital Management, L.P., which serves as the investment manager for the majority of Oaktree’s funds; (ii) Oaktree Capital II, L.P., which includes Oaktree’s investments in funds and businesses; (iii) Oaktree Investment Holdings, L.P., which holds certain corporate investments in other entities; and (iv) Oaktree AIF Investments, L.P., which primarily holds interests in certain Oaktree fund investments for regulatory or structuring purposes.

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INCOME TAXES AND RELATED PAYMENTS

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES AND RELATED PAYMENTS

INCOME TAXES AND RELATED PAYMENTS

Oaktree is a publicly traded partnership and Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc., two of its Intermediate Holding Companies, are wholly-owned corporate subsidiaries. Income earned by these corporate subsidiaries is subject to U.S. federal and state income taxation and taxed at prevailing rates. Income earned by non-corporate subsidiaries is not subject to U.S. federal corporate income tax and is allocated to the Oaktree Operating Group’s unitholders.  The Company’s effective tax rate is dependent on many factors, including the estimated nature of many amounts and the mix of revenues and expenses between the subsidiaries that are or are not subject to income tax; consequently, from period to period the effective tax rate is subject to significant variation. The Company’s effective tax rate used for interim periods is based on the estimated full-year income tax rate. Certain future items that cannot be reliably estimated, such as incentive income, are excluded from the estimated annual effective tax rate. The tax expense or benefit stemming from these items is recognized in the same period as the underlying income or expense.

Tax authorities currently are examining certain income tax returns of Oaktree, with certain of these examinations at an advanced stage. Over the next four quarters ending September 30, 2020, the Company believes that it is reasonably possible that one outcome of these examinations and expiring statutes of limitation on other items may be the release of up to approximately $3.0 million of previously accrued Operating Group income taxes. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to its tax examinations and that any settlements related thereto will not have a material adverse effect on the Company’s consolidated financial statements; however, there can be no assurances as to the ultimate outcomes.

Tax Receivable Agreement

Prior to the consummation of the Mergers, subject to certain restrictions and the approval of the Company’s board of directors, each holder of OCGH units had the right to exchange his or her vested units for, at the option of the Company’s board of directors, Class A units, an equivalent amount of cash based on then-prevailing market prices and/or other consideration of equal value. Certain of the Oaktree Operating Group entities made an election under Section 754 of the U.S. Internal Revenue Code, as amended, which have resulted in an adjustment to the tax basis of the assets owned by the Oaktree Operating Group at the time of any such exchange. These exchanges have resulted in increases in tax deductions and tax basis that would reduce the amount of tax that Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. would otherwise be required to pay in the future.

Oaktree Holdings, Inc. and Oaktree AIF Holdings, Inc. previously entered into a tax receivable agreement (the “Original TRA”) with OCGH unitholders that, as amended, provided for the payment to an exchanging or selling OCGH unitholder of 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income taxes that they actually realized (or were deemed to realize in the case of an early termination payment by Oaktree Holdings, Inc. or Oaktree AIF Holdings, Inc., or a change of control) as a result of an increase in the tax basis of the assets owned by the Oaktree Operating Group. When an exchange of OCGH units resulted in an increase to the tax basis of the assets owned by the Oaktree Operating Group, a deferred tax asset and an associated liability for payments to OCGH unitholders under the tax receivable agreement are recorded, subject to realizability

considerations. The establishment of a deferred tax asset increases additional paid-in capital because the transactions are between Oaktree and its unitholders.

Upon the closing of the Mergers, Oaktree entered into a Third Amended and Restated Tax Receivable Agreement (the “TRA Amendment”), which amended and restated the Original TRA.     

Pursuant to the TRA Amendment, the Original TRA no longer applies and no Tax Benefit Payments (as defined in the TRA Amendment) will be made with respect to any exchanges of OCGH Units that occur on or after March 13, 2019. With respect to any exchanges of OCGH Units that occurred prior to March 13, 2019, the TRA Amendment provides that Tax Benefit Payments will continue to be made with respect to such exchanges in accordance with the Original TRA (as amended in certain respects, including that such payments will be calculated without taking into account any tax attributes of Brookfield).

Upon the closing of the Mergers, the tax basis of the assets owned by the Oaktree Operating Group increased and as a result the Company recorded an increase of $212.0 million to its total deferred tax assets. In accordance with the above, there was no associated tax receivable agreement liability recorded with this exchange and the entire amount resulted in a corresponding increase to additional paid-in capital.

On each of the first, second and third anniversaries of the closing date, Brookfield will pay $66 million in the aggregate to the OCGH limited partners in consideration for certain tax benefits delivered upon the exchange of OCGH Units on the closing date and for future exchanges of OCGH Units following the closing date, which will be allocated among OCGH’s limited partners as set forth in the Exchange Agreement.

Assuming no further material changes in the relevant tax law and that the Company earns sufficient taxable income to realize the full tax benefit of the increased amortization of the assets, the expected estimated future payments to OCGH unitholders under the Original TRA, as of September 30, 2019, are set forth below:

Transaction	Total Future Payments		Payments Through Fiscal Year
2007 private offering	$	11,987	2029
Initial public offering	30,525		2034
May 2013 offering	43,235		2035
March 2014 offering	32,919		2036
March 2015 offering	28,093		2037
February 2018 offering	31,281		2040
Total	$	178,040

For the nine months ended September 30, 2019, $10.0 million was paid under the Original TRA.

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The Company’s other financial assets and financial liabilities by fair-value hierarchy level are set forth below. Please see notes 10 and 18 for the fair value of the Company’s outstanding debt obligations and amounts due from/to affiliates, respectively.

	As of September 30, 2019											As of December 31, 2018
	Level I		Level II			Level III			Total			Level I		Level II			Level III			Total
Assets
U.S. Treasury and other securities (1)	$	24,025	$	—		$	—		$	24,025		$	546,531	$	—		$	—		$	546,531
Corporate investments	—		4,663			45,636			50,299			—		29,476			45,426			74,902
Foreign-currency forward contracts (2)	—		3,856			—			3,856			—		1,654			—			1,654
Cross-currency swap (2)	—		13,074			—			13,074			—		2,384			—			2,384
Total assets	$	24,025	$	21,593		$	45,636		$	91,254		$	546,531	$	33,514		$	45,426		$	625,471
Liabilities
Contingent liability (3)	$	—	$	—		$	(4,518	)	$	(4,518	)	$	—	$	—		$	(6,657	)	$	(6,657	)
Foreign-currency forward contracts (4)	—		(2,071		)	—			(2,071		)	—		(2,318		)	—			(2,318		)
Total liabilities	$	—	$	(2,071	)	$	(4,518	)	$	(6,589	)	$	—	$	(2,318	)	$	(6,657	)	$	(8,975	)

(1) Carrying value approximates fair value due to the short-term nature.

(2) Amounts are included in other assets in the condensed consolidated statements of financial condition, except for $162 as of September 30, 2019 which is included within corporate investments in the condensed consolidated statements of financial condition.

(3) Amounts are included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition.

(4)

Amounts are included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition, except for $3 as of December 31, 2018, which is included within corporate investments in the condensed consolidated statements of financial condition.

Summary of Changes in Fair Value of Level III Investments

The table below sets forth a summary of changes in the fair value of Level III financial instruments:

	Three months ended September 30,
	2019					2018
	Corporate Investments		Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	42,234	$	(6,737	)	$	31,084		$	(9,129	)
Contributions or additions	883		—			10,258			—
Distributions	—		—			(290		)	—
Net gain (loss) included in earnings	2,519		2,219			(453		)	2,538
Ending balance	$	45,636	$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	2,519	$	2,219		$	(557	)	$	2,538

	Nine months ended September 30,
	2019						2018
	Corporate Investments			Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	45,426		$	(6,657	)	$	50,902		$	(18,778	)
Contributions or additions	937			—			16,668			—
Distributions	(7,181		)	—			(31,145		)	—
Net gain (loss) included in earnings	6,454			2,139			4,174			12,187
Ending balance	$	45,636		$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	6,454		$	2,139		$	3,102		$	12,187

Summary of Changes in Fair Value of Level III Investments

The following tables set forth a summary of changes in the fair value of Level III investments:

	Corporate Debt – Bank Debt			Corporate Debt – All Other			Equities – Common Stock			Equities – Preferred Stock			Real Estate			Total
Three Months Ended September 30, 2019
Beginning balance	$	101,494		$	23,209		$	42,972		$	1,934		$	57,080		$	226,689
Deconsolidation of funds	(5,441		)	(11,216		)	—			—			—			(16,657		)
Transfers into Level III	9,853			6,490			29			—			—			16,372
Transfers out of Level III	—			—			—			—			—			—
Purchases	67,093			25,102			154,446			80			107,046			353,767
Sales	(8,763		)	(71		)	(1,146		)	—			—			(9,980		)
Realized gains (losses), net	(443		)	26			587			—			—			170
Unrealized appreciation (depreciation), net	(7,683		)	(808		)	(664		)	115			(2,282		)	(11,322		)
Ending balance	$	156,110		$	42,732		$	196,224		$	2,129		$	161,844		$	559,039
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	(5,455	)	$	(389	)	$	(525	)	$	115		$	(2,282	)	$	(8,536	)
Three Months Ended September 30, 2018
Beginning balance	$	83,529		$	123,936		$	54,934		$	1,586		$	—		$	263,985
Transfers into Level III	7,698			—			—			—			—			7,698
Transfers out of Level III	(11,549		)	—			—			—			—			(11,549		)
Purchases	49,347			41,063			197			—			—			90,607
Sales	(22,253		)	(17,580		)	(76		)	—			—			(39,909		)
Realized gains (losses), net	144			65			59			—			—			268
Unrealized appreciation (depreciation), net	975			(921		)	(273		)	(171		)	—			(390		)
Ending balance	$	107,891		$	146,563		$	54,841		$	1,415		$	—		$	310,710
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	1,140		$	(508	)	$	(273	)	$	(171	)	$	—		$	188

	Corporate Debt – Bank Debt			Corporate Debt – All Other			Equities – Common Stock			Equities – Preferred Stock		Real Estate			Total
Nine months Ended September 30, 2019
Beginning balance	$	136,055		$	185,378		$	3,063		$	1,426	$	—		$	325,922
Deconsolidation of funds	(54,895		)	(108,121		)	—			—		—			(163,016		)
Transfers into Level III	32,711			89			2,379			—		—			35,179
Transfers out of Level III	(16,658		)	(51,770		)	—			—		—			(68,428		)
Purchases	94,865			27,489			194,304			322		164,126			481,106
Sales	(25,937		)	(10,452		)	(2,072		)	—		—			(38,461		)
Realized gains (losses), net	(319		)	(100		)	616			—		—			197
Unrealized appreciation (depreciation), net	(9,712		)	219			(2,066		)	381		(2,282		)	(13,460		)
Ending balance	$	156,110		$	42,732		$	196,224		$	2,129	$	161,844		$	559,039
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	21,502		$	(25	)	$	(1,528	)	$	381	$	(2,282	)	$	18,048
Nine Months Ended September 30, 2018
Beginning balance	$	86,999		$	75,388		$	3,427		$	—	$	121,588		$	287,402
Deconsolidation of funds	—			—			—			—		(121,087		)	(121,087		)
Transfers into Level III	36,627			899			490			—		—			38,016
Transfers out of Level III	(25,041		)	(490		)	(658		)	—		—			(26,189		)
Purchases	58,534			119,328			52,253			1,248		—			231,363
Sales	(51,577		)	(47,628		)	(387		)	—		(501		)	(100,093		)
Realized gains (losses), net	612			314			59			—		—			985
Unrealized appreciation (depreciation), net	1,737			(1,248		)	(343		)	167		—			313
Ending balance	$	107,891		$	146,563		$	54,841		$	1,415	$	—		$	310,710
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	1,566		$	(1,054	)	$	(343	)	$	167	$	—		$	336

The table below sets forth a summary of changes in the fair value of Level III financial instruments:

	Three months ended September 30,
	2019					2018
	Corporate Investments		Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	42,234	$	(6,737	)	$	31,084		$	(9,129	)
Contributions or additions	883		—			10,258			—
Distributions	—		—			(290		)	—
Net gain (loss) included in earnings	2,519		2,219			(453		)	2,538
Ending balance	$	45,636	$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	2,519	$	2,219		$	(557	)	$	2,538

	Nine months ended September 30,
	2019						2018
	Corporate Investments			Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	45,426		$	(6,657	)	$	50,902		$	(18,778	)
Contributions or additions	937			—			16,668			—
Distributions	(7,181		)	—			(31,145		)	—
Net gain (loss) included in earnings	6,454			2,139			4,174			12,187
Ending balance	$	45,636		$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	6,454		$	2,139		$	3,102		$	12,187

Summary of Valuation Techniques and Quantitative Information

The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of September 30, 2019:

Investment Type	Fair Value		Valuation Technique	Significant Unobservable Inputs (1)(2)	Range	Weighted Average (3)
Credit-oriented investments:
Consumer discretionary:	$	26,190	Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,340		Discounted cash flow (4)	Discount rate	10% – 18%	13%
Financials:	39,099		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,415		Discounted cash flow (4)	Discount rate	8% – 12%	11%
Health care:	35,560		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	666		Discounted cash flow (4)	Discount rate	16% – 18%	17%
Real estate:	20,572		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	702		Discounted cash flow (4)	Discount rate	17% – 19%	18%
Other:	53,041		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	14,257		Discounted cash flow (4)	Discount rate	8% – 18%	13%
Equity investments:
	26,632		Recent transaction price (8)	Quoted prices	Not applicable	Not applicable
	131,778		Discounted cash flow (4)	Discount rate	8% – 15%	11%
	39,578		Market approach (comparable companies) (6)	Earnings multiple (7)	4x – 10x	6x
	365		Market approach (comparable companies) (6)	Revenue multiple (9)	2x – 4x	3x
Real estate investments:
	146,208		Recent transaction price (8)	Quoted prices	Not applicable	Not applicable
	15,636		Discounted cash flow (4)	Discount rate	5% – 7%	6%
Total Level III investments	$	559,039

The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of December 31, 2018:

Investment Type	Fair Value		Valuation Technique	Significant Unobservable Inputs (1)(2)	Range	Weighted Average (3)
Credit-oriented investments:
Communication services:	$	20,746	Recent market information (5)	Quoted prices	Not applicable	Not applicable
	2,416		Discounted cash flow (4)	Discount rate	12% – 14%	13%
Financials:	108,277		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	3,608		Discounted cash flow (4)	Discount rate	9% – 15%	14%
Health care:	37,724		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	2,550		Discounted cash flow (4)	Discount rate	10% – 16%	14%
Real estate:	79,562		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,570		Discounted cash flow (4)	Discount rate	12% – 23%	14%
Other:	38,959		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	17,943		Discounted cash flow (4)	Discount rate	8% – 15%	13%
	5,078		Recent transaction price (8)	Not applicable	Not applicable	Not applicable
Equity investments:
	2,099		Discounted cash flow (4)	Discount rate	10% – 30%	12%
	2,390		Market approach (comparable companies) (6)	Earnings multiple (7)	4x – 10x	7x
Total Level III investments	$	325,922

(1) The discount rate is the significant unobservable input used in the fair-value measurement of performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments and real estate loan portfolios. An increase (decrease) in the discount rate would result in a lower (higher) fair-value measurement.

(2) Multiple of either earnings or underlying assets is the significant unobservable input used in the market approach for the fair-value measurement of distressed credit-oriented investments, credit-oriented investments in which the consolidated funds have a controlling interest in the underlying issuer, equity investments and certain real estate-oriented investments. An increase (decrease) in the multiple would result in a higher (lower) fair-value measurement.

(3) The weighted average is based on the fair value of the investments included in the range.

(4) A discounted cash-flow method is generally used to value performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments, real estate-oriented investments and real estate loan portfolios.

(5) Certain investments are valued using vendor prices or broker quotes for the subject or similar securities.  Generally, investments valued in this manner are classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.

(6) A market approach is generally used to value distressed investments and investments in which the consolidated funds have a controlling interest in the underlying issuer.

(7) Earnings multiples are based on comparable public companies and transactions with comparable companies. The Company typically utilizes multiples of EBITDA; however, in certain cases the Company may use other earnings multiples believed to be most relevant to the investment. The Company typically applies the multiple to trailing twelve-months’ EBITDA. However, in certain cases other earnings measures, such as pro forma EBITDA, may be utilized if deemed to be more relevant.

(8) Certain investments are valued based on recent transactions, generally defined as investments purchased or sold within six months of the valuation date. The fair value may also be based on a pending transaction expected to close after the valuation date.

(9)

Revenue multiples are based on comparable public companies and transactions with comparable companies. The Company typically applies the multiple to trailing twelve-months’ revenue. However, in certain cases other revenue measures, such as pro forma revenue, may be utilized if deemed to be more relevant.

The table below sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the Company’s Level III financial instruments:

	Fair Value as of							Significant Unobservable Input
Financial Instrument	September 30, 2019			December 31, 2018			Valuation Technique		Range	Weighted Average
Corporate investment – Limited partnership interests	$	45,636		$	45,426		Market approach (value of underlying assets)	Not applicable	Not applicable	Not applicable
Contingent liability	(4,518		)	(6,657		)	Discounted cash flow	Assumed % of total potential contingent payments	0% – 100%	24%

Valuation of Investments and Other Financial Instruments

The table below summarizes the investments and other financial instruments of the consolidated funds by fair-value hierarchy level:

	As of September 30, 2019										As of December 31, 2018
	Level I		Level II			Level III		Total			Level I			Level II			Level III		Total
Assets
Investments:
Corporate debt – bank debt	$	—	$	6,758,814		$	156,110	$	6,914,924		$	—		$	5,216,923		$	136,055	$	5,352,978
Corporate debt – all other	—		896,826			42,732		939,558			634			963,423			185,378		1,149,435
Equities – common stock	3,022		—			196,224		199,246			24,483			—			3,063		27,546
Equities – preferred stock			—			2,129		2,129			—			—			1,426		1,426
Real estate	—		49,098			161,844		210,942			—			—			—		—
Total investments	3,022		7,704,738			559,039		8,266,799			25,117			6,180,346			325,922		6,531,385
Derivatives:
Foreign-currency forward contracts	116		2,331			—		2,447			—			2,275			—		2,275
Options and futures	—		—			—		—			189			—			—		189
Total derivatives (1)	116		2,331			—		2,447			189			2,275			—		2,464
Total assets	$	3,138	$	7,707,069		$	559,039	$	8,269,246		$	25,306		$	6,182,621		$	325,922	$	6,533,849
Liabilities
CLO debt obligations:
Senior secured notes	$	—	$	(5,354,638	)	$	—	$	(5,354,638	)	$	—		$	(3,976,602	)	$	—	$	(3,976,602	)
Subordinated notes	—		(198,506		)	—		(198,506		)	—			(151,392		)	—		(151,392		)
Total CLO debt obligations (2)	—		(5,553,144		)	—		(5,553,144		)	—			(4,127,994		)	—		(4,127,994		)
Securities sold short:
Equity securities	—		—			—		—			(2,609		)	—			—		(2,609		)
Derivatives:
Foreign-currency forward contracts	—		(1,536		)	—		(1,536		)	—			(643		)	—		(643		)
Total derivatives (3)	—		(1,536		)	—		(1,536		)	—			(643		)	—		(643		)
Total liabilities	$	—	$	(5,554,680	)	$	—	$	(5,554,680	)	$	(2,609	)	$	(4,128,637	)	$	—	$	(4,131,246	)

(1) Amounts are included in other assets under “assets of consolidated funds” in the condensed consolidated statements of financial condition.

(2) The fair value of CLO liabilities is classified based on the more observable fair value of CLO assets. Please see notes 2 and 10 for more information.

(3) Amounts are included in accounts payable, accrued expenses and other liabilities under “liabilities of consolidated funds” in the condensed consolidated statements of financial condition

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DEBT OBLIGATIONS AND CREDIT FACILITIES (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt Obligations

The Company’s debt obligations are set forth below:

	As of
	September 30, 2019			December 31, 2018
$250,000, 3.78%, issued in December 2017, payable on December 18, 2032	$	250,000		$	250,000
$250,000, variable-rate term loan, issued in March 2014, payable on March 29, 2023 (1)	150,000			150,000
$50,000, 3.91%, issued in September 2014, payable on September 3, 2024	50,000			50,000
$100,000, 4.01%, issued in September 2014, payable on September 3, 2026	100,000			100,000
$100,000, 4.21%, issued in September 2014, payable on September 3, 2029	100,000			100,000
$100,000, 3.69%, issued in July 2016, payable on July 12, 2031	100,000			100,000
Total remaining principal	750,000			750,000
Less: Debt issuance costs	(3,657		)	(4,055		)
Debt obligations	$	746,343		$	745,945

(1)

The credit facility consists of a $150 million term loan and a $500 million revolving credit facility. Borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of Oaktree Capital Management, L.P., the interest rate on borrowings is LIBOR plus 1.00% per annum and the commitment fee on the unused portions of the revolving credit facility is 0.10% per annum. The credit agreement contains customary financial covenants and restrictions, including ones regarding a maximum leverage ratio and a minimum required level of assets under management (as defined in the credit agreement, as amended above). As of September 30, 2019, the Company had no outstanding borrowings under the revolving credit facility.

Future Principal Payments of Debt Obligations

As of September 30, 2019, future scheduled principal payments of debt obligations were as follows:

Remainder of 2019	$	—
2020	—
2021	—
2022	—
2023	150,000
Thereafter	600,000
Total	$	750,000

As of September 30, 2019, future scheduled principal or par value payments with respect to the debt obligations of CLOs were as follows:

Remainder of 2019	$	600,481
2020	169,372
2021	—
2022	—
2023	—
Thereafter	4,822,368
Total	$	5,592,221

Schedule of Collateralized Loan Obligation

Outstanding debt obligations of CLOs were as follows:

	As of September 30, 2019				As of December 31, 2018
	Fair Value (1)		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Fair Value (1)		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)
Senior secured notes	$	5,354,638	2.95%	9.1	$	3,976,602	2.69%	9.9
Subordinated notes (2)	198,506		N/A	8.6	151,392		N/A	9.7
Total CLO debt obligations	$	5,553,144			$	4,127,994

(1) The fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Please see notes 2 and 6 for more information.

(2) The subordinated notes do not have a contractual interest rate; instead, they receive distributions from the excess cash flows generated by the CLO.

The consolidated funds had the following debt obligations outstanding:

	Outstanding Amount as of						Facility Capacity		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Commitment Fee Rate	L/C Fee
Credit Agreement	September 30, 2019			December 31, 2018
Senior variable rate notes	$	976,470		$	870,098		$	976,470	3.39%	8.7	N/A	N/A
Less: Debt issuance costs	(4,616		)	(5,569		)
Total debt obligations, net	$	971,854		$	864,529

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Condensed Consolidated Statements of Financial Condition (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Receivable for securities sold	$ 76,106	$ 74,795
Total assets	11,739,195	10,432,178
Liabilities:
Debt obligations	971,854	864,529
Operating lease liabilities	131,282
Total liabilities	8,527,977	6,982,839
Commitments and contingencies (Note 17)
Non-controlling redeemable interests in consolidated funds	1,081,462	961,622
Unitholders’ capital:
Paid-in capital	1,166,609	893,043
Retained earnings	0	100,683
Accumulated other comprehensive income	(1,522)	1,053
Unitholders’ capital attributable to Oaktree Capital Group, LLC	1,565,671	1,395,363
Non-controlling interests in consolidated subsidiaries	564,085	1,092,354
Total unitholders’ capital	2,129,756	2,487,717
Total liabilities and unitholders’ capital	11,739,195	10,432,178
Series A Preferred Units
Unitholders’ capital:
Preferred stock	173,669	173,669
Series B Preferred Units
Unitholders’ capital:
Preferred stock	226,915	226,915
Class A Units
Unitholders’ capital:
Common stock	0	0
Class B Units
Unitholders’ capital:
Common stock	0	0
Consolidated Funds
Assets
Cash and cash-equivalents	615,567	370,790
Other assets	9,906	3,440
Investments, at fair value	8,266,799	6,531,385
Dividends and interest receivable	29,206	26,792
Due from brokers	123	11,599
Receivable for securities sold	75,928	65,884
Liabilities:
Accounts payable, accrued expenses and other liabilities	76,378	31,643
Debt obligations	5,553,144	4,127,994
Payables for securities purchased	467,389	450,172
Securities sold short, at fair value	0	2,609
Distributions payable	233	4,885
Borrowings under credit facilities	971,854	864,529
Oaktree Capital Group Excluding Consolidated Funds
Assets
Cash and cash-equivalents	356,431	460,937
U.S. Treasury and other securities	24,025	546,531
Corporate investments (includes $50,461 and $74,899 measured at fair value as of September 30, 2019 and December 31, 2018, respectively)	1,141,232	1,209,764
Due from affiliates	152,232	442,912
Deferred tax assets	441,322	229,100
Operating lease assets	102,608	0
Other assets	523,816	533,044
Investments, at fair value	50,461	74,899
Liabilities:
Accrued compensation expense	245,178	437,966
Accounts payable, accrued expenses and other liabilities	156,698	128,729
Due to affiliates	179,478	188,367
Debt obligations	746,343	745,945
Operating lease liabilities	$ 131,282	$ 0

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 285,030	$ 346,249
Adjustments to reconcile net income to net cash used in operating activities:
Adoption of revenue recognition standard	0	48,709
Investment income	(121,804)	(149,682)
Depreciation and amortization	19,732	19,412
Equity-based compensation	59,756	44,614
Net realized and unrealized (gain) loss from consolidated funds’ investments	(8,931)	47,448
Amortization (accretion) of original issue and market discount of consolidated funds’ investments, net	(4,305)	(3,488)
Income distributions from corporate investments in funds and companies	123,911	177,864
Other non-cash items	3,295	1,468
Cash flows due to changes in operating assets and liabilities:
Net cash used in operating activities	(2,796,179)	(138,569)
Cash flows from investing activities:
Purchases of U.S. Treasury and other securities	(602,600)	(791,401)
Proceeds from maturities and sales of U.S. Treasury and other securities	1,124,951	498,104
Corporate investments in funds and companies	(254,478)	(212,427)
Distributions and proceeds from corporate investments in funds and companies	373,916	245,801
Purchases of fixed assets	(6,366)	(3,527)
Net cash provided by (used in) investing activities	635,423	(263,450)
Cash flows from financing activities:
Net proceeds from issuance of preferred units	0	400,584
Net cash provided by financing activities	2,415,944	309,433
Effect of exchange rate changes on cash	(12,078)	1,497
Net increase (decrease) in cash and cash-equivalents	243,110	(91,089)
Deconsolidation of funds	(102,839)	(12,315)
Cash and cash-equivalents, beginning balance	831,727	959,465
Cash and cash-equivalents, ending balance	971,998	856,061
Total cash and cash-equivalents	831,727	959,465
Consolidated Funds
Cash flows due to changes in operating assets and liabilities:
Increase (decrease) in accounts payable, accrued expenses and other liabilities	26,111	9,619
Increase in dividends and interest receivable	(8,437)	(2,030)
Decrease in due from brokers	11,476	37,010
(Increase) decrease in receivables for securities sold	(27,609)	72,118
Increase in other assets	(7,074)	(724)
Increase (decrease) in payables for securities purchased	123,853	(212,499)
Purchases of securities	(5,571,689)	(3,443,337)
Proceeds from maturities and sales of securities	2,149,132	2,849,135
Cash flows from financing activities:
Distributions to non-controlling interests	(107,071)	(236,929)
Payment of debt issuance costs	(3,070)	(1,771)
Contributions from non-controlling interests	519,684	107,962
Proceeds from debt obligations issued by CLOs	3,892,380	1,170,317
Repayment on debt obligations issued by CLOs	(1,188,452)	(729,458)
Borrowings on credit facilities	505,521	0
Repayments on credit facilities	(372,000)	0
Cash and cash-equivalents, ending balance	615,567	312,832
Total cash and cash-equivalents	615,567	312,832
Oaktree Capital Group Excluding Consolidated Funds
Cash flows due to changes in operating assets and liabilities:
(Increase) decrease in other assets	(3,883)	28,353
Decrease in net due from affiliates	281,791	53,430
Decrease in accrued compensation expense	(191,859)	(47,365)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	65,325	(14,873)
Cash flows from financing activities:
Net proceeds from issuance of Class A units	0	219,750
Purchase of OCGH units	0	(219,525)
Repurchase and cancellation of units	(12,191)	(12,195)
Distributions to Class A unitholders	(436,494)	(160,883)
Distributions to preferred unitholders	(20,487)	(3,909)
Distributions to OCGH unitholders	(358,455)	(218,575)
Distributions to non-controlling interests	(3,421)	(3,700)
Payment of debt issuance costs	0	(2,235)
Cash and cash-equivalents, ending balance	356,431	543,229
Total cash and cash-equivalents	$ 356,431	$ 543,229

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FIXED ASSETS

9 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

FIXED ASSETS

FIXED ASSETS

Fixed assets, which consist of furniture and equipment, capitalized software, office leasehold improvements, and company-owned aircraft, are included in other assets in the condensed consolidated statements of financial position.

The following table sets forth the Company’s fixed assets and accumulated depreciation:

	As of
	September 30, 2019			December 31, 2018
Furniture, equipment and capitalized software	$	28,781		$	26,345
Leasehold improvements	72,724			70,270
Corporate aircraft	66,120			66,120
Other	5,302			4,859
Fixed assets	172,927			167,594
Accumulated depreciation	(68,457		)	(61,879		)
Fixed assets, net	$	104,470		$	105,715

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VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

The Company consolidates VIEs for which it is the primary beneficiary. VIEs include funds managed by Oaktree and CLOs for which Oaktree acts as collateral manager. The purpose of these VIEs is to provide investment opportunities for investors in exchange for management fees and, in certain cases, performance-based fees. While the investment strategies of the funds and CLOs differ by product, in general the fundamental risks of the funds and CLOs have similar characteristics, including loss of invested capital and reduction or absence of management and performance-based fees. As general partner or collateral manager, respectively, Oaktree generally considers itself the sponsor of the applicable fund or CLO. The Company does not provide performance guarantees and, other than capital commitments, has no financial obligation to provide funding to VIEs.

Consolidated VIEs

As of September 30, 2019, the Company consolidated 23 VIEs for which it was the primary beneficiary, including 10 funds managed by Oaktree, 12 CLOs for which Oaktree serves as collateral manager, and Oaktree AIF Holdings, Inc., which was formed to hold certain assets for regulatory and other purposes. Two of the consolidated funds, Oaktree Enhanced Income Retention Holdings III, LLC and Oaktree CLO RR Holder, LLC, were formed to satisfy risk retention requirements under Section 15G of the Exchange Act. As of December 31, 2018, the Company consolidated 23 VIEs.

As of September 30, 2019, the assets and liabilities of the 22 consolidated VIEs representing funds and CLOs amounted to $8.2 billion and $6.9 billion, respectively. The assets of these consolidated VIEs primarily consisted of investments in debt and equity securities, while their liabilities primarily represented debt obligations issued by CLOs. The assets of these VIEs may be used only to settle obligations of the same VIE. In addition, there is no recourse to the Company for the VIEs’ liabilities. In exchange for managing either the funds’ or CLOs’ collateral, the Company typically earns management fees and may earn performance fees, all of which are eliminated in consolidation. As of September 30, 2019, the Company’s investments in consolidated VIEs had a carrying value of $606.5 million, which represented its maximum risk of loss as of that date. The Company’s investments in CLOs are generally subordinated to other interests in the CLOs and entitle the Company to receive a pro-rata portion of the residual cash flows, if any, from the CLOs. Please see note 10 for more information on CLO debt obligations.

Unconsolidated VIEs

The Company holds variable interests in certain VIEs in the form of direct equity interests that are not consolidated because it is not the primary beneficiary, inasmuch as its fee arrangements are considered at-market and it does not hold interests in those entities that are considered more than insignificant.

The carrying value of the Company’s investments in VIEs that were not consolidated are shown below.

	Carrying Value as of
	September 30, 2019		December 31, 2018
Corporate investments	$	1,077,595	$	1,093,294
Due from affiliates	89,682		384,225
Maximum exposure to loss	$	1,167,277	$	1,477,519

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NON-CONTROLLING REDEEMABLE INTERESTS IN CONSOLIDATED FUNDS

9 Months Ended

Sep. 30, 2019

Non-Controlling Redeemable Interests in Consolidated Funds [Abstract]

NON-CONTROLLING REDEEMABLE INTERESTS IN CONSOLIDATED FUNDS

NON-CONTROLLING REDEEMABLE INTERESTS IN CONSOLIDATED FUNDS

The following table sets forth a summary of changes in the non-controlling redeemable interests in the consolidated funds. Dividends reinvested and in-kind contributions or distributions are non-cash in nature and have been presented on a gross basis in the table below.

	Nine Months Ended September 30,
	2019			2018
Beginning balance	$	961,622		$	860,548
Initial consolidation of a fund	54,964			—
Deconsolidation of a fund	(424,603		)	—
Contributions	519,684			107,962
Distributions	(107,071		)	(214,096		)
Net income	82,234			18,399
Change in distributions payable	4,652			(75,196		)
Foreign currency translation and other	(10,020		)	(1,310		)
Ending balance	$	1,081,462		$	696,307

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EQUITY-BASED COMPENSATION - Summary of Unvested Equity-Based Awards and Changes (Details) - $ / shares	9 Months Ended
	Sep. 30, 2019	Jan. 01, 2020
Class A Units
Number of Units
Beginning balance (in shares)	2,700,585
Granted (in shares)	1,494,324
Vested (in shares)	(975,072)
Forfeited (in shares)	(98,301)
Ending balance (in shares)	3,121,536
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)	$ 42.76
Granted (in dollars per share)	49.56
Vested (in dollars per share)	43.06
Forfeited (in dollars per share)	44.53
Ending balance (in dollars per share)	$ 45.87
OCGH Units
Number of Units
Beginning balance (in shares)	1,864,049
Granted (in shares)	1,873,155
Vested (in shares)	(434,674)
Forfeited (in shares)	0
Ending balance (in shares)	3,302,530
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)	$ 39.83
Granted (in dollars per share)	41.34
Vested (in dollars per share)	35.11
Forfeited (in dollars per share)	0
Ending balance (in dollars per share)	$ 41.31
Forecast | Class A Units
Weighted Average Grant Date Fair Value
Shares issued, price per share (in usd per share)		$ 49.00

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LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Operating lease cost	$ 4,739	$ 14,226
Sublease income	(278)	(535)
Total lease cost	$ 4,461	$ 13,691

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LEASES - Maturity of Operating Lease Liabilities (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Remainder of 2019	$ 4,874
2020	18,717
2021	17,702
2022	17,135
2023	16,554
Thereafter	84,617
Total lease payments	159,599
Less: imputed interest	(28,317)
Total operating lease liabilities	$ 131,282

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GOODWILL AND INTANGIBLES - Expected Future Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization	$ 4,200	$ 4,200	$ 12,600	$ 12,600
Remainder of 2019	4,198		4,198
2020	16,780		16,780
2021	15,112		15,112
2022	12,777		12,777
2023	12,777		12,777
Thereafter	240,053		240,053
Total	$ 301,697		$ 301,697

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DEBT OBLIGATIONS AND CREDIT FACILITIES - Credit Facilities of Consolidated Funds (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Less: Debt issuance costs	$ (4,616,000)	$ (5,569,000)
Total debt obligations, net	971,854,000	864,529,000
Credit Agreement | Senior variable rate notes
Debt Instrument [Line Items]
Senior variable rate notes	976,470,000	$ 870,098,000
Facility Capacity	$ 976,470,000
Weighted Average Interest Rate	3.39%
Weighted Average Remaining Maturity (years)	8 years 8 months 12 days

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UNITHOLDERS' CAPITAL - Changes in Company Ownership Interest (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stockholders' Equity Note [Abstract]
Net income (loss) attributable to OCG Class A unitholders	$ (16,648)	$ 52,750	$ 73,050	$ 136,603
Equity reallocation between controlling and non-controlling interests	267,715	4,514	304,280	78,269
Change from net income attributable to OCG Class A unitholders and transfers from non-controlling interests	$ 251,067	$ 57,264	$ 377,330	$ 214,872

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FAIR VALUE - Financial Instruments by Fair-value Hierarchy Level (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 19,377	$ 6,502
Contingent consideration	(4,500)	(6,700)
Derivative liabilities	(3,607)	(2,961)
Oaktree Capital Group Excluding Consolidated Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	50,461	74,899
Derivative assets	16,930	4,038
Oaktree Capital Group Excluding Consolidated Funds | Cross-currency swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	13,074	2,384
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	91,254	625,471
Total liabilities	(6,589)	(8,975)
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Foreign-currency forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	3,856	1,654
Derivative liabilities	(2,071)	(2,318)
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Cross-currency swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	13,074	2,384
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | U.S. Treasury and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	24,025	546,531
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Corporate investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	50,299	74,902
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Contingent liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	(4,518)	(6,657)
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level I
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	24,025	546,531
Total liabilities	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Foreign-currency forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Cross-currency swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level I | U.S. Treasury and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	24,025	546,531
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Corporate investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level I | Contingent liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level II
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	21,593	33,514
Total liabilities	(2,071)	(2,318)
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Foreign-currency forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	3,856	1,654
Derivative liabilities	(2,071)	(2,318)
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Foreign-currency forward contracts | Corporate investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	(162)	(3)
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Cross-currency swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	13,074	2,384
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level II | U.S. Treasury and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Corporate investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	4,663	29,476
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level II | Contingent liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level III
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	45,636	45,426
Total liabilities	(4,518)	(6,657)
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Foreign-currency forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Cross-currency swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level III | U.S. Treasury and other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	0	0
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Corporate investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments	45,636	45,426
Oaktree Capital Group Excluding Consolidated Funds | Fair Value, Measurements, Recurring | Level III | Contingent liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ (4,518)	$ (6,657)

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INVESTMENTS - Other Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Schedule of Investments [Line Items]
Realized gain (loss)	$ (3,664)	$ (9,812)	$ (9,036)	$ (12,509)
Net change in unrealized gain (loss)	(40,964)	10,552	17,967	(34,939)
Total gain (loss)			8,931	(47,448)
Other Investments at Fair Value
Schedule of Investments [Line Items]
Realized gain (loss)	1,345	104	7,656	1,072
Net change in unrealized gain (loss)	17,472	181	12,018	2,067
Total gain (loss)	$ 18,817	$ 285	$ 19,674	$ 3,139

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EARNINGS PER UNIT (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Computations of Net Income (Loss) Per Unit

The computation of net income (loss) per Class A unit is set forth below:  

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Net income (loss) per Class A unit (basic and diluted):	(in thousands, except per unit amounts)
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750	$	73,050	$	136,603
Weighted average number of Class A units outstanding (basic and diluted)	75,995			71,369		74,005		70,167
Basic and diluted net income (loss) per Class A unit	$	(0.22	)	$	0.74	$	0.99	$	1.95

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ORGANIZATION AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Billions			9 Months Ended
	Sep. 30, 2019 USD ($) partnership_interest $ / shares shares	Mar. 13, 2019	Sep. 30, 2019 USD ($) partnership_interest vote $ / shares shares
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Limited liability company (LLC) ownership interest			100.00%
Number of limited partnership interests | partnership_interest	1		1
Number of votes per class A unit | vote			1
Number of votes per class B unit | vote			10
Subsidiary, Sale of Stock [Line Items]
OSC class A, cash consideration received (in USD per share) | $ / shares	$ 20.92		$ 20.92
Brookfield Asset Management Inc. Merger Agreement, OCGH Unitholders
Subsidiary, Sale of Stock [Line Items]
OSC class A, cash consideration (in USD per share) | $ / shares	$ 49.00		$ 49.00
Shares of Brookfield issued (in shares)	1.0770		1.0770
Cash pro ration	50.00%		50.00%
Shares of Brookfield issued, received (in shares)	0.6173		0.6173
Aggregate amount of cash payable to unitholders | $	$ 2.4		$ 2.4
Brookfield | Brookfield Merger Agreement
Subsidiary, Sale of Stock [Line Items]
Percentage of business acquired by Brookfield		61.20%
OCGH | Brookfield Merger Agreement
Subsidiary, Sale of Stock [Line Items]
Percentage of business owned by OCGH	38.80%
Class A Units | Brookfield Asset Management Inc. Merger Agreement, OCGH Unitholders
Subsidiary, Sale of Stock [Line Items]
Share pro ration	50.00%		50.00%
Number of shares issued during mergers (in shares)	52,800,000
Class A Units and Converted Class A Units | Brookfield Asset Management Inc. Merger Agreement, OCGH Unitholders
Subsidiary, Sale of Stock [Line Items]
Number of unvested shares vested during mergers (in shares)	0

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VARIABLE INTEREST ENTITIES - Additional Information (Details) - Consolidated VIEs $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($) entity	Dec. 31, 2018 entity
Variable Interest Entity [Line Items]
Number of VIE's consolidated (in entity)	23	23
Consolidated VIEs representing funds and CLOs, assets | $	$ 8,200.0
Consolidated VIEs representing funds and CLOs, liabilities | $	6,900.0
Maximum exposure to loss | $	$ 606.5
Number of fund managed by Oaktree
Variable Interest Entity [Line Items]
Number of VIE's consolidated (in entity)	10
Number of CLO's for which Oaktree acts as collateral manager
Variable Interest Entity [Line Items]
Number of VIE's consolidated (in entity)	12
Number of consolidated funds formed to satisfy risk retention requirements
Variable Interest Entity [Line Items]
Number of VIE's consolidated (in entity)	2
Number of remaining variable interest entities
Variable Interest Entity [Line Items]
Number of VIE's consolidated (in entity)	22

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DERIVATIVES AND HEDGING - Balance Sheet Offsetting (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Derivative Assets:
Derivative assets	$ 19,377	$ 6,502
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Assets	2,071	1,497
Cash Collateral Received	0	0
Net Amount	17,306	5,005
Derivative Liabilities:
Derivative liabilities	(3,607)	(2,961)
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Liabilities	(2,071)	(1,497)
Cash Collateral Pledged	0	0
Net Amount	(1,536)	(1,464)
Consolidated Funds
Derivative Assets:
Derivative assets		2,464
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Assets		0
Cash Collateral Received		0
Net Amount		2,464
Consolidated Funds | Foreign-currency forward contracts
Derivative Assets:
Derivative assets	2,447	2,275
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Assets	0	0
Cash Collateral Received	0	0
Net Amount	2,447	2,275
Derivative Liabilities:
Derivative liabilities	(1,536)	(643)
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Liabilities	0	0
Cash Collateral Pledged	0	0
Net Amount	(1,536)	(643)
Consolidated Funds | Options and futures
Derivative Assets:
Derivative assets		189
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Assets		0
Cash Collateral Received		0
Net Amount		189
Oaktree Capital Group Excluding Consolidated Funds
Derivative Assets:
Derivative assets	16,930	4,038
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Assets	2,071	1,497
Cash Collateral Received	0	0
Net Amount	14,859	2,541
Oaktree Capital Group Excluding Consolidated Funds | Foreign-currency forward contracts
Derivative Assets:
Derivative assets	3,856	1,654
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Assets	2,071	1,497
Cash Collateral Received	0	0
Net Amount	1,785	157
Derivative Liabilities:
Derivative liabilities	(2,071)	(2,318)
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Liabilities	(2,071)	(1,497)
Cash Collateral Pledged	0	0
Net Amount	0	(821)
Oaktree Capital Group Excluding Consolidated Funds | Cross-currency swap
Derivative Assets:
Derivative assets	13,074	2,384
Gross Amounts Not Offset in Statements of Financial Condition
Derivative Assets	0	0
Cash Collateral Received	0	0
Net Amount	$ 13,074	$ 2,384

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FAIR VALUE - Consolidated Funds Additional Information (Details) - investment	3 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Consolidated Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of investments that changed valuation technique	0	0

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RELATED-PARTY TRANSACTIONS - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total operating lease liabilities	$ 131,282		$ 131,282
Affiliates
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Rent expense	1,100	$ 1,200	3,400	$ 3,600
Total operating lease liabilities	63,200		63,200
Oaktree Capital Group Excluding Consolidated Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest income	18	22	66	193
Total operating lease liabilities	131,282		131,282		$ 0
Oaktree Capital Group Excluding Consolidated Funds | Level III
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Due to affiliates	94,043		94,043		$ 95,953
Oaktree Capital Group Excluding Consolidated Funds | Affiliates
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Management fees and incentive income	$ 184,700	$ 218,000	$ 719,300	$ 719,600
Oaktree Capital Group Excluding Consolidated Funds | Discounted cash flow | Affiliates | Level III
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	0.100		0.100

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REVENUES (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Disaggregated by Fund Structure

Revenues disaggregated by fund structure is set forth below. Revenues are affected by economic factors related to the asset class composition of the holdings and the contractual terms such as the basis for calculating the management fees and investors’ ability to redeem.

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Management Fees
Closed-end	$	120,462	$	112,415	$	345,091	$	353,225
Open-end	29,990		34,942		90,480		109,051
Evergreen	29,309		27,838		89,227		76,430
Total	$	179,761	$	175,195	$	524,798	$	538,706
Incentive Income
Closed-end	$	25,335	$	65,661	$	257,778	$	249,447
Evergreen	94		371		2,512		3,678
Total	$	25,429	$	66,032	$	260,290	$	253,125

Contract Balances

The table below sets forth contract balances for the periods indicated:

	As of
	September 30, 2019			December 31, 2018
Receivables (1)	$	76,106		$	74,795
Contract assets (1)	—			288,176
Contract liabilities (2)	(26,383		)	(26,549		)

(1) The changes in the balances primarily related to accruals, net of payments received.

(2)

Revenue recognized in the three months and nine months ended September 30, 2019 from amounts included in the contract liability balance were $5.4 million and $17.1 million.

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RELATED-PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

RELATED-PARTY TRANSACTIONS

RELATED-PARTY TRANSACTIONS

The Company considers its senior executives, employees and unconsolidated Oaktree funds to be affiliates (as defined in the FASB ASC Master Glossary). Amounts due from and to affiliates are set forth below. The fair value of amounts due from and to affiliates is a Level III valuation and was valued based on a discounted cash-flow analysis. The carrying value of amounts due from affiliates approximated fair value due to their short-term nature or because their average interest rate approximated the Company’s cost of debt. The fair value of amounts due to affiliates approximated $94,043 and $95,953 as of September 30, 2019 and December 31, 2018, respectively, based on a discount rate of 10.0%.

	As of
	September 30, 2019		December 31, 2018
Due from affiliates:
Loans	$	6,416	$	3,857
Amounts due from unconsolidated funds	66,490		72,588
Management fees and incentive income due from unconsolidated funds	76,106		362,971
Payments made on behalf of unconsolidated entities	3,220		3,469
Non-interest bearing advances made to certain non-controlling interest holders and employees	—		27
Total due from affiliates	$	152,232	$	442,912
Due to affiliates:
Due to OCGH unitholders in connection with the tax receivable agreement (please see note 16)	$	178,040	$	187,872
Amounts due to senior executives, certain non-controlling interest holders and employees	1,438		495
Total due to affiliates	$	179,478	$	188,367

Loans

Loans primarily consist of interest-bearing loans made to certain non-controlling interest holders, primarily certain employees, to meet tax obligations related to vesting of equity awards. The loans, which are generally recourse to the borrower or secured by vested equity and other collateral, typically bear interest at the Company’s cost of debt and generated interest income of $18 and $66 for the three and nine months ended September 30, 2019, respectively, and $22 and $193 for the three and nine months ended September 30, 2018, respectively.

Due From Oaktree Funds and Portfolio Companies

In the normal course of business, the Company advances certain expenses on behalf of Oaktree funds. Amounts advanced on behalf of consolidated funds are eliminated in consolidation. Certain expenses paid by the Company, which typically are employee travel and other costs associated with particular portfolio company holdings, are reimbursed to the Company by the portfolio companies.

Revenues Earned From Oaktree Funds

Management fees and incentive income earned from unconsolidated Oaktree funds totaled $184.7 million and $719.3 million for the three and nine months ended September 30, 2019, respectively, and $218.0 million and $719.6 million for the three and nine months ended September 30, 2018, respectively.

Other Investment Transactions

The Company’s senior executives, directors and senior professionals are permitted to invest their own capital (or the capital of family trusts or other estate planning vehicles they control) in Oaktree funds, for which they pay the particular fund’s full management fee but not its incentive allocation. To facilitate the funding of capital calls by funds in which employees are invested, the Company periodically advances on a short-term basis the capital calls on certain employees’ behalf. These advances are reimbursed generally toward the end of the calendar quarter in which the capital calls occurred. Amounts advanced by the Company are included within “non-interest bearing advances made to certain non-controlling interest holders and employees” in the table above.

Aircraft Services

The Company owns an aircraft for business purposes. Howard Marks, the Company’s co-chairman, may use this aircraft for personal travel and will reimburse the Company to the extent his use of the aircraft for personal travel exceeds a certain threshold pursuant to a Company policy.  The Company also provides certain senior executives a personal travel allowance for private aircraft usage up to a certain threshold pursuant to the same Company policy. Additionally, the Company occasionally makes use of an aircraft owned by one of its senior executives for business purposes at a price to the Company that is based on market rates.

Special Allocations

Certain senior executives receive special allocations based on a percentage of profits of the Oaktree Operating Group. These special allocations, which are recorded as compensation expense, are made on a current basis for so long as they remain senior executives of the Company, with limited exceptions.

Leases

The Company leases certain office space from affiliates of Brookfield. Rent expense associated with these leases was $1.1 million and $3.4 million for the three and nine months ended September 30, 2019, respectively, and $1.2 million and $3.6 million for the three and nine months ended September 30, 2018, respectively. Future lease obligations associated with these leases are $63.2 million for the remaining lease commitments through 2030.

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EARNINGS PER UNIT

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

EARNINGS PER UNIT

EARNINGS PER UNIT

The computation of net income (loss) per Class A unit is set forth below:  

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Net income (loss) per Class A unit (basic and diluted):	(in thousands, except per unit amounts)
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750	$	73,050	$	136,603
Weighted average number of Class A units outstanding (basic and diluted)	75,995			71,369		74,005		70,167
Basic and diluted net income (loss) per Class A unit	$	(0.22	)	$	0.74	$	0.99	$	1.95

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DEBT OBLIGATIONS AND CREDIT FACILITIES

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

DEBT OBLIGATIONS AND CREDIT FACILITIES

DEBT OBLIGATIONS AND CREDIT FACILITIES

The Company’s debt obligations are set forth below:

	As of
	September 30, 2019			December 31, 2018
$250,000, 3.78%, issued in December 2017, payable on December 18, 2032	$	250,000		$	250,000
$250,000, variable-rate term loan, issued in March 2014, payable on March 29, 2023 (1)	150,000			150,000
$50,000, 3.91%, issued in September 2014, payable on September 3, 2024	50,000			50,000
$100,000, 4.01%, issued in September 2014, payable on September 3, 2026	100,000			100,000
$100,000, 4.21%, issued in September 2014, payable on September 3, 2029	100,000			100,000
$100,000, 3.69%, issued in July 2016, payable on July 12, 2031	100,000			100,000
Total remaining principal	750,000			750,000
Less: Debt issuance costs	(3,657		)	(4,055		)
Debt obligations	$	746,343		$	745,945

(1) The credit facility consists of a $150 million term loan and a $500 million revolving credit facility. Borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of Oaktree Capital Management, L.P., the interest rate on borrowings is LIBOR plus 1.00% per annum and the commitment fee on the unused portions of the revolving credit facility is 0.10% per annum. The credit agreement contains customary financial covenants and restrictions, including ones regarding a maximum leverage ratio and a minimum required level of assets under management (as defined in the credit agreement, as amended above). As of September 30, 2019, the Company had no outstanding borrowings under the revolving credit facility.

As of September 30, 2019, future scheduled principal payments of debt obligations were as follows:

Remainder of 2019	$	—
2020	—
2021	—
2022	—
2023	150,000
Thereafter	600,000
Total	$	750,000

The Company was in compliance with all financial maintenance covenants associated with its senior notes and bank credit facility as of September 30, 2019 and December 31, 2018.

The fair value of the Company’s debt obligations, which are carried at amortized cost, is a Level III valuation that is estimated based on a discounted cash-flow calculation using estimated rates that would be offered to Oaktree for debt of similar terms and maturities. The fair value of these debt obligations, gross of debt issuance costs, was $806.3 million and $720.3 million as of September 30, 2019 and December 31, 2018, respectively, utilizing an average borrowing rate of 2.8% and 4.4%, respectively. As of September 30, 2019, a 10% increase in the assumed average borrowing rate would lower the estimated fair value to $788.9 million, whereas a 10% decrease would increase the estimated fair value to $824.2 million.

Credit Facilities of the Consolidated Funds

Certain consolidated funds may maintain revolving credit facilities that are secured by the assets of the fund or may issue senior variable rate notes to fund investments on a longer term basis, generally up to ten years. The obligations of the consolidated funds are nonrecourse to the Company.

The consolidated funds had the following debt obligations outstanding:

	Outstanding Amount as of						Facility Capacity		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Commitment Fee Rate	L/C Fee
Credit Agreement	September 30, 2019			December 31, 2018
Senior variable rate notes	$	976,470		$	870,098		$	976,470	3.39%	8.7	N/A	N/A
Less: Debt issuance costs	(4,616		)	(5,569		)
Total debt obligations, net	$	971,854		$	864,529

As of September 30, 2019 and December 31, 2018, the consolidated funds had debt obligations with an aggregate outstanding principal balance of $976.5 million. The fair value of the senior variable rate notes is a Level III valuation and aggregated $976.8 million and $871.3 million as of September 30, 2019 and December 31, 2018, respectively, using prices obtained from pricing vendors. Financial instruments that are valued using quoted prices for the security or similar securities are generally classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.

Debt Obligations of CLOs

Debt obligations of CLOs represent amounts due to holders of debt securities issued by the CLOs, as well as term loans of CLOs that had not priced as of period end.

Outstanding debt obligations of CLOs were as follows:

	As of September 30, 2019				As of December 31, 2018
	Fair Value (1)		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Fair Value (1)		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)
Senior secured notes	$	5,354,638	2.95%	9.1	$	3,976,602	2.69%	9.9
Subordinated notes (2)	198,506		N/A	8.6	151,392		N/A	9.7
Total CLO debt obligations	$	5,553,144			$	4,127,994

(1) The fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Please see notes 2 and 6 for more information.

(2) The subordinated notes do not have a contractual interest rate; instead, they receive distributions from the excess cash flows generated by the CLO.

The debt obligations of CLOs are nonrecourse to the Company and are backed by the investments held by the respective CLO. Assets of one CLO may not be used to satisfy the liabilities of another. As of September 30, 2019 and December 31, 2018, the fair value of CLO assets was $6.3 billion and $4.7 billion, respectively, and consisted of cash, corporate loans, corporate bonds and other securities.

As of September 30, 2019, future scheduled principal or par value payments with respect to the debt obligations of CLOs were as follows:

Remainder of 2019	$	600,481
2020	169,372
2021	—
2022	—
2023	—
Thereafter	4,822,368
Total	$	5,592,221

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FAIR VALUE

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Fair Value of Financial Assets and Liabilities

The short-term nature of cash and cash-equivalents, receivables and accounts payable causes each of their carrying values to approximate fair value. The fair value of short-term investments included in cash and cash-equivalents is a Level I valuation. The Company’s other financial assets and financial liabilities by fair-value hierarchy level are set forth below. Please see notes 10 and 18 for the fair value of the Company’s outstanding debt obligations and amounts due from/to affiliates, respectively.

	As of September 30, 2019											As of December 31, 2018
	Level I		Level II			Level III			Total			Level I		Level II			Level III			Total
Assets
U.S. Treasury and other securities (1)	$	24,025	$	—		$	—		$	24,025		$	546,531	$	—		$	—		$	546,531
Corporate investments	—		4,663			45,636			50,299			—		29,476			45,426			74,902
Foreign-currency forward contracts (2)	—		3,856			—			3,856			—		1,654			—			1,654
Cross-currency swap (2)	—		13,074			—			13,074			—		2,384			—			2,384
Total assets	$	24,025	$	21,593		$	45,636		$	91,254		$	546,531	$	33,514		$	45,426		$	625,471
Liabilities
Contingent liability (3)	$	—	$	—		$	(4,518	)	$	(4,518	)	$	—	$	—		$	(6,657	)	$	(6,657	)
Foreign-currency forward contracts (4)	—		(2,071		)	—			(2,071		)	—		(2,318		)	—			(2,318		)
Total liabilities	$	—	$	(2,071	)	$	(4,518	)	$	(6,589	)	$	—	$	(2,318	)	$	(6,657	)	$	(8,975	)

(1) Carrying value approximates fair value due to the short-term nature.

(2) Amounts are included in other assets in the condensed consolidated statements of financial condition, except for $162 as of September 30, 2019 which is included within corporate investments in the condensed consolidated statements of financial condition.

(3) Amounts are included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition.

(4) Amounts are included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition, except for $3 as of December 31, 2018, which is included within corporate investments in the condensed consolidated statements of financial condition.

The table below sets forth a summary of changes in the fair value of Level III financial instruments:

	Three months ended September 30,
	2019					2018
	Corporate Investments		Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	42,234	$	(6,737	)	$	31,084		$	(9,129	)
Contributions or additions	883		—			10,258			—
Distributions	—		—			(290		)	—
Net gain (loss) included in earnings	2,519		2,219			(453		)	2,538
Ending balance	$	45,636	$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	2,519	$	2,219		$	(557	)	$	2,538

	Nine months ended September 30,
	2019						2018
	Corporate Investments			Contingent Liability			Corporate Investments			Contingent Liability
Beginning balance	$	45,426		$	(6,657	)	$	50,902		$	(18,778	)
Contributions or additions	937			—			16,668			—
Distributions	(7,181		)	—			(31,145		)	—
Net gain (loss) included in earnings	6,454			2,139			4,174			12,187
Ending balance	$	45,636		$	(4,518	)	$	40,599		$	(6,591	)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$	6,454		$	2,139		$	3,102		$	12,187

The table below sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the Company’s Level III financial instruments:

	Fair Value as of							Significant Unobservable Input
Financial Instrument	September 30, 2019			December 31, 2018			Valuation Technique		Range	Weighted Average
Corporate investment – Limited partnership interests	$	45,636		$	45,426		Market approach (value of underlying assets)	Not applicable	Not applicable	Not applicable
Contingent liability	(4,518		)	(6,657		)	Discounted cash flow	Assumed % of total potential contingent payments	0% – 100%	24%

Fair Value of Financial Instruments Held By Consolidated Funds

The short-term nature of cash and cash-equivalents held at the consolidated funds causes their carrying value to approximate fair value. The fair value of cash-equivalents is a Level I valuation. Derivatives may relate to a mix of Level I, II or III investments, and therefore their fair-value hierarchy level may not correspond to the fair-value hierarchy level of the economically hedged investment. The table below summarizes the investments and other financial instruments of the consolidated funds by fair-value hierarchy level:

	As of September 30, 2019										As of December 31, 2018
	Level I		Level II			Level III		Total			Level I			Level II			Level III		Total
Assets
Investments:
Corporate debt – bank debt	$	—	$	6,758,814		$	156,110	$	6,914,924		$	—		$	5,216,923		$	136,055	$	5,352,978
Corporate debt – all other	—		896,826			42,732		939,558			634			963,423			185,378		1,149,435
Equities – common stock	3,022		—			196,224		199,246			24,483			—			3,063		27,546
Equities – preferred stock			—			2,129		2,129			—			—			1,426		1,426
Real estate	—		49,098			161,844		210,942			—			—			—		—
Total investments	3,022		7,704,738			559,039		8,266,799			25,117			6,180,346			325,922		6,531,385
Derivatives:
Foreign-currency forward contracts	116		2,331			—		2,447			—			2,275			—		2,275
Options and futures	—		—			—		—			189			—			—		189
Total derivatives (1)	116		2,331			—		2,447			189			2,275			—		2,464
Total assets	$	3,138	$	7,707,069		$	559,039	$	8,269,246		$	25,306		$	6,182,621		$	325,922	$	6,533,849
Liabilities
CLO debt obligations:
Senior secured notes	$	—	$	(5,354,638	)	$	—	$	(5,354,638	)	$	—		$	(3,976,602	)	$	—	$	(3,976,602	)
Subordinated notes	—		(198,506		)	—		(198,506		)	—			(151,392		)	—		(151,392		)
Total CLO debt obligations (2)	—		(5,553,144		)	—		(5,553,144		)	—			(4,127,994		)	—		(4,127,994		)
Securities sold short:
Equity securities	—		—			—		—			(2,609		)	—			—		(2,609		)
Derivatives:
Foreign-currency forward contracts	—		(1,536		)	—		(1,536		)	—			(643		)	—		(643		)
Total derivatives (3)	—		(1,536		)	—		(1,536		)	—			(643		)	—		(643		)
Total liabilities	$	—	$	(5,554,680	)	$	—	$	(5,554,680	)	$	(2,609	)	$	(4,128,637	)	$	—	$	(4,131,246	)

(1) Amounts are included in other assets under “assets of consolidated funds” in the condensed consolidated statements of financial condition.

(2) The fair value of CLO liabilities is classified based on the more observable fair value of CLO assets. Please see notes 2 and 10 for more information.

(3) Amounts are included in accounts payable, accrued expenses and other liabilities under “liabilities of consolidated funds” in the condensed consolidated statements of financial condition

The following tables set forth a summary of changes in the fair value of Level III investments:

	Corporate Debt – Bank Debt			Corporate Debt – All Other			Equities – Common Stock			Equities – Preferred Stock			Real Estate			Total
Three Months Ended September 30, 2019
Beginning balance	$	101,494		$	23,209		$	42,972		$	1,934		$	57,080		$	226,689
Deconsolidation of funds	(5,441		)	(11,216		)	—			—			—			(16,657		)
Transfers into Level III	9,853			6,490			29			—			—			16,372
Transfers out of Level III	—			—			—			—			—			—
Purchases	67,093			25,102			154,446			80			107,046			353,767
Sales	(8,763		)	(71		)	(1,146		)	—			—			(9,980		)
Realized gains (losses), net	(443		)	26			587			—			—			170
Unrealized appreciation (depreciation), net	(7,683		)	(808		)	(664		)	115			(2,282		)	(11,322		)
Ending balance	$	156,110		$	42,732		$	196,224		$	2,129		$	161,844		$	559,039
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	(5,455	)	$	(389	)	$	(525	)	$	115		$	(2,282	)	$	(8,536	)
Three Months Ended September 30, 2018
Beginning balance	$	83,529		$	123,936		$	54,934		$	1,586		$	—		$	263,985
Transfers into Level III	7,698			—			—			—			—			7,698
Transfers out of Level III	(11,549		)	—			—			—			—			(11,549		)
Purchases	49,347			41,063			197			—			—			90,607
Sales	(22,253		)	(17,580		)	(76		)	—			—			(39,909		)
Realized gains (losses), net	144			65			59			—			—			268
Unrealized appreciation (depreciation), net	975			(921		)	(273		)	(171		)	—			(390		)
Ending balance	$	107,891		$	146,563		$	54,841		$	1,415		$	—		$	310,710
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	1,140		$	(508	)	$	(273	)	$	(171	)	$	—		$	188

	Corporate Debt – Bank Debt			Corporate Debt – All Other			Equities – Common Stock			Equities – Preferred Stock		Real Estate			Total
Nine months Ended September 30, 2019
Beginning balance	$	136,055		$	185,378		$	3,063		$	1,426	$	—		$	325,922
Deconsolidation of funds	(54,895		)	(108,121		)	—			—		—			(163,016		)
Transfers into Level III	32,711			89			2,379			—		—			35,179
Transfers out of Level III	(16,658		)	(51,770		)	—			—		—			(68,428		)
Purchases	94,865			27,489			194,304			322		164,126			481,106
Sales	(25,937		)	(10,452		)	(2,072		)	—		—			(38,461		)
Realized gains (losses), net	(319		)	(100		)	616			—		—			197
Unrealized appreciation (depreciation), net	(9,712		)	219			(2,066		)	381		(2,282		)	(13,460		)
Ending balance	$	156,110		$	42,732		$	196,224		$	2,129	$	161,844		$	559,039
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	21,502		$	(25	)	$	(1,528	)	$	381	$	(2,282	)	$	18,048
Nine Months Ended September 30, 2018
Beginning balance	$	86,999		$	75,388		$	3,427		$	—	$	121,588		$	287,402
Deconsolidation of funds	—			—			—			—		(121,087		)	(121,087		)
Transfers into Level III	36,627			899			490			—		—			38,016
Transfers out of Level III	(25,041		)	(490		)	(658		)	—		—			(26,189		)
Purchases	58,534			119,328			52,253			1,248		—			231,363
Sales	(51,577		)	(47,628		)	(387		)	—		(501		)	(100,093		)
Realized gains (losses), net	612			314			59			—		—			985
Unrealized appreciation (depreciation), net	1,737			(1,248		)	(343		)	167		—			313
Ending balance	$	107,891		$	146,563		$	54,841		$	1,415	$	—		$	310,710
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period	$	1,566		$	(1,054	)	$	(343	)	$	167	$	—		$	336

Total realized and unrealized gains and losses recorded for Level III investments are included in net realized gain on consolidated funds’ investments or net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations.

Transfers out of Level III are generally attributable to certain investments that experienced a more significant level of market trading activity or completed an initial public offering during the respective period and thus were valued using observable inputs. Transfers into Level III typically reflect either investments that experienced a less significant level of market trading activity during the period or portfolio companies that undertook restructurings or bankruptcy proceedings and thus were valued in the absence of observable inputs.

The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of September 30, 2019:

Investment Type	Fair Value		Valuation Technique	Significant Unobservable Inputs (1)(2)	Range	Weighted Average (3)
Credit-oriented investments:
Consumer discretionary:	$	26,190	Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,340		Discounted cash flow (4)	Discount rate	10% – 18%	13%
Financials:	39,099		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,415		Discounted cash flow (4)	Discount rate	8% – 12%	11%
Health care:	35,560		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	666		Discounted cash flow (4)	Discount rate	16% – 18%	17%
Real estate:	20,572		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	702		Discounted cash flow (4)	Discount rate	17% – 19%	18%
Other:	53,041		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	14,257		Discounted cash flow (4)	Discount rate	8% – 18%	13%
Equity investments:
	26,632		Recent transaction price (8)	Quoted prices	Not applicable	Not applicable
	131,778		Discounted cash flow (4)	Discount rate	8% – 15%	11%
	39,578		Market approach (comparable companies) (6)	Earnings multiple (7)	4x – 10x	6x
	365		Market approach (comparable companies) (6)	Revenue multiple (9)	2x – 4x	3x
Real estate investments:
	146,208		Recent transaction price (8)	Quoted prices	Not applicable	Not applicable
	15,636		Discounted cash flow (4)	Discount rate	5% – 7%	6%
Total Level III investments	$	559,039

The following table sets forth a summary of the valuation techniques and quantitative information utilized in determining the fair value of the consolidated funds’ Level III investments as of December 31, 2018:

Investment Type	Fair Value		Valuation Technique	Significant Unobservable Inputs (1)(2)	Range	Weighted Average (3)
Credit-oriented investments:
Communication services:	$	20,746	Recent market information (5)	Quoted prices	Not applicable	Not applicable
	2,416		Discounted cash flow (4)	Discount rate	12% – 14%	13%
Financials:	108,277		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	3,608		Discounted cash flow (4)	Discount rate	9% – 15%	14%
Health care:	37,724		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	2,550		Discounted cash flow (4)	Discount rate	10% – 16%	14%
Real estate:	79,562		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	4,570		Discounted cash flow (4)	Discount rate	12% – 23%	14%
Other:	38,959		Recent market information (5)	Quoted prices	Not applicable	Not applicable
	17,943		Discounted cash flow (4)	Discount rate	8% – 15%	13%
	5,078		Recent transaction price (8)	Not applicable	Not applicable	Not applicable
Equity investments:
	2,099		Discounted cash flow (4)	Discount rate	10% – 30%	12%
	2,390		Market approach (comparable companies) (6)	Earnings multiple (7)	4x – 10x	7x
Total Level III investments	$	325,922

(1) The discount rate is the significant unobservable input used in the fair-value measurement of performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments and real estate loan portfolios. An increase (decrease) in the discount rate would result in a lower (higher) fair-value measurement.

(2) Multiple of either earnings or underlying assets is the significant unobservable input used in the market approach for the fair-value measurement of distressed credit-oriented investments, credit-oriented investments in which the consolidated funds have a controlling interest in the underlying issuer, equity investments and certain real estate-oriented investments. An increase (decrease) in the multiple would result in a higher (lower) fair-value measurement.

(3) The weighted average is based on the fair value of the investments included in the range.

(4) A discounted cash-flow method is generally used to value performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments, real estate-oriented investments and real estate loan portfolios.

(5) Certain investments are valued using vendor prices or broker quotes for the subject or similar securities.  Generally, investments valued in this manner are classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.

(6) A market approach is generally used to value distressed investments and investments in which the consolidated funds have a controlling interest in the underlying issuer.

(7) Earnings multiples are based on comparable public companies and transactions with comparable companies. The Company typically utilizes multiples of EBITDA; however, in certain cases the Company may use other earnings multiples believed to be most relevant to the investment. The Company typically applies the multiple to trailing twelve-months’ EBITDA. However, in certain cases other earnings measures, such as pro forma EBITDA, may be utilized if deemed to be more relevant.

(8) Certain investments are valued based on recent transactions, generally defined as investments purchased or sold within six months of the valuation date. The fair value may also be based on a pending transaction expected to close after the valuation date.

(9) Revenue multiples are based on comparable public companies and transactions with comparable companies. The Company typically applies the multiple to trailing twelve-months’ revenue. However, in certain cases other revenue measures, such as pro forma revenue, may be utilized if deemed to be more relevant.

A significant amount of judgment may be required when using unobservable inputs, including assessing the accuracy of source data and the results of pricing models. The Company assesses the accuracy and reliability of the sources it uses to develop unobservable inputs. These sources may include third-party vendors that the Company believes are reliable and commonly utilized by other marketplace participants. As described in note 2, other factors beyond the unobservable inputs described above may have a significant impact on investment valuations.

During the three months ended September 30, 2019 and September 30, 2018, there were no changes in the valuation techniques for Level III securities.

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VARIABLE INTEREST ENTITIES (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Carrying value of the Company's investments in VIEs

The carrying value of the Company’s investments in VIEs that were not consolidated are shown below.

	Carrying Value as of
	September 30, 2019		December 31, 2018
Corporate investments	$	1,077,595	$	1,093,294
Due from affiliates	89,682		384,225
Maximum exposure to loss	$	1,167,277	$	1,477,519

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ORGANIZATION AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION AND BASIS OF PRESENTATION

Oaktree Capital Group, LLC (“OCG”, together with its subsidiaries, “Oaktree” or the “Company”) is a leader among global investment managers specializing in alternative investments. Oaktree emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in credit, private equity, real assets and listed equities. Funds managed by Oaktree (the “Oaktree funds”) include commingled funds, separate accounts, collateralized loan obligation vehicles (“CLOs”) and publicly-traded business development companies (“BDCs”). Commingled funds include open-end and closed-end limited partnerships in which the Company makes an investment and for which it serves as the general partner. CLOs are structured finance vehicles in which the Company typically makes an investment and for which it serves as collateral manager.

Oaktree Capital Group, LLC is a Delaware limited liability company that was formed on April 13, 2007. The Company is owned by its Class A and Class B unitholders and its preferred unitholders. As of September 30, 2019, Oaktree Capital Group Holdings GP, LLC acts as the Company’s manager and is the general partner of Oaktree Capital Group Holdings, L.P. (“OCGH”), which owns 100% of the Company’s outstanding Class B units. OCGH is owned by the Company’s senior executives, current and former employees and certain other investors (collectively, the “OCGH unitholders”). The Company’s operations are conducted through a group of operating entities collectively referred to as the “Oaktree Operating Group.” OCGH has a direct economic interest in the Oaktree Operating Group and the Company has an indirect economic interest in the Oaktree Operating Group. The interests in the Oaktree Operating Group are referred to as the “Oaktree Operating Group units.” An Oaktree Operating Group unit is not a separate legal interest but represents one limited partnership interest in each of the Oaktree Operating Group entities. Class A units are entitled to one vote per unit. Class B units are entitled to ten votes per unit and do not represent an economic interest in the Company. The number of Class B units held by OCGH increases or decreases in response to corresponding changes in OCGH’s economic interest in the Oaktree Operating Group; consequently, the OCGH unitholders’ economic interest in the Oaktree Operating Group is reflected within non-controlling interests in consolidated subsidiaries in the accompanying condensed consolidated financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) such that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The condensed consolidated financial statements include the accounts of the Company, its wholly-owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. Certain of the Oaktree funds consolidated by the Company are investment companies that follow a specialized basis of accounting established by GAAP. All intercompany transactions and balances have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on February 22, 2019.

Brookfield Merger

On March 13, 2019, Oaktree, Brookfield Asset Management Inc., a corporation incorporated under the laws of the Province of Ontario (“Brookfield”), Berlin Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”) and a wholly-owned subsidiary of Brookfield, Oslo Holdings LLC, a Delaware limited liability company (“SellerCo”) and a wholly-owned subsidiary of OCGH, and Oslo Holdings Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Oaktree (“Seller MergerCo”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Brookfield would acquire 61.2% of Oaktree’s business in a stock and cash transaction. Pursuant to the terms and conditions set forth in the Merger Agreement, on September 30, 2019, (i) Merger Sub merged with and into Oaktree (the “Merger”), with Oaktree continuing as the surviving entity, and (ii) immediately following the Merger, SellerCo merged with and into Seller MergerCo (the “Subsequent Merger” and together with the Merger, the “Mergers”), with Seller MergerCo continuing as the surviving entity. Following the closing of the Mergers on September 30, 2019, the remaining 38.8% of the business continues to be owned by OCGH, whose unitholders consist primarily of Oaktree’s founders and certain other members of management and current and former employees.

At the effective time of the Merger (the “Effective Time”) on September 30, 2019, each Class A Unit of Oaktree (“Class A Unit”) (other than unvested Class A Units), issued and outstanding immediately prior to the Effective Time, at the election (or deemed election) of the holder, was converted (subject to pro-rations as described below) into the right to receive either $49.00 in cash (the “Cash Consideration”) or 1.0770 Class A Limited Voting Shares of Brookfield (“Brookfield Class A Shares”), together with any dividends or distributions thereon payable in accordance with the Merger Agreement (the “Share Consideration” and together with the Cash Consideration, the “Merger Consideration”), without interest. Oaktree Class A unitholders’ and OCGH unitholders’ elections were made on a per unit basis and subject to pro-ration such that the total consideration paid by Brookfield was 50% cash and 50% Brookfield Class A Shares. At the effective time of the Subsequent Merger (the “Subsequent Effective Time”) on September 30, 2019, each unit of equity interest in SellerCo (a “SellerCo Unit”), at the election (or deemed election) of the holder, was converted into the right to receive either Cash Consideration or Share Consideration. Based on the elections made (or deemed to have been made), the Share Consideration was oversubscribed and former holders of Class A Units and participating OCGH units who elected (or were deemed to have elected) to receive Share Consideration with respect to all or a portion of their units instead received approximately 0.6173 Limited Voting Shares of Brookfield and $20.92 in cash with respect to each such unit.

The aggregate amount of cash payable to Oaktree Class A unitholders and OCGH unitholders in the transaction was approximately $2.4 billion and approximately 52.8 million Brookfield Class A shares were issued in the Mergers. In connection with the closing of the Merger, Oaktree Class A units were delisted from the New York Stock Exchange.

At the Effective Time, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted Class A Unit”) and will thereafter be subject to the terms and conditions of the OCGH limited partnership agreement. The Converted Class A Units will (i) be subject to the same vesting terms that were applicable to such units prior to the Effective Time, (ii) be entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. No unvested Class A Units or Converted Class A Units vested in connection with the Mergers. Please see note 15 for more information.

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FIXED ASSETS (Tables)

9 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Fixed Assets and Accumulated Depreciation

The following table sets forth the Company’s fixed assets and accumulated depreciation:

	As of
	September 30, 2019			December 31, 2018
Furniture, equipment and capitalized software	$	28,781		$	26,345
Leasehold improvements	72,724			70,270
Corporate aircraft	66,120			66,120
Other	5,302			4,859
Fixed assets	172,927			167,594
Accumulated depreciation	(68,457		)	(61,879		)
Fixed assets, net	$	104,470		$	105,715

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NON-CONTROLLING REDEEMABLE INTERESTS IN CONSOLIDATED FUNDS (Tables)

9 Months Ended

Sep. 30, 2019

Non-Controlling Redeemable Interests in Consolidated Funds [Abstract]

Summary of Changes in Non-controlling Redeemable Interests in Consolidated Funds

The following table sets forth a summary of changes in the non-controlling redeemable interests in the consolidated funds. Dividends reinvested and in-kind contributions or distributions are non-cash in nature and have been presented on a gross basis in the table below.

	Nine Months Ended September 30,
	2019			2018
Beginning balance	$	961,622		$	860,548
Initial consolidation of a fund	54,964			—
Deconsolidation of a fund	(424,603		)	—
Contributions	519,684			107,962
Distributions	(107,071		)	(214,096		)
Net income	82,234			18,399
Change in distributions payable	4,652			(75,196		)
Foreign currency translation and other	(10,020		)	(1,310		)
Ending balance	$	1,081,462		$	696,307

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues:
Total revenues	$ 205,190	$ 241,227	$ 785,088	$ 791,831
Expenses:
Compensation and benefits	(111,281)	(101,787)	(334,919)	(315,614)
Equity-based compensation	(22,779)	(14,747)	(59,756)	(44,614)
Incentive income compensation	(11,427)	(27,294)	(136,849)	(127,327)
Total compensation and benefits expense	(145,487)	(143,828)	(531,524)	(487,555)
General and administrative	(86,851)	(38,051)	(184,592)	(110,459)
Depreciation and amortization	(6,602)	(6,459)	(19,732)	(19,412)
Consolidated fund expenses	(6,540)	(2,829)	(12,994)	(9,383)
Total expenses	(245,480)	(191,167)	(748,842)	(626,809)
Other income (loss):
Interest expense	(59,883)	(39,456)	(149,643)	(115,504)
Interest and dividend income	101,882	74,490	278,782	205,089
Net realized gain (loss) on consolidated funds’ investments	(3,664)	(9,812)	(9,036)	(12,509)
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments	(40,964)	10,552	17,967	(34,939)
Investment income	26,819	58,196	121,804	149,682
Other income, net	0	5,629	58	7,240
Total other income	24,190	99,599	259,932	199,059
Income (loss) before income taxes	(16,100)	149,659	296,178	364,081
Income taxes	(4,798)	(6,568)	(11,148)	(17,832)
Net income (loss)	(20,898)	143,091	285,030	346,249
Less:
Net income (loss) attributable to Oaktree Capital Group, LLC	(9,819)	56,659	93,537	140,512
Net income attributable to preferred unitholders	(6,829)	(3,909)	(20,487)	(3,909)
Net income (loss) attributable to OCG Class A unitholders	$ (16,648)	$ 52,750	$ 73,050	$ 136,603
Distributions declared per Class A unit (in dollars per share)	$ 3.13	$ 0.55	$ 4.93	$ 2.27
Net income per Class A unit (basic and diluted):
Net income per Class A unit (in dollars per share)	$ (0.22)	$ 0.74	$ 0.99	$ 1.95
Weighted average Oaktree Operating Group units outstanding (in shares)	75,995	71,369	74,005	70,167
Net (income) loss attributable to non-controlling interests in consolidated subsidiaries
Less:
Net income (loss) attributable to non-controlling interests	$ 6,871	$ (72,005)	$ (109,259)	$ (187,945)
Net (income) loss attributable to non-controlling interests in consolidated funds
Less:
Net income (loss) attributable to non-controlling interests	4,208	(14,427)	(82,234)	(17,792)
Management fees
Revenues:
Total revenues	179,761	175,195	524,798	538,706
Incentive income
Revenues:
Total revenues	$ 25,429	$ 66,032	$ 260,290	$ 253,125

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FAIR VALUE - Valuation Techniques (Details) - Oaktree Capital Group Excluding Consolidated Funds $ in Thousands	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investments, at fair value	$ 50,461	$ 74,899
Corporate investment – Limited partnership interests | Market approach (value of underlying assets) | Level III
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investments, at fair value	45,636	45,426
Contingent liability | Discounted cash flow | Level III
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent liability	$ (4,518)	$ (6,657)
Minimum | Contingent liability | Discounted cash flow | Level III
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent liability, measurement inputs	0.00
Maximum | Contingent liability | Discounted cash flow | Level III
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent liability, measurement inputs	1.00
Weighted Average | Contingent liability | Discounted cash flow | Level III
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent liability, measurement inputs	0.24

XML

INVESTMENTS - Fair Value, Additional Information (Details) (Phantom) - Consolidated Funds - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Schedule Of Investments In Marketable Securities [Line Items]
Securities sold short, proceeds	$ 0	$ 2,644
United states
Schedule Of Investments In Marketable Securities [Line Items]
Total debt securities, cost	5,124,603	4,019,823
Total equity securities, cost	138,533	6,117
Real estate securities, cost	213,228	0
Europe
Schedule Of Investments In Marketable Securities [Line Items]
Total debt securities, cost	2,618,439	2,477,821
Total equity securities, cost	58,869	320
Asia and other
Schedule Of Investments In Marketable Securities [Line Items]
Total debt securities, cost	169,761	233,603
Total equity securities, cost	$ 3,880	$ 22,977

XML

INVESTMENTS - Investment income (loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Schedule of Equity Method Investments [Line Items]
Other investments, at fair value	$ 18,817	$ 285	$ 19,674	$ 3,139
Total investment income	26,819	58,196	121,804	149,682
Funds
Schedule of Equity Method Investments [Line Items]
Equity-method investments:	(12,106)	39,041	45,211	92,105
Companies
Schedule of Equity Method Investments [Line Items]
Equity-method investments:	$ 20,108	$ 18,870	$ 56,919	$ 54,438

XML

UNITHOLDERS' CAPITAL - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Class of Stock [Line Items]
Total unitholders’ capital	$ 2,129,756	$ 2,423,663	$ 2,487,717	$ 2,422,803	$ 2,150,416	$ 2,020,617
OCGH
Class of Stock [Line Items]
Unitholders' capital (in shares)	62,145,608		85,471,937
Total unitholders’ capital	$ 560,067		$ 1,086,693
Total weighted average units outstanding
Class of Stock [Line Items]
Total Oaktree Operating Group units (in shares)	160,112,863		157,133,560
Total unitholders’ capital	$ 1,442,907		$ 1,997,745
Equity Held by Third Parties
Class of Stock [Line Items]
Total unitholders’ capital	$ 4,018		$ 5,661

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DEBT OBLIGATIONS AND CREDIT FACILITIES - Future Principal Payments of Debt Obligations (Details) - Oaktree Capital Group Excluding Consolidated Funds - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Remainder of 2019	$ 0
2020	0
2021	0
2022	0
2023	150,000
Thereafter	600,000
Total	$ 750,000	$ 750,000

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DEBT OBLIGATIONS AND CREDIT FACILITIES - Future Principal Payments with Respect to the CLO Loans Payable (Details) - Consolidated Funds $ in Thousands	Sep. 30, 2019 USD ($)
Debt Instrument [Line Items]
Remainder of 2019	$ 600,481
2020	169,372
2021	0
2022	0
2023	0
Thereafter	4,822,368
Total	$ 5,592,221

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EQUITY-BASED COMPENSATION EQUITY-BASED COMPENSATION - Restated Exchange Agreement (Details)		12 Months Ended						36 Months Ended	72 Months Ended
	Sep. 30, 2019 USD ($) $ / shares	Dec. 31, 2029	Dec. 31, 2026	Dec. 31, 2025	Dec. 31, 2024	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2025	Dec. 31, 2028
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maturity of notes issued under exchange agreement	3 years
Exchange election notice period	60 days
Exchange consummation period	155 days
Beneficial ownership percentage following an exchange, minimum threshold	1.00%
Required notice period for remaining units following exchange	36 months
Beneficial ownership percentage following final exchange, minimum threshold	5.00%
OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Valuation assumptions, multiple applied to fee-related earnings less stock-based compensation excluding depreciation and amortization	13.5
Valuation assumptions, multiple applied to net incentives created	6.75
Valuation assumptions, trailing period for net incentives created	3 years
Valuation assumptions, percentage of net cash value	100.00%
Valuation assumptions, percentage of corporate investments value	100.00%
Valuation assumptions, percentage of fund-level net accrued incentives	75.00%
Converted Class A Units and Phantom Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Valuation assumptions, price per unit (in usd per share) | $ / shares	$ 49.00
Maximum exchange consideration amount payable, incremental amount above exchange consideration | $	$ 20,000,000
Treasury rate
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Notes issued under exchange agreement, basis spread on variable rate	3.00%
Forecast | OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of units to exchange in aggregate, annual limit				35.00%	30.00%	25.00%	20.00%
Forecast | Messrs. Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson And Larry Keele | OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of units to exchange per individual			100.00%				20.00%
Maximum percentage of units to exchange per individual, additional annual limit								20.00%
Forecast | Current employees not separately named | OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of units to exchange per individual		100.00%					12.50%
Maximum percentage of units to exchange per individual, additional annual limit									12.50%
Maximum | OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Valuation assumptions, trailing period for fee-related earnings less stock-based compensation excluding depreciation and amortization	3 years
Minimum | OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Valuation assumptions, trailing period for fee-related earnings less stock-based compensation excluding depreciation and amortization	2 years

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GOODWILL AND INTANGIBLES

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

GOODWILL AND INTANGIBLES

Goodwill represents the excess of cost over the fair value of identifiable net assets of acquired businesses. Goodwill has an indefinite useful life and is not amortized, but instead is tested for impairment annually in the fourth quarter of each fiscal year, or more frequently if events or circumstances indicate that impairment may have occurred. As of September 30, 2019, the Company had determined there was no goodwill impairment. The carrying value of goodwill was $69.3 million as of September 30, 2019 and December 31, 2018.

The following table summarizes the carrying value of intangible assets:

	As of
	September 30, 2019			December 31, 2018
Contractual rights	$	347,452		$	347,452
Accumulated amortization	(45,755		)	(33,173		)
Intangible assets, net	$	301,697		$	314,279

Amortization expense associated with the Company’s intangible assets was $4.2 million and $12.6 million for both the three and nine months ended September 30, 2019 and 2018, respectively. Future amortization of intangible assets held as of September 30, 2019 is set forth below:

Remainder of 2019	$	4,198
2020	16,780
2021	15,112
2022	12,777
2023	12,777
Thereafter	240,053
Total	$	301,697

Goodwill and intangible assets are included in other assets in the condensed consolidated statements of financial position.

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INVESTMENTS

9 Months Ended

Sep. 30, 2019

Investments [Abstract]

INVESTMENTS

INVESTMENTS

Corporate Investments

Corporate investments consist of investments in funds and companies in which the Company does not have a controlling financial interest. Investments for which the Company is deemed to exert significant influence are accounted for under the equity method of accounting and reflect Oaktree’s ownership interest in each fund or company. In the case of investments for which the Company is not deemed to exert significant influence or control, the fair value option of accounting has been elected. Investment income represents the Company’s pro-rata share of income or loss from these funds or companies, or the change in fair value of the investment, as applicable. Oaktree’s general partnership interests are substantially illiquid. While investments in funds reflect each respective fund’s holdings at fair value, equity-method investments in DoubleLine Capital LP and its affiliates (collectively, “DoubleLine”) and other companies are not adjusted to reflect the fair value of the underlying company. The fair value of the underlying investments in Oaktree funds is based on the Company’s assessment, which takes into account expected cash flows, earnings multiples and/or comparisons to similar market transactions, among other factors. Valuation adjustments reflecting consideration of credit quality, concentration risk, sales restrictions and other liquidity factors are integral to valuing these instruments.

Corporate investments consisted of the following:

	As of
Corporate Investments	September 30, 2019		December 31, 2018
Equity-method investments:
Funds	$	1,063,668	$	1,089,068
Companies	27,103		45,797
Other investments, at fair value	50,461		74,899
Total corporate investments	$	1,141,232	$	1,209,764

The components of investment income are set forth below:

	Three months ended September 30,					Nine months ended September 30,
Investment Income (Loss)	2019			2018		2019		2018
Equity-method investments:
Funds	$	(12,106	)	$	39,041	$	45,211	$	92,105
Companies	20,108			18,870		56,919		54,438
Other investments, at fair value	18,817			285		19,674		3,139
Total investment income	$	26,819		$	58,196	$	121,804	$	149,682

Equity-method Investments

The Company’s equity-method investments include its investments in Oaktree funds for which it serves as general partner and other third-party funds and companies that are not consolidated but for which the Company is deemed to exert significant influence. The Company’s share of income or loss generated by these investments is recorded within investment income in the condensed consolidated statements of operations. The Company’s equity-method investments in Oaktree funds principally reflect the Company’s general partner interests in those funds, which typically does not exceed 2.5% in each fund. The Oaktree funds are investment companies that follow a specialized basis of accounting established by GAAP. Equity-method investments in companies include the Company’s one-fifth equity stake in DoubleLine.

Each reporting period, the Company evaluates each of its equity-method investments to determine if any are considered significant, as defined by the SEC. For the nine months ended September 30, 2019, no individual equity-method investment met the significance criteria.

Summarized financial information of the Company’s equity-method investments is set forth below.

	Three months ended September 30,						Nine months ended September 30,
Statements of Operations	2019			2018			2019			2018
Revenues / investment income	$	353,289		$	489,240		$	1,584,552		$	1,423,993
Interest expense	(54,329		)	(70,803		)	(185,227		)	(203,418		)
Other expenses	(157,878		)	(210,752		)	(639,180		)	(628,109		)
Net realized and unrealized gain (loss) on investments	(204,820		)	832,725			916,097			2,178,524
Net income (loss)	$	(63,738	)	$	1,040,410		$	1,676,242		$	2,770,990

Other Investments, at Fair Value

Other investments, at fair value primarily consist of (a) investments in certain Oaktree and non-Oaktree funds for which the fair value option of accounting has been elected and (b) derivatives utilized to hedge the Company’s exposure to investment income earned from its funds.

The following table summarizes net gains (losses) attributable to the Company’s other investments:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Realized gain (loss)	$	1,345	$	104	$	7,656	$	1,072
Net change in unrealized gain (loss)	17,472		181		12,018		2,067
Total gain (loss)	$	18,817	$	285	$	19,674	$	3,139

Investments of Consolidated Funds

Investments, at Fair Value

Investments held and securities sold short by the consolidated funds are summarized below:

	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
United States:
Debt securities:
Communication services	$	753,331	$	543,948	9.3	%	8.4	%
Consumer discretionary	623,147		506,551		7.5		7.8
Consumer staples	100,798		112,197		1.2		1.7
Energy	317,161		204,568		3.8		3.1
Financials	431,216		332,240		5.2		5.1
Health care	672,716		537,592		8.1		8.2
Industrials	735,539		443,406		8.9		6.8
Information technology	610,557		536,000		7.4		8.2
Materials	368,129		289,499		4.5		4.4
Real estate	198,649		217,633		2.4		3.3
Utilities	255,356		137,031		3.1		2.1
Total debt securities (cost: $5,124,603 and $4,019,823 as of September 30, 2019 and December 31, 2018, respectively)	5,066,599		3,860,665		61.4		59.1
Equity securities:
Communication services	24		—		0.0		—
Consumer discretionary	1,950		1,915		0.0		0.1
Energy	169		131		0.0		0.0
Financials	528		837		0.0		0.0
Health care	1,461		1,348		0.0		0.0
Industrials	93		88		0.0		0.0
Utilities	130,354		1,107		1.6		0.0
Total equity securities (cost: $138,533 and $6,117 as of September 30, 2019 and December 31, 2018, respectively)	134,579		5,426		1.6		0.1
Real estate:
Real estate	210,942		—		2.6		—
Total real estate securities (cost: $213,228 and $0 as of September 30, 2019 and December 31, 2018, respectively)	210,942		—		2.6		—

	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Europe:
Debt securities:
Communication services	$	503,543	$	530,337	6.1	%	8.1	%
Consumer discretionary	591,975		545,324		7.2		8.3
Consumer staples	165,928		160,406		2.0		2.5
Energy	18,040		15,260		0.2		0.2
Financials	79,423		48,545		1.0		0.7
Health care	514,946		418,516		6.2		6.4
Industrials	267,975		246,640		3.2		3.8
Information technology	168,473		194,988		2.0		3.0
Materials	273,045		221,660		3.3		3.4
Real estate	27,735		30,045		0.3		0.5
Utilities	8,712		1,559		0.1		0.0
Total debt securities (cost: $2,618,439 and $2,477,821 as of September 30, 2019 and December 31, 2018, respectively)	2,619,795		2,413,280		31.6		36.9
Equity securities:
Consumer discretionary	38,498		—		0.5		—
Consumer staples	—		38		—		0.0
Health care	696		948		0.0		0.1
Real estate	25,783		—		0.3		—
Total equity securities (cost: $58,869 and $320 as of September 30, 2019 and December 31, 2018, respectively)	64,977		986		0.8		0.1
Asia and other:
Debt securities:
Communication services	14,653		12,069		0.2		0.2
Consumer discretionary	39,453		36,822		0.5		0.6
Consumer staples	8,663		11,867		0.1		0.2
Energy	14,782		20,594		0.2		0.3
Financials	10,359		13,995		0.1		0.2
Government	1,010		12,155		0.0		0.2
Health care	6,465		9,633		0.1		0.1
Industrials	52,434		40,468		0.6		0.7
Information technology	—		1,887		—		0.0
Materials	10,628		15,516		0.1		0.2
Real estate	1,475		38,592		0.0		0.6
Utilities	8,166		14,870		0.1		0.2
Total debt securities (cost: $169,761 and $233,603 as of September 30, 2019 and December 31, 2018, respectively)	168,088		228,468		2.0		3.5

	Fair Value as of					Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018			September 30, 2019		December 31, 2018
Asia and other:
Equity securities:
Consumer discretionary	$	—	$	874		—	%	0.0	%
Consumer staples	1		997			0.0		0.0
Energy	323		382			0.0		0.0
Financials	—		2,935			—		0.0
Industrials	—		11,265			—		0.2
Information technology	—		1,725			—		0.0
Materials	1,495		4,382			0.0		0.1
Total equity securities (cost: $3,880 and $22,977 as of September 30, 2019 and December 31, 2018, respectively)	1,819		22,560			0.0		0.3
Total debt securities	7,854,482		6,502,413			95.0		99.5
Total equity securities	201,375		28,972			2.4		0.5
Total real estate	210,942		—			2.6		—
Total investments, at fair value	$	8,266,799	$	6,531,385		100.0	%	100.0	%
Securities Sold Short
Equity securities (proceeds: $0 and $2,644 as of September 30, 2019 and December 31, 2018, respectively)	$	—	$	(2,609	)

As of September 30, 2019 and December 31, 2018, no single issuer or investment had a fair value that exceeded 5% of Oaktree’s total consolidated net assets.

Net Gains (Losses) From Investment Activities of Consolidated Funds

Net gains (losses) from investment activities in the condensed consolidated statements of operations consist primarily of realized and unrealized gains and losses on the consolidated funds’ investments (including foreign-exchange gains and losses attributable to foreign-denominated investments and related activities) and other financial instruments. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments. Upon disposition of an investment, unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.

The following table summarizes net gains (losses) from investment activities:

	Three months ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments
Investments and other financial instruments	$	636		$	(14,910	)	$	(11,493	)	$	51,969
CLO liabilities (1)	—			(25,778		)	—			(42,458		)
Foreign-currency forward contracts (2)	(4,300		)	(276		)	1,496			1,193
Options and futures (2)	—			—			185			(152		)
Total	$	(3,664	)	$	(40,964	)	$	(9,812	)	$	10,552

	Nine Months Ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments
Investments and other financial instruments	$	(7,076	)	$	137,322		$	(14,027	)	$	(25,119	)
CLO liabilities (1)	—			(119,767		)	—			(9,601		)
Foreign-currency forward contracts (2)	(1,960		)	412			428			17
Total-return and interest-rate swaps (2)	—			—			858			29
Options and futures (2)	—			—			232			(265		)
Total	$	(9,036	)	$	17,967		$	(12,509	)	$	(34,939	)

(1) Represents the net change in the fair value of CLO liabilities based on the more observable fair value of CLO assets, as measured under the CLO measurement guidance. Please see note 2 for more information.

(2)

Please see note 7 for additional information.

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Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Nov. 01, 2019
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-35500
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Registrant Name	Oaktree Capital Group, LLC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-0174894
Entity Address, Address Line One	333 South Grand Avenue
Entity Address, Address Line Two	28th Floor
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90071
City Area Code	213
Local Phone Number	830-6300
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Central Index Key	0001403528
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Class A Units
Entity Information [Line Items]
Title of 12(b) Security	Class A units representing limited liability company interests
No Trading Symbol Flag	true
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		97,967,255
Class B Units
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		62,163,389
Series A Preferred Units
Entity Information [Line Items]
Title of 12(b) Security	6.625% Series A preferred units
Trading Symbol	OAK-A
Security Exchange Name	NYSE
Series B Preferred Units
Entity Information [Line Items]
Title of 12(b) Security	6.550% Series B preferred units
Trading Symbol	OAK-B
Security Exchange Name	NYSE

XML

UNITHOLDERS' CAPITAL (Tables)

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Summary of Net Income (Loss)

The following table sets forth a summary of net income attributable to the preferred unitholders, the OCGH non-controlling interest and the Class A common unitholders:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Weighted average Oaktree Operating Group units outstanding (in thousands):
OCGH non-controlling interest	83,666			85,775			84,796			86,675
Class A unitholders	75,995			71,369			74,005			70,167
Total weighted average units outstanding	159,661			157,144			158,801			156,842
Oaktree Operating Group net income (loss):
Net income attributable to preferred unitholders (1)	$	6,829		$	3,909		$	20,487		$	3,909
Net income (loss) attributable to OCGH non-controlling interest	(7,389		)	71,408			107,480			185,959
Net income (loss) attributable to OCG Class A unitholders	(6,708		)	59,417			91,226			149,956
Oaktree Operating Group net income (loss) (2)	$	(7,268	)	$	134,734		$	219,193		$	339,824
Net income (loss) attributable to OCG Class A unitholders:
Oaktree Operating Group net income (loss) attributable to OCG Class A unitholders	$	(6,708	)	$	59,417		$	91,226		$	149,956
Non-Operating Group income (expense)	(3,967		)	(321		)	(8,287		)	(629		)
Income tax benefit (expense) of Intermediate Holding Companies	(5,973		)	(6,346		)	(9,889		)	(12,724		)
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750		$	73,050		$	136,603

(1) Represents distributions declared, if any, on the preferred units.

(2)

Oaktree Operating Group net income does not include amounts attributable to other non-controlling interests, which amounted to $518 and $1,779 for the three and nine months ended September 30, 2019, respectively and $597 and $1,986 for the three and nine months ended September 30, 2018, respectively.

Changes in Company Ownership Interest

The change in the Company’s ownership interest in the Oaktree Operating Group is set forth below:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750	$	73,050	$	136,603
Equity reallocation between controlling and non-controlling interests	267,715			4,514		304,280		78,269
Change from net income attributable to OCG Class A unitholders and transfers from non-controlling interests	$	251,067		$	57,264	$	377,330	$	214,872

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income	$ (20,898)	$ 143,091	$ 285,030	$ 346,249
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(5,780)	773	(2,411)	683
Other comprehensive loss, net of tax	(5,780)	773	(2,411)	683
Total comprehensive income	(26,678)	143,864	282,619	346,932
Comprehensive income attributable to OCG	(13,745)	57,003	90,962	140,833
Comprehensive income attributable to preferred unitholders	(6,829)	(3,909)	(20,487)	(3,909)
Comprehensive income (loss) attributable to OCG Class A unitholders	(20,574)	53,094	70,475	136,924
Comprehensive (income) loss attributable to non-controlling interests in consolidated subsidiaries
Other comprehensive income (loss), net of tax:
Less: Comprehensive (income) loss attributable to non-controlling interest	8,725	(72,434)	(109,423)	(188,307)
Consolidated Funds
Other comprehensive income (loss), net of tax:
Less: Comprehensive (income) loss attributable to non-controlling interest	$ 4,208	$ (14,427)	$ (82,234)	$ (17,792)

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2019

Investments [Abstract]

Corporate Investments

Corporate investments consisted of the following:

	As of
Corporate Investments	September 30, 2019		December 31, 2018
Equity-method investments:
Funds	$	1,063,668	$	1,089,068
Companies	27,103		45,797
Other investments, at fair value	50,461		74,899
Total corporate investments	$	1,141,232	$	1,209,764

Summarized financial information of the Company’s equity-method investments is set forth below.

	Three months ended September 30,						Nine months ended September 30,
Statements of Operations	2019			2018			2019			2018
Revenues / investment income	$	353,289		$	489,240		$	1,584,552		$	1,423,993
Interest expense	(54,329		)	(70,803		)	(185,227		)	(203,418		)
Other expenses	(157,878		)	(210,752		)	(639,180		)	(628,109		)
Net realized and unrealized gain (loss) on investments	(204,820		)	832,725			916,097			2,178,524
Net income (loss)	$	(63,738	)	$	1,040,410		$	1,676,242		$	2,770,990

Investment Income

The components of investment income are set forth below:

	Three months ended September 30,					Nine months ended September 30,
Investment Income (Loss)	2019			2018		2019		2018
Equity-method investments:
Funds	$	(12,106	)	$	39,041	$	45,211	$	92,105
Companies	20,108			18,870		56,919		54,438
Other investments, at fair value	18,817			285		19,674		3,139
Total investment income	$	26,819		$	58,196	$	121,804	$	149,682

Investments, at Fair Value

Investments held and securities sold short by the consolidated funds are summarized below:

	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
United States:
Debt securities:
Communication services	$	753,331	$	543,948	9.3	%	8.4	%
Consumer discretionary	623,147		506,551		7.5		7.8
Consumer staples	100,798		112,197		1.2		1.7
Energy	317,161		204,568		3.8		3.1
Financials	431,216		332,240		5.2		5.1
Health care	672,716		537,592		8.1		8.2
Industrials	735,539		443,406		8.9		6.8
Information technology	610,557		536,000		7.4		8.2
Materials	368,129		289,499		4.5		4.4
Real estate	198,649		217,633		2.4		3.3
Utilities	255,356		137,031		3.1		2.1
Total debt securities (cost: $5,124,603 and $4,019,823 as of September 30, 2019 and December 31, 2018, respectively)	5,066,599		3,860,665		61.4		59.1
Equity securities:
Communication services	24		—		0.0		—
Consumer discretionary	1,950		1,915		0.0		0.1
Energy	169		131		0.0		0.0
Financials	528		837		0.0		0.0
Health care	1,461		1,348		0.0		0.0
Industrials	93		88		0.0		0.0
Utilities	130,354		1,107		1.6		0.0
Total equity securities (cost: $138,533 and $6,117 as of September 30, 2019 and December 31, 2018, respectively)	134,579		5,426		1.6		0.1
Real estate:
Real estate	210,942		—		2.6		—
Total real estate securities (cost: $213,228 and $0 as of September 30, 2019 and December 31, 2018, respectively)	210,942		—		2.6		—

	Fair Value as of				Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Europe:
Debt securities:
Communication services	$	503,543	$	530,337	6.1	%	8.1	%
Consumer discretionary	591,975		545,324		7.2		8.3
Consumer staples	165,928		160,406		2.0		2.5
Energy	18,040		15,260		0.2		0.2
Financials	79,423		48,545		1.0		0.7
Health care	514,946		418,516		6.2		6.4
Industrials	267,975		246,640		3.2		3.8
Information technology	168,473		194,988		2.0		3.0
Materials	273,045		221,660		3.3		3.4
Real estate	27,735		30,045		0.3		0.5
Utilities	8,712		1,559		0.1		0.0
Total debt securities (cost: $2,618,439 and $2,477,821 as of September 30, 2019 and December 31, 2018, respectively)	2,619,795		2,413,280		31.6		36.9
Equity securities:
Consumer discretionary	38,498		—		0.5		—
Consumer staples	—		38		—		0.0
Health care	696		948		0.0		0.1
Real estate	25,783		—		0.3		—
Total equity securities (cost: $58,869 and $320 as of September 30, 2019 and December 31, 2018, respectively)	64,977		986		0.8		0.1
Asia and other:
Debt securities:
Communication services	14,653		12,069		0.2		0.2
Consumer discretionary	39,453		36,822		0.5		0.6
Consumer staples	8,663		11,867		0.1		0.2
Energy	14,782		20,594		0.2		0.3
Financials	10,359		13,995		0.1		0.2
Government	1,010		12,155		0.0		0.2
Health care	6,465		9,633		0.1		0.1
Industrials	52,434		40,468		0.6		0.7
Information technology	—		1,887		—		0.0
Materials	10,628		15,516		0.1		0.2
Real estate	1,475		38,592		0.0		0.6
Utilities	8,166		14,870		0.1		0.2
Total debt securities (cost: $169,761 and $233,603 as of September 30, 2019 and December 31, 2018, respectively)	168,088		228,468		2.0		3.5

	Fair Value as of					Fair Value as a Percentage of Investments of Consolidated Funds as of
Investments	September 30, 2019		December 31, 2018			September 30, 2019		December 31, 2018
Asia and other:
Equity securities:
Consumer discretionary	$	—	$	874		—	%	0.0	%
Consumer staples	1		997			0.0		0.0
Energy	323		382			0.0		0.0
Financials	—		2,935			—		0.0
Industrials	—		11,265			—		0.2
Information technology	—		1,725			—		0.0
Materials	1,495		4,382			0.0		0.1
Total equity securities (cost: $3,880 and $22,977 as of September 30, 2019 and December 31, 2018, respectively)	1,819		22,560			0.0		0.3
Total debt securities	7,854,482		6,502,413			95.0		99.5
Total equity securities	201,375		28,972			2.4		0.5
Total real estate	210,942		—			2.6		—
Total investments, at fair value	$	8,266,799	$	6,531,385		100.0	%	100.0	%
Securities Sold Short
Equity securities (proceeds: $0 and $2,644 as of September 30, 2019 and December 31, 2018, respectively)	$	—	$	(2,609	)

The following table summarizes net gains (losses) attributable to the Company’s other investments:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Realized gain (loss)	$	1,345	$	104	$	7,656	$	1,072
Net change in unrealized gain (loss)	17,472		181		12,018		2,067
Total gain (loss)	$	18,817	$	285	$	19,674	$	3,139

Net Gains (Losses) from Investment Activities of Consolidated Funds

The following table summarizes net gains (losses) from investment activities:

	Three months ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments
Investments and other financial instruments	$	636		$	(14,910	)	$	(11,493	)	$	51,969
CLO liabilities (1)	—			(25,778		)	—			(42,458		)
Foreign-currency forward contracts (2)	(4,300		)	(276		)	1,496			1,193
Options and futures (2)	—			—			185			(152		)
Total	$	(3,664	)	$	(40,964	)	$	(9,812	)	$	10,552

	Nine Months Ended September 30,
	2019						2018
	Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments			Net Realized Gain (Loss) on Investments			Net Change in Unrealized Appreciation (Depreciation) on Investments
Investments and other financial instruments	$	(7,076	)	$	137,322		$	(14,027	)	$	(25,119	)
CLO liabilities (1)	—			(119,767		)	—			(9,601		)
Foreign-currency forward contracts (2)	(1,960		)	412			428			17
Total-return and interest-rate swaps (2)	—			—			858			29
Options and futures (2)	—			—			232			(265		)
Total	$	(9,036	)	$	17,967		$	(12,509	)	$	(34,939	)

(1) Represents the net change in the fair value of CLO liabilities based on the more observable fair value of CLO assets, as measured under the CLO measurement guidance. Please see note 2 for more information.

(2)

Please see note 7 for additional information.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Policies of the Company

Consolidation

The Company consolidates entities in which it has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. A limited partnership or similar entity is a variable interest entity (“VIE”) if the unaffiliated limited partners do not have substantive kick-out or participating rights. Most of the Oaktree funds are VIEs because they have not granted unaffiliated limited partners substantive kick-out or participating rights. The Company consolidates those VIEs in which it is the primary beneficiary. An entity is deemed to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (e.g., management and performance-based fees), would give it a controlling financial interest. A decision maker’s fee arrangement is not considered a variable interest if (a) it is compensation for services provided, commensurate with the level of effort required to provide those services, and part of a compensation arrangement that includes only terms, conditions or amounts that are customarily present in arrangements for similar services negotiated at arm’s length (“at-market”), and (b) the decision maker does not hold any other variable interests that absorb more than an insignificant amount of the potential VIE’s expected residual returns.

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective Oaktree funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. The Company does not consolidate most of the Oaktree funds because it is not the primary beneficiary of those funds due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in those funds that are considered to be more than insignificant. Please see note 4 for more information regarding both consolidated and unconsolidated VIEs. For entities that are not VIEs, consolidation is evaluated through a majority voting interest model.

“Consolidated funds” refers to Oaktree-managed funds and CLOs that the Company is required to consolidate. When funds or CLOs are consolidated, the Company reflects the assets, liabilities, revenues, expenses and cash flows of the funds or CLOs on a gross basis, and the majority of the economic interests in those funds or CLOs, which are held by third-party investors, are reflected as non-controlling interests in consolidated funds or debt obligations of CLOs in the condensed consolidated financial statements. All of the revenues earned by the Company as investment manager of the consolidated funds are eliminated in consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the consolidation of a fund does not impact net income or loss attributable to the Company.

Certain entities in which the Company has the ability to exert significant influence, including unconsolidated Oaktree funds for which the Company acts as general partner, are accounted for under the equity method of accounting.

Non-controlling Redeemable Interests in Consolidated Funds

The Company records non-controlling interests to reflect the economic interests of the unaffiliated limited partners. These interests are presented as non-controlling redeemable interests in consolidated funds within the condensed consolidated statements of financial condition, outside of the permanent capital section. Limited

partners in open-end and evergreen funds generally have the right to withdraw their capital, subject to the terms of the respective limited partnership agreements, over periods ranging from one month to three years. While limited partners in consolidated closed-end funds generally have not been granted redemption rights, these limited partners do have withdrawal or redemption rights in certain limited circumstances that are beyond the control of the Company, such as instances in which retaining the limited partnership interest could cause the limited partner to violate a law, regulation or rule.

The allocation of net income or loss to non-controlling redeemable interests in consolidated funds is based on the relative ownership interests of the unaffiliated limited partners after the consideration of contractual arrangements that govern allocations of income or loss. At the consolidated level, potential incentives are allocated to non-controlling redeemable interests in consolidated funds until such incentives become allocable to the Company under the substantive contractual terms of the limited partnership agreements of the funds.

Non-controlling Interests in Consolidated Funds

Non-controlling interests in consolidated funds represent the equity interests held by third-party investors in CLOs that had not yet priced as of the respective period end. All non-controlling interests in those CLOs are attributed a share of income or loss arising from the respective CLO based on the relative ownership interests of third-party investors after consideration of contractual arrangements that govern allocations of income or loss.

Non-controlling Interests in Consolidated Subsidiaries

Non-controlling interests in consolidated subsidiaries reflect the portion of unitholders’ capital attributable to OCGH unitholders (“OCGH non-controlling interest”) and third parties. All non-controlling interests in consolidated subsidiaries are attributed a share of income or loss in the respective consolidated subsidiary based on the relative economic interests of the OCGH unitholders or third parties after consideration of contractual arrangements that govern allocations of income or loss. Please see note 13 for more information.

Leases

The Company determines whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. Operating leases are recorded in the statements of financial condition as separate line items: operating lease right-of-use assets (“ROU assets”) and operating lease liabilities. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities and lease incentives. The Company’s lease arrangements generally do not provide an implicit rate. As a result, in such situations the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company may also include options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement of its ROU assets and liabilities. Lease expense for operating leases is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. Please see note 11 for more information.

Revenue Recognition

The Company earns management fees and incentive income from the investment advisory services it provides to its customers. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company typically enters into contracts with investment funds to provide investment management and administrative services. These services are generally capable of being distinct and each is accounted for as separate performance obligations comprised of distinct service periods because the services are performed over time. The Company determined that for accounting purposes the investment funds are generally considered to be the customers with respect to commingled funds, while the individual investors are the customers with respect to separate account and fund-of-one vehicles. The Company receives management fees and/or incentive income with

respect to its investment management services, and it is reimbursed by the funds for expenses incurred or paid on behalf of the funds with respect to its investment advisory services and its administrative services. The Company evaluates whether it is the principal (i.e., report as management fees on a gross basis) or agent (i.e., report as management fees on a net basis) with respect to each performance obligation and associated reimbursement arrangements. The Company has elected to apply the variable consideration exemption for its fee arrangements with its customers. Please see note 3 for more information on revenues.

Management Fees

Management fees are recognized over the period in which the investment management services are performed because customers simultaneously consume and receive benefits that are satisfied over time. The contractual terms of management fees generally vary by fund structure. For most closed-end funds, the management fee rate is applied against committed capital during the fund’s investment period and the lesser of total funded capital or cost basis of assets in the liquidation period. Certain closed-end funds pay management fees during the investment period based on drawn capital or cost basis. Additionally, for closed-end funds that pay management fees based on committed capital, the Company may elect to delay the start of the fund’s investment period and thus its full management fees, in which case it earns management fees based on drawn capital, and in certain cases outstanding borrowings under a fund-level credit facility made in lieu of drawing capital, until the Company elects to start the fund’s investment period. The Company’s right to receive management fees typically ends after 10 or 11 years from either the initial closing date or the start of the investment period, even if assets remain in the fund. In the case of CLOs, the management fee is based on the aggregate par value of collateral assets and principal cash, as defined in the applicable CLO indentures, and a portion of the management fees is dependent on the sufficiency of the particular vehicle’s cash flow. For open-end and evergreen funds, the management fee is generally based on the NAV of the fund. For the publicly-traded BDCs, the management fee is based on gross assets (including assets acquired with leverage), net of cash. In the case of certain open-end fund accounts, the Company has the potential to earn performance-based fees, typically in reference to a relevant benchmark index or hurdle rate, which are classified as management fees. The Company also earns quarterly incentive fees on the investment income from certain evergreen funds, such as the publicly-traded BDCs and other fund accounts, which are generally recurring in nature and reflected as management fees.

The ultimate amount of management fees that will be earned over the life of the contract is subject to a large number and broad range of possible outcomes due to market volatility and other factors outside of the Company’s control. As a result, the amount of revenue earned in any given period is generally determined at the end of each reporting period and relates to services performed during that period.

Incentive Income

Incentive income generally represents 20% of each closed-end fund’s profits, subject to the return of contributed capital and a preferred return of typically 8% per annum, and up to 20% of certain evergreen fund’s annual profits, subject to high-water marks or hurdle rates. Incentive income is recognized when it is probable that a significant reversal will not occur. Revenue recognition is typically met (a) for closed-end funds, after all contributed capital and the preferred return on that capital have been distributed to the fund’s investors, and (b) for certain evergreen funds, at the conclusion of each annual measurement period. Potential incentive income is highly susceptible to market volatility, the judgment and actions of third parties, and other factors outside of the Company’s control. The Company’s experience has demonstrated little predictive value in the amount of potential incentive income ultimately earned due to the highly uncertain nature of returns inherent in the markets and contingencies associated with many realization events. As a result, the amount of incentive income recognized in any given period is generally determined after giving consideration to a number of factors, including whether the fund is in its investment or liquidation period, and the nature and level of risk associated with changes in fair value of the remaining assets in the fund. In general, it would be unlikely that any amount of potential incentive income would be recognized until (a) the uncertainty is resolved or (b) the fund is near final liquidation, assets are under contract for sale or are of low risk of significant fluctuation in fair value, and the assets are significantly in excess of the threshold at which incentive income would be earned.

Incentives received by Oaktree before the revenue recognition criteria have been met are deferred and recorded as a deferred incentive income liability within accounts payable, accrued expenses and other liabilities in

the consolidated statements of financial condition. The Company may receive tax distributions related to taxable income allocated by funds, which are treated as an advance of incentive income and subject to the same recognition criteria. Tax distributions are contractually not subject to clawback.

Fair Value of Financial Instruments

GAAP establishes a hierarchical disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, such as the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I – Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement. The types of investments in Level I include exchange-traded equities, debt and derivatives with quoted prices.

• Level II – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are directly or indirectly observable. Level II inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. The types of investments in Level II generally include corporate bonds and loans, government and agency securities, less liquid and restricted equity investments, over-the-counter traded derivatives, debt obligations of consolidated CLOs, and other investments where the fair value is based on observable inputs.

• Level III – Valuations for which one or more significant inputs are unobservable. These inputs reflect the Company’s assessment of the assumptions that market participants use to value the investment based on the best available information. Level III inputs include prices of quoted securities in markets for which there are few transactions, less public information exists or prices vary among brokered market makers. The types of investments in Level III include non-publicly traded equity, debt, real estate and derivatives.

In some instances, the inputs used to value an instrument may fall into multiple levels of the fair-value hierarchy. In such instances, the instrument’s level within the fair-value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair-value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. Transfers of assets into or out of each fair value hierarchy level as a result of changes in the observability of the inputs used in measuring fair value are accounted for as of the beginning of the reporting period. Transfers resulting from a specific event, such as a reorganization or restructuring, are accounted for as of the date of the event that caused the transfer.

In the absence of observable market prices, the Company values Level III investments using valuation methodologies applied on a consistent basis. The quarterly valuation process for Level III investments begins with each portfolio company, property or security being valued by the investment and/or valuation teams. With the exception of open-end funds, all unquoted Level III investment values are reviewed and approved by (i) the Company’s valuation officer, who is independent of the investment teams, (ii) a designated investment professional of each strategy and (iii) for a substantial majority of unquoted Level III holdings as measured by market value, a valuation committee of the respective strategy.  For open-end funds, unquoted Level III investment values are reviewed and approved by the Company’s valuation officer. For certain investments, the valuation process also includes a review by independent valuation parties, at least annually, to determine whether the fair values determined by management are reasonable. Results of the valuation process are evaluated each quarter, including an assessment of whether the underlying calculations should be adjusted or recalibrated. In connection with this process, the Company periodically evaluates changes in fair-value measurements for reasonableness, considering items such as industry trends, general economic and market conditions, and factors specific to the investment.

Certain assets are valued using prices obtained from pricing vendors or brokers. The Company seeks to obtain prices from at least two pricing vendors for the subject or similar securities. In cases where vendor pricing is not reflective of fair value, a secondary vendor is unavailable, or no vendor pricing is available, a comparison value made up of quotes for the subject or similar securities received from broker dealers may be used. These investments may be classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions. The Company evaluates the prices obtained from brokers or pricing vendors based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. The Company also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, the Company performs due diligence procedures surrounding pricing vendors to understand their methodology and controls to support their use in the valuation process.

Fair Value Option

The Company has elected the fair value option for certain corporate investments that otherwise would not have reflected unrealized gains and losses in current-period earnings. Such election is irrevocable and is applied on an investment-by-investment basis at initial recognition. Unrealized gains and losses resulting from changes in fair value are reflected as a component of investment income in the condensed consolidated statements of operations. The Company’s accounting for these investments is similar to its accounting for investments held by the consolidated funds at fair value and the valuation methods are consistent with those used to determine the fair value of the consolidated funds’ investments.

The Company has elected the fair value option for the financial assets and financial liabilities of its consolidated CLOs. The assets and liabilities of CLOs are primarily reflected within the investments, at fair value and within the debt obligations of CLOs line items in the condensed consolidated statements of financial condition. The Company’s accounting for CLO assets is similar to its accounting for its funds with respect to both carrying investments held by CLOs at fair value and the valuation methods used to determine the fair value of those investments. The fair value of CLO liabilities are measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Realized gains or losses and changes in the fair value of CLO assets, respectively, are included in net realized gain on consolidated funds’ investments and net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Interest income of CLOs is included in interest and dividend income, and interest expense and other expenses, respectively, are included in interest expense and consolidated fund expenses in the condensed consolidated statements of operations. Changes in the fair value of a CLO’s financial liabilities in accordance with the CLO measurement guidance are included in net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Please see notes 6 and 10 for more information.

Accounting Policies of Consolidated Funds

Investments, at Fair Value

The consolidated funds include investment limited partnerships and CLOs that reflect their investments, including majority-owned and controlled investments, at fair value. The Company has retained the specialized investment company accounting guidance under GAAP for investment limited partnerships with respect to consolidated investments and has elected the fair value option for the financial assets of CLOs. Thus, the consolidated investments are reflected in the condensed consolidated statements of financial condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

Non-publicly traded debt and equity securities and other securities or instruments for which reliable market quotations are not available are valued by management using valuation methodologies applied on a consistent basis. These securities may initially be valued at the acquisition price as the best indicator of fair value. The

Company reviews the significant unobservable inputs, valuations of comparable investments and other similar transactions for investments valued at acquisition price to determine whether another valuation methodology should be utilized. Subsequent valuations will depend on the facts and circumstances known as of the valuation date and the application of valuation methodologies as further described below under “—Non-publicly Traded Equity and Real Estate Investments.” The fair value may also be based on a pending transaction expected to close after the valuation date.

Exchange-traded Investments

Securities listed on one or more national securities exchanges are valued at their last reported sales price on the date of valuation. If no sale occurred on the valuation date, the security is valued at the mean of the last “bid” and “ask” prices on the valuation date. Securities that are not readily marketable due to legal restrictions that may limit or restrict transferability are generally valued at a discount from quoted market prices. The discount would reflect the amount market participants would require due to the risk relating to the inability to access a public market for the security for the specified period and would vary depending on the nature and duration of the restriction and the perceived risk and volatility of the underlying securities. Securities with longer duration restrictions or higher volatility are generally valued at a higher discount. Such discounts are generally estimated based on put option models or an analysis of market studies. Instances where the Company has applied discounts to quoted prices of restricted listed securities have been infrequent. The impact of such discounts is not material to the Company’s condensed consolidated statements of financial condition and results of operations for all periods presented.

Credit-oriented Investments (including Real Estate Loan Portfolios)

Investments in corporate and government debt which are not listed or admitted to trading on any securities exchange are valued at the mean of the last bid and ask prices on the valuation date based on quotations supplied by recognized quotation services or by reputable broker-dealers.

The market-yield approach is considered in the valuation of non-publicly traded debt securities, utilizing expected future cash flows and discounted using estimated current market rates. Discounted cash-flow calculations may be adjusted to reflect current market conditions and/or the perceived credit risk of the borrower. Consideration is also given to a borrower’s ability to meet principal and interest obligations; this may include an evaluation of collateral and/or the underlying value of the borrower utilizing techniques described below under “—Non-publicly Traded Equity and Real Estate Investments.”

Non-publicly Traded Equity and Real Estate Investments

The fair value of equity and real estate investments is determined using a cost, market or income approach. The cost approach is based on the current cost of reproducing a real estate investment less deterioration and functional and economic obsolescence. The market approach utilizes valuations of comparable public companies and transactions, and generally seeks to establish the enterprise value of the portfolio company or investment property using a market-multiple methodology. This approach takes into account the financial measure (such as EBITDA, adjusted EBITDA, free cash flow, net operating income, net income, book value or net asset value) believed to be most relevant for the given company or investment property. Consideration also may be given to factors such as acquisition price of the security or investment property, historical and projected operational and financial results for the portfolio company, the strengths and weaknesses of the portfolio company or investment property relative to its comparable companies or properties, industry trends, general economic and market conditions, and others deemed relevant. The income approach is typically a discounted cash-flow method that incorporates expected timing and level of cash flows. It incorporates assumptions in determining growth rates, income and expense projections, discount and capitalization rates, capital structure, terminal values, and other factors. The applicability and weight assigned to market and income approaches are determined based on the availability of reliable projections and comparable companies and transactions.

The valuation of securities may be impacted by expectations of investors’ receptiveness to a public offering of the securities, the size of the holding of the securities and any associated control, information with respect to transactions or offers for the securities (including the transaction pursuant to which the investment was made and the elapsed time from the date of the investment to the valuation date), and applicable restrictions on the transferability of the securities.

These valuation methodologies involve a significant degree of management judgment. Accordingly, valuations by the Company do not necessarily represent the amounts that eventually may be realized from sales or other dispositions of investments. Fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the condensed consolidated financial statements.

Recent Accounting Developments

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance that changes the fair value measurement disclosure requirements. The amendments remove or modify certain disclosures, while adding others. The Company adopted the guidance in the first quarter of 2019. The adoption did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairments by eliminating step 2 of the goodwill impairment test. This step currently requires an entity to perform a hypothetical purchase price allocation to derive the implied fair value of goodwill. Under the new guidance, an impairment loss is recognized if the carrying value of a reporting unit exceeds its fair value. The impairment loss would equal the amount of that excess, limited to the total amount of goodwill. All other goodwill impairment guidance remains largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The guidance is effective for the Company in the first quarter of 2020 on a prospective basis, with early adoption permitted. The Company expects that adoption of this guidance will not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued guidance that requires a lessee to recognize a lease asset and a lease liability for most of its operating leases. Under legacy GAAP, operating leases were not recognized by a lessee in its statements of financial position. In general, the asset and liability each equal the present value of lease payments. The guidance does not significantly change the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee. The Company adopted the guidance in the first quarter of 2019 under the simplified transition method, which allows companies to forgo the comparative reporting requirements initially required under the modified retrospective transition approach and apply the new guidance prospectively. The adoption did not have an impact on the consolidated statements of operations because all of the Company’s leases are currently classified as operating leases, which under the guidance will continue to be recognized as expense on a straight-line basis. The adoption, however, resulted in a significant gross-up in total assets and total liabilities on the consolidated statements of financial position. The amount of the liability represents the aggregate discounted amount of the Company’s minimum lease obligations as of the reporting date. The difference between the asset and liability amounts represents deferred rent liabilities and lease incentives as of the reporting date that are netted against the asset amount.

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GOODWILL AND INTANGIBLES (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying Value of Intangible Assets

The following table summarizes the carrying value of intangible assets:

	As of
	September 30, 2019			December 31, 2018
Contractual rights	$	347,452		$	347,452
Accumulated amortization	(45,755		)	(33,173		)
Intangible assets, net	$	301,697		$	314,279

Expected Future Amortization

Future amortization of intangible assets held as of September 30, 2019 is set forth below:

Remainder of 2019	$	4,198
2020	16,780
2021	15,112
2022	12,777
2023	12,777
Thereafter	240,053
Total	$	301,697

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INVESTMENTS - Fair Value (Details) - Consolidated Funds - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 7,854,482	$ 6,502,413
Equity securities	$ 201,375	$ 28,972
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	95.00%	99.50%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	2.40%	0.50%
Real estate securities	$ 210,942	$ 0
Real estate securities, Fair Value as a Percentage of Investments of Consolidated Funds	2.60%	0.00%
Total Level III investments	$ 8,266,799	$ 6,531,385
Total investments, at fair value, percentage	100.00%	100.00%
Financial Instruments Sold, Not yet Purchased, at Fair Value [Abstract]
Equity securities (proceeds: $0 and $2,644 as of September 30, 2019 and December 31, 2018, respectively)	$ 0	$ (2,609)
United states
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	5,066,599	3,860,665
Equity securities	$ 134,579	$ 5,426
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	61.40%	59.10%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	1.60%	0.10%
Real estate securities	$ 210,942	$ 0
Real estate securities, Fair Value as a Percentage of Investments of Consolidated Funds	2.60%	0.00%
United states | Communication services
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 753,331	$ 543,948
Equity securities	$ 24	$ 0
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	9.30%	8.40%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
United states | Consumer discretionary
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 623,147	$ 506,551
Equity securities	$ 1,950	$ 1,915
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	7.50%	7.80%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.10%
United states | Consumer staples
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 100,798	$ 112,197
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	1.20%	1.70%
United states | Energy
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 317,161	$ 204,568
Equity securities	$ 169	$ 131
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	3.80%	3.10%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
United states | Financials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 431,216	$ 332,240
Equity securities	$ 528	$ 837
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	5.20%	5.10%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
United states | Health care
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 672,716	$ 537,592
Equity securities	$ 1,461	$ 1,348
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	8.10%	8.20%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
United states | Industrials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 735,539	$ 443,406
Equity securities	$ 93	$ 88
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	8.90%	6.80%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
United states | Information technology
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 610,557	$ 536,000
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	7.40%	8.20%
United states | Materials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 368,129	$ 289,499
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	4.50%	4.40%
United states | Real estate
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 198,649	$ 217,633
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	2.40%	3.30%
United states | Utilities
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 255,356	$ 137,031
Equity securities	$ 130,354	$ 1,107
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	3.10%	2.10%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	1.60%	0.00%
Europe
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 2,619,795	$ 2,413,280
Equity securities	$ 64,977	$ 986
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	31.60%	36.90%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.80%	0.10%
Europe | Communication services
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 503,543	$ 530,337
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	6.10%	8.10%
Europe | Consumer discretionary
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 591,975	$ 545,324
Equity securities	$ 38,498	$ 0
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	7.20%	8.30%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.50%	0.00%
Europe | Consumer staples
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 165,928	$ 160,406
Equity securities	$ 0	$ 38
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	2.00%	2.50%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
Europe | Energy
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 18,040	$ 15,260
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.20%	0.20%
Europe | Financials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 79,423	$ 48,545
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	1.00%	0.70%
Europe | Health care
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 514,946	$ 418,516
Equity securities	$ 696	$ 948
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	6.20%	6.40%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.10%
Europe | Industrials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 267,975	$ 246,640
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	3.20%	3.80%
Europe | Information technology
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 168,473	$ 194,988
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	2.00%	3.00%
Europe | Materials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 273,045	$ 221,660
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	3.30%	3.40%
Europe | Real estate
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 27,735	$ 30,045
Equity securities	$ 25,783	$ 0
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.30%	0.50%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.30%	0.00%
Europe | Utilities
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 8,712	$ 1,559
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.10%	0.00%
Asia and other
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 168,088	$ 228,468
Equity securities	$ 1,819	$ 22,560
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	2.00%	3.50%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.30%
Asia and other | Communication services
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 14,653	$ 12,069
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.20%	0.20%
Asia and other | Consumer discretionary
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 39,453	$ 36,822
Equity securities	$ 0	$ 874
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.50%	0.60%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
Asia and other | Consumer staples
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 8,663	$ 11,867
Equity securities	$ 1	$ 997
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.10%	0.20%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
Asia and other | Energy
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 14,782	$ 20,594
Equity securities	$ 323	$ 382
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.20%	0.30%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
Asia and other | Financials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 10,359	$ 13,995
Equity securities	$ 0	$ 2,935
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.10%	0.20%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
Asia and other | Government
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 1,010	$ 12,155
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.20%
Asia and other | Health care
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 6,465	$ 9,633
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.10%	0.10%
Asia and other | Industrials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 52,434	$ 40,468
Equity securities	$ 0	$ 11,265
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.60%	0.70%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.20%
Asia and other | Information technology
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 0	$ 1,887
Equity securities	$ 0	$ 1,725
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.00%
Asia and other | Materials
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 10,628	$ 15,516
Equity securities	$ 1,495	$ 4,382
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.10%	0.20%
Equity securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.10%
Asia and other | Real estate
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 1,475	$ 38,592
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.00%	0.60%
Asia and other | Utilities
Schedule Of Investments In Marketable Securities [Line Items]
Debt securities	$ 8,166	$ 14,870
Debt securities, Fair Value as a Percentage of Investments of Consolidated Funds	0.10%	0.20%

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INVESTMENTS - Corporate investments (Details) - Oaktree Capital Group Excluding Consolidated Funds - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]
Other investments, at fair value	$ 50,461	$ 74,899
Total corporate investments	1,141,232	1,209,764
Funds
Schedule of Equity Method Investments [Line Items]
Equity-method investments:	1,063,668	1,089,068
Companies
Schedule of Equity Method Investments [Line Items]
Equity-method investments:	$ 27,103	$ 45,797

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FAIR VALUE - Changes in Fair Value (Details) - Oaktree Capital Group Excluding Consolidated Funds - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Corporate Investments
Beginning balance	$ 42,234	$ 31,084	$ 45,426	$ 50,902
Contributions or additions	883	10,258	937	16,668
Distributions	0	(290)	(7,181)	(31,145)
Net gain (loss) included in earnings	2,519	(453)	6,454	4,174
Ending balance	45,636	40,599	45,636	40,599
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	2,519	(557)	6,454	3,102
Contingent Liability
Beginning balance	(6,737)	(9,129)	(6,657)	(18,778)
Contributions or additions	0	0	0	0
Distributions	0	0	0	0
Net gain (loss) included in earnings	2,219	2,538	2,139	12,187
Ending balance	(4,518)	(6,591)	(4,518)	(6,591)
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period	$ 2,219	$ 2,538	$ 2,139	$ 12,187

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UNITHOLDERS' CAPITAL - Summary of Net Income (Loss) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Weighted average Oaktree Operating Group units outstanding (in thousands):
Weighted average Oaktree Operating Group units outstanding (in shares)	75,995	71,369	74,005	70,167
Oaktree Operating Group net income (loss):
Oaktree Operating Group net income (loss)	$ (20,898)	$ 143,091	$ 285,030	$ 346,249
Net income (loss) attributable to OCG Class A unitholders:
Oaktree Operating Group net income (loss) attributable to OCG Class A unitholders	(6,708)	59,417	91,226	149,956
Non-Operating Group income (expense)	(3,967)	(321)	(8,287)	(629)
Income tax benefit (expense) of Intermediate Holding Companies	(5,973)	(6,346)	(9,889)	(12,724)
Net income (loss) attributable to OCG Class A unitholders	$ (16,648)	$ 52,750	$ 73,050	$ 136,603
Oaktree Operating Group
Weighted average Oaktree Operating Group units outstanding (in thousands):
Weighted average Oaktree Operating Group units outstanding (in shares)	159,661	157,144	158,801	156,842
Oaktree Operating Group net income (loss):
Oaktree Operating Group net income (loss)	$ (7,268)	$ 134,734	$ 219,193	$ 339,824
Net income (loss) attributable to OCG Class A unitholders:
OCGH non-controlling interest	$ 518	$ 597	$ 1,779	$ 1,986
Weighted average Oaktree Operating Group units outstanding (in shares) | Oaktree Operating Group
Weighted average Oaktree Operating Group units outstanding (in thousands):
Weighted average Oaktree Operating Group units outstanding (in shares)	83,666	85,775	84,796	86,675
Oaktree Operating Group net income (loss):
Oaktree Operating Group net income (loss)	$ (7,389)	$ 71,408	$ 107,480	$ 185,959
Series A Preferred Units | Oaktree Operating Group
Oaktree Operating Group net income (loss):
Oaktree Operating Group net income (loss)	$ 6,829	$ 3,909	$ 20,487	$ 3,909
Class A Units | Oaktree Operating Group
Weighted average Oaktree Operating Group units outstanding (in thousands):
Weighted average Oaktree Operating Group units outstanding (in shares)	75,995	71,369	74,005	70,167
Oaktree Operating Group net income (loss):
Oaktree Operating Group net income (loss)	$ (6,708)	$ 59,417	$ 91,226	$ 149,956

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DEBT OBLIGATIONS AND CREDIT FACILITIES - Additional Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Consolidated Funds
Debt Instrument [Line Items]
Fair value of debt obligations	$ 5,553,144	$ 4,127,994
Total remaining principal	5,592,221
Securities owned and pledged as collateral	6,300,000	4,700,000
Oaktree Capital Group Excluding Consolidated Funds
Debt Instrument [Line Items]
Total remaining principal	750,000	750,000
Oaktree Capital Group Excluding Consolidated Funds | Level III
Debt Instrument [Line Items]
Fair value of debt obligations	$ 806,300	$ 720,300
Weighted average interest rate	2.80%	4.40%
Percentage increase in average borrowing rate assumption that would decrease fair value of debt obligation	10.00%
Fair value of debt obligation decrease in value due to increase in average borrowing rate	$ 788,900
Percentage decrease in average borrowing rate assumption that would increase fair value of debt obligation	10.00%
Fair value of debt obligation increase in value due to decrease in average borrowing rate	$ 824,200
Credit Agreement | Senior secured notes
Debt Instrument [Line Items]
Weighted average interest rate	3.39%
Total remaining principal	$ 976,470	$ 870,098
Credit Agreement | Consolidated Funds
Debt Instrument [Line Items]
Total remaining principal	976,500	976,500
Credit Agreement | Consolidated Funds | Level III
Debt Instrument [Line Items]
Fair value of debt	$ 976,800	$ 871,300
Credit Agreement | Maximum | Consolidated Funds | Senior secured notes
Debt Instrument [Line Items]
Term (in years)	10 years

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LEASES - Narrative (Details)	9 Months Ended
	Sep. 30, 2019
Leases [Abstract]
Remaining lease term	1 year
Extension term	5 years
Termination period	1 year

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EQUITY-BASED COMPENSATION - Class A and OCGH Unit Awards (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) shares
Class A Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units granted (in shares)	1,494,324
OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units granted (in shares)	1,873,155
Discount from market price	17.50%
Unrecognized compensation expense on non-vested equity-based awards | $	$ 217.1
Weighted average period of recognition non-vested equity-based awards	4 years 4 months 24 days
Class A Units and OCGH Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	5 years 10 months 24 days

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VARIABLE INTEREST ENTITIES - VIEs Not Consolidated (Details) - Unconsolidated VIEs - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Variable Interest Entity [Line Items]
Maximum exposure to loss	$ 1,167,277	$ 1,477,519
Corporate investments
Variable Interest Entity [Line Items]
Carrying value of company's investments in VIEs, not consolidated	1,077,595	1,093,294
Due from affiliates
Variable Interest Entity [Line Items]
Carrying value of company's investments in VIEs, not consolidated	$ 89,682	$ 384,225

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EQUITY-BASED COMPENSATION EQUITY-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement, Noncash Expense [Abstract]

Summary of Unvested Equity-Based Awards and Changes

A summary of the status of the Company’s unvested OCGH unit awards and changes for the period presented are set forth below (actual dollars per unit):

	Converted Class A Units (1)				OCGH Units
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
Balance as of December 31, 2018	2,700,585		$	42.76	1,864,049		$	39.83
Granted	1,494,324		49.56		1,873,155		41.34
Vested	(975,072	)	43.06		(434,674	)	35.11
Forfeited	(98,301	)	44.53		—		—
Balance as of September 30, 2019	3,121,536		$	45.87	3,302,530		$	41.31

(1) At the Effective Time, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted Class A Unit”) and will thereafter be subject to the terms and conditions of the OCGH limited partnership agreement. The Converted Class A Units will (i) be subject to the same vesting terms that were applicable to such units prior to the Effective Time, (ii) be entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. However, in 2020 and 2021, Converted Class A Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting. No unvested Class A Units or Converted Class A Units vested in connection with the Mergers.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	9 Months Ended
	Sep. 30, 2019
Minimum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Withdrawal period	1 month
Maximum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Withdrawal period	3 years
Management fees | Minimum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Management fees payment term (years)	10 years
Management fees | Maximum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Management fees payment term (years)	11 years
Closed-end
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percentage of fund profits	20.00%
Preferred return on funds	8.00%
Evergreen
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percentage of fund profits	20.00%

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SUBSEQUENT EVENTS (Details) - Subsequent Event	Nov. 07, 2019 $ / shares
Class A Units
Class of Stock [Line Items]
Dividend declared (in dollars per share)	$ 0.03
Series A Preferred Units
Class of Stock [Line Items]
Dividend declared (in dollars per share)	0.414063
Series B Preferred Units
Class of Stock [Line Items]
Dividend declared (in dollars per share)	$ 0.409375

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DERIVATIVES AND HEDGING - Impact of Derivatives Held by Consolidated Funds on Income (Details) - Not Designated as Hedging Instrument - Consolidated Funds - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivatives, Fair Value [Line Items]
Net Realized Gain (Loss) on Investments	$ (4,300)	$ 1,681	$ (1,960)	$ 1,518
Net Change in Unrealized Appreciation (Depreciation) on Investments	(276)	1,041	412	(219)
Foreign-currency forward contracts
Derivatives, Fair Value [Line Items]
Net Realized Gain (Loss) on Investments	(4,300)	1,496	(1,960)	428
Net Change in Unrealized Appreciation (Depreciation) on Investments	(276)	1,193	412	17
Total-return and interest-rate swaps
Derivatives, Fair Value [Line Items]
Net Realized Gain (Loss) on Investments			0	858
Net Change in Unrealized Appreciation (Depreciation) on Investments			0	29
Options and futures
Derivatives, Fair Value [Line Items]
Net Realized Gain (Loss) on Investments	0	185	0	232
Net Change in Unrealized Appreciation (Depreciation) on Investments	$ 0	$ (152)	$ 0	$ (265)

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FAIR VALUE - Consolidated Funds Summary of Valuation Techniques and Quantitative Information (Details) - Consolidated Funds $ in Thousands	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Real estate investments	$ 210,942	$ 0
Total Level III investments	8,266,799	6,531,385
Level III
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Total Level III investments	559,039	325,922
Level III | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Real estate investments	15,636
Level III | Recent transaction price
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Real estate investments	146,208
Level III | Communication services | Recent market information
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments		20,746
Level III | Communication services | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments		2,416
Level III | Consumer discretionary | Recent market information
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	26,190
Level III | Consumer discretionary | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	4,340
Level III | Financials | Recent market information
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	39,099	108,277
Level III | Financials | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	4,415	3,608
Level III | Health care | Recent market information
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	35,560	37,724
Level III | Health care | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	666	2,550
Level III | Real estate | Recent market information
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	20,572	79,562
Level III | Real estate | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	702	4,570
Level III | Other | Recent market information
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	53,041	38,959
Level III | Other | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments	14,257	17,943
Level III | Other | Recent transaction price
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments		5,078
Level III | Equity Investment | Discounted cash flow
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments	131,778	2,099
Level III | Equity Investment | Market approach (comparable companies)
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments		$ 2,390
Level III | Equity Investment | Recent transaction price
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments	$ 26,632
Discount rate | Level III | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Real estate investments, significant unobservable inputs	5.00%
Discount rate | Level III | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Real estate investments, significant unobservable inputs	7.00%
Discount rate | Level III | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Real estate investments, significant unobservable inputs	6.00%
Discount rate | Level III | Communication services | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs		0.12
Discount rate | Level III | Communication services | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs		0.14
Discount rate | Level III | Communication services | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs		0.13
Discount rate | Level III | Consumer discretionary | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.10
Discount rate | Level III | Consumer discretionary | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.18
Discount rate | Level III | Consumer discretionary | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.13
Discount rate | Level III | Financials | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.08	0.09
Discount rate | Level III | Financials | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.12	0.15
Discount rate | Level III | Financials | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.11	0.14
Discount rate | Level III | Health care | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.16	0.10
Discount rate | Level III | Health care | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.18	0.16
Discount rate | Level III | Health care | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.17	0.14
Discount rate | Level III | Real estate | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.17	0.12
Discount rate | Level III | Real estate | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.19	0.23
Discount rate | Level III | Real estate | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.18	0.14
Discount rate | Level III | Other | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.08	0.08
Discount rate | Level III | Other | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.18	0.15
Discount rate | Level III | Other | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Credit-oriented investments, significant unobservable inputs	0.13	0.13
Discount rate | Level III | Equity Investment | Discounted cash flow | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	0.08	0.10
Discount rate | Level III | Equity Investment | Discounted cash flow | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	0.15	0.30
Discount rate | Level III | Equity Investment | Discounted cash flow | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	0.11	0.12
Earnings multiple | Level III | Equity Investment | Market approach (comparable companies)
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments	$ 39,578
Earnings multiple | Level III | Equity Investment | Market approach (comparable companies) | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	4	4
Earnings multiple | Level III | Equity Investment | Market approach (comparable companies) | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	10	10
Earnings multiple | Level III | Equity Investment | Market approach (comparable companies) | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	6	7
Revenue multiple | Level III | Equity Investment | Market approach (comparable companies)
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments	$ 365
Revenue multiple | Level III | Equity Investment | Market approach (comparable companies) | Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	2
Revenue multiple | Level III | Equity Investment | Market approach (comparable companies) | Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	4
Revenue multiple | Level III | Equity Investment | Market approach (comparable companies) | Weighted Average
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Equity investments, significant unobservable inputs	3

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Oct. 31, 2017
Contingencies And Commitments [Line Items]
Accrued incentives (fund level)	$ 1,344,218		$ 1,344,218		$ 1,434,458
Compensation expense related to accrued incentives (fund level)	704,178		704,178		754,903
Contingent consideration	36,100		36,100
Contingent consideration, fair value	4,500		4,500		6,700
Contingent consideration income (expense)	2,200	$ 2,500	2,100	$ 12,200
Capital commitments	365,100		365,100		385,800
Consolidated Funds
Contingencies And Commitments [Line Items]
Aggregate potential credit and investment commitments	21,400		21,400		$ 13,800
BDC Acquisition
Contingencies And Commitments [Line Items]
Indemnification asset	$ 32,000		$ 32,000			$ 56,200

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

In the normal course of business, Oaktree enters into contracts that contain certain representations, warranties and indemnifications. The Company’s exposure under these arrangements would involve future claims that have not yet been asserted. Inasmuch as no such claims currently exist or are expected to arise, the Company has not accrued any liability in connection with these indemnifications.

Legal Actions

Oaktree, its affiliates, investment professionals, and portfolio companies are routinely involved in litigation and other legal actions in the ordinary course of their business and investing activities.  In addition, Oaktree is subject to the authority of a number of U.S. and non-U.S. regulators, including the SEC and the Financial Industry Regulatory Authority, and those authorities periodically conduct examinations of Oaktree and make other inquiries that may result in the commencement of regulatory proceedings against Oaktree and its personnel. Oaktree is currently not subject to any pending actions or regulatory proceedings that either individually or in the aggregate are expected to have a material impact on its consolidated financial statements.

Incentive Income

In addition to the incentive income recognized by the Company, certain of its funds have amounts recorded as potentially allocable to the Company as its share of potential future incentive income, based on each fund’s net asset value. Inasmuch as this incentive income is contingent upon future investment activity and other factors, it is not recognized by the Company as revenue until it is probable that a significant reversal will not occur. As of September 30, 2019 and December 31, 2018, respectively, the aggregate of such amounts recorded at the fund level in excess of incentive income recognized by the Company was $1,344,218 and $1,434,458, for which related direct incentive income compensation expense was estimated to be $704,178 and $754,903.

Contingent Liabilities

The Company has a contingent consideration obligation of up to $36.1 million, payable in cash and Class A units. The amount of contingent consideration is based on the achievement of certain performance targets. As of both September 30, 2019 and December 31, 2018, respectively, the fair value of the contingent liability was $4.5 million and $6.7 million. Changes in this liability resulted in income of $2.2 million and $2.1 million for the three and nine months ended September 30, 2019, respectively and income of $2.5 million and $12.2 million for the three and nine months ended September 30, 2018, respectively. The fair value of the contingent consideration liability is a Level III valuation, which uses a discounted cash-flow analysis based on a probability-weighted average estimate of certain performance targets, including fundraising and revenue levels. The assumptions used in the analysis are inherently subjective, and thus the ultimate amount of the contingent consideration liability may differ materially from the most recent estimate. The contingent consideration liability is included in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. Changes in the liability are recorded in general and administrative expense in the condensed consolidated statements of operations.

In connection with the BDC acquisition in October 2017, Fifth Street Management LLC pledged assets with an estimated fair value of $56.2 million to indemnify the Company or the BDCs against any claims or assessments arising from the period during which it managed the BDCs. As of September 30, 2019, the remaining amount of the pledged assets was $32.0 million.

Commitments to Funds

As of September 30, 2019 and December 31, 2018, the Company, generally in its capacity as general partner, had undrawn capital commitments of $365.1 million and $385.8 million, respectively, including commitments to both unconsolidated and consolidated funds.

Investment Commitments of the Consolidated Funds

Certain of the consolidated funds are parties to credit arrangements that provide for the issuance of letters of credit and/or revolving loans, which may require the particular fund to extend loans to investee companies. The consolidated funds use the same investment criteria in making these commitments as they do for investments that

are included in the condensed consolidated statements of financial condition. The unfunded liability associated with these credit arrangements is equal to the amount by which the contractual loan commitment exceeds the sum of funded debt and cash held in escrow, if any. As of September 30, 2019 and December 31, 2018, the consolidated funds had potential aggregate commitments of $21.4 million and $13.8 million, respectively. These commitments are expected to be funded by the funds’ cash balances, proceeds from asset sales or drawdowns against existing capital commitments.

A consolidated fund may agree to guarantee the repayment obligations of certain investee companies. As of September 30, 2019 and December 31, 2018, there were no guaranteed amounts under such arrangements.

Certain consolidated funds are investment companies that are required to disclose financial support provided or contractually required to be provided to any of their portfolio companies. During the nine months ended September 30, 2019, the consolidated funds did not provide any financial support to portfolio companies.

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UNITHOLDERS' CAPITAL

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

UNITHOLDERS' CAPITAL

UNITHOLDERS’ CAPITAL

Unitholders’ capital reflects the economic interests attributable to Class A unitholders, preferred unitholders, non-controlling interests in consolidated subsidiaries and non-controlling interests in consolidated funds. Non-controlling interests in consolidated subsidiaries represent the portion of unitholders’ capital attributable to the OCGH non-controlling interest and third parties. The OCGH non-controlling interest is determined at the Oaktree Operating Group level, after giving effect to distributions, if any, attributable to the preferred unitholders, based on the proportionate share of Oaktree Operating Group units held by the OCGH unitholders. Certain expenses, such as income taxes and related administrative expenses of Oaktree Capital Group, LLC and its Intermediate Holding Companies, are solely attributable to the Class A unitholders. As of September 30, 2019 and December 31, 2018, respectively, OCGH units represented 62,145,608 of the total 160,112,863 Oaktree Operating Group units and 85,471,937 of the total 157,133,560 Oaktree Operating Group units. Based on total allocable Oaktree Operating Group capital of $1,442,907 and $1,997,745 as of September 30, 2019 and December 31, 2018, respectively, the OCGH non-controlling interest was $560,067 and $1,086,693. As of September 30, 2019 and December 31, 2018, non-controlling interests attributable to third parties was $4,018 and $5,661, respectively.

The following table sets forth a summary of net income attributable to the preferred unitholders, the OCGH non-controlling interest and the Class A common unitholders:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Weighted average Oaktree Operating Group units outstanding (in thousands):
OCGH non-controlling interest	83,666			85,775			84,796			86,675
Class A unitholders	75,995			71,369			74,005			70,167
Total weighted average units outstanding	159,661			157,144			158,801			156,842
Oaktree Operating Group net income (loss):
Net income attributable to preferred unitholders (1)	$	6,829		$	3,909		$	20,487		$	3,909
Net income (loss) attributable to OCGH non-controlling interest	(7,389		)	71,408			107,480			185,959
Net income (loss) attributable to OCG Class A unitholders	(6,708		)	59,417			91,226			149,956
Oaktree Operating Group net income (loss) (2)	$	(7,268	)	$	134,734		$	219,193		$	339,824
Net income (loss) attributable to OCG Class A unitholders:
Oaktree Operating Group net income (loss) attributable to OCG Class A unitholders	$	(6,708	)	$	59,417		$	91,226		$	149,956
Non-Operating Group income (expense)	(3,967		)	(321		)	(8,287		)	(629		)
Income tax benefit (expense) of Intermediate Holding Companies	(5,973		)	(6,346		)	(9,889		)	(12,724		)
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750		$	73,050		$	136,603

(1) Represents distributions declared, if any, on the preferred units.

(2) Oaktree Operating Group net income does not include amounts attributable to other non-controlling interests, which amounted to $518 and $1,779 for the three and nine months ended September 30, 2019, respectively and $597 and $1,986 for the three and nine months ended September 30, 2018, respectively.

The change in the Company’s ownership interest in the Oaktree Operating Group is set forth below:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Net income (loss) attributable to OCG Class A unitholders	$	(16,648	)	$	52,750	$	73,050	$	136,603
Equity reallocation between controlling and non-controlling interests	267,715			4,514		304,280		78,269
Change from net income attributable to OCG Class A unitholders and transfers from non-controlling interests	$	251,067		$	57,264	$	377,330	$	214,872

 

Please see notes 14, 15 and 16 for additional information regarding transactions that impacted unitholders’ capital.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Consolidation

Consolidation

The Company consolidates entities in which it has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. A limited partnership or similar entity is a variable interest entity (“VIE”) if the unaffiliated limited partners do not have substantive kick-out or participating rights. Most of the Oaktree funds are VIEs because they have not granted unaffiliated limited partners substantive kick-out or participating rights. The Company consolidates those VIEs in which it is the primary beneficiary. An entity is deemed to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company’s involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (e.g., management and performance-based fees), would give it a controlling financial interest. A decision maker’s fee arrangement is not considered a variable interest if (a) it is compensation for services provided, commensurate with the level of effort required to provide those services, and part of a compensation arrangement that includes only terms, conditions or amounts that are customarily present in arrangements for similar services negotiated at arm’s length (“at-market”), and (b) the decision maker does not hold any other variable interests that absorb more than an insignificant amount of the potential VIE’s expected residual returns.

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective Oaktree funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. The Company does not consolidate most of the Oaktree funds because it is not the primary beneficiary of those funds due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in those funds that are considered to be more than insignificant. Please see note 4 for more information regarding both consolidated and unconsolidated VIEs. For entities that are not VIEs, consolidation is evaluated through a majority voting interest model.

“Consolidated funds” refers to Oaktree-managed funds and CLOs that the Company is required to consolidate. When funds or CLOs are consolidated, the Company reflects the assets, liabilities, revenues, expenses and cash flows of the funds or CLOs on a gross basis, and the majority of the economic interests in those funds or CLOs, which are held by third-party investors, are reflected as non-controlling interests in consolidated funds or debt obligations of CLOs in the condensed consolidated financial statements. All of the revenues earned by the Company as investment manager of the consolidated funds are eliminated in consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the consolidation of a fund does not impact net income or loss attributable to the Company.

Certain entities in which the Company has the ability to exert significant influence, including unconsolidated Oaktree funds for which the Company acts as general partner, are accounted for under the equity method of accounting.

Non-controlling Interests in Consolidated Funds and Subsidiaries

Non-controlling Redeemable Interests in Consolidated Funds

The Company records non-controlling interests to reflect the economic interests of the unaffiliated limited partners. These interests are presented as non-controlling redeemable interests in consolidated funds within the condensed consolidated statements of financial condition, outside of the permanent capital section. Limited

partners in open-end and evergreen funds generally have the right to withdraw their capital, subject to the terms of the respective limited partnership agreements, over periods ranging from one month to three years. While limited partners in consolidated closed-end funds generally have not been granted redemption rights, these limited partners do have withdrawal or redemption rights in certain limited circumstances that are beyond the control of the Company, such as instances in which retaining the limited partnership interest could cause the limited partner to violate a law, regulation or rule.

The allocation of net income or loss to non-controlling redeemable interests in consolidated funds is based on the relative ownership interests of the unaffiliated limited partners after the consideration of contractual arrangements that govern allocations of income or loss. At the consolidated level, potential incentives are allocated to non-controlling redeemable interests in consolidated funds until such incentives become allocable to the Company under the substantive contractual terms of the limited partnership agreements of the funds.

Non-controlling Interests in Consolidated Funds

Non-controlling interests in consolidated funds represent the equity interests held by third-party investors in CLOs that had not yet priced as of the respective period end. All non-controlling interests in those CLOs are attributed a share of income or loss arising from the respective CLO based on the relative ownership interests of third-party investors after consideration of contractual arrangements that govern allocations of income or loss.

Non-controlling Interests in Consolidated Subsidiaries

Non-controlling interests in consolidated subsidiaries reflect the portion of unitholders’ capital attributable to OCGH unitholders (“OCGH non-controlling interest”) and third parties. All non-controlling interests in consolidated subsidiaries are attributed a share of income or loss in the respective consolidated subsidiary based on the relative economic interests of the OCGH unitholders or third parties after consideration of contractual arrangements that govern allocations of income or loss. Please see note 13 for more information.

Leases

Leases

The Company determines whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. Operating leases are recorded in the statements of financial condition as separate line items: operating lease right-of-use assets (“ROU assets”) and operating lease liabilities. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities and lease incentives. The Company’s lease arrangements generally do not provide an implicit rate. As a result, in such situations the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company may also include options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement of its ROU assets and liabilities. Lease expense for operating leases is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

Revenue Recognition

Revenue Recognition

The Company earns management fees and incentive income from the investment advisory services it provides to its customers. Revenue is recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company typically enters into contracts with investment funds to provide investment management and administrative services. These services are generally capable of being distinct and each is accounted for as separate performance obligations comprised of distinct service periods because the services are performed over time. The Company determined that for accounting purposes the investment funds are generally considered to be the customers with respect to commingled funds, while the individual investors are the customers with respect to separate account and fund-of-one vehicles. The Company receives management fees and/or incentive income with

respect to its investment management services, and it is reimbursed by the funds for expenses incurred or paid on behalf of the funds with respect to its investment advisory services and its administrative services. The Company evaluates whether it is the principal (i.e., report as management fees on a gross basis) or agent (i.e., report as management fees on a net basis) with respect to each performance obligation and associated reimbursement arrangements. The Company has elected to apply the variable consideration exemption for its fee arrangements with its customers. Please see note 3 for more information on revenues.

Management Fees

Management fees are recognized over the period in which the investment management services are performed because customers simultaneously consume and receive benefits that are satisfied over time. The contractual terms of management fees generally vary by fund structure. For most closed-end funds, the management fee rate is applied against committed capital during the fund’s investment period and the lesser of total funded capital or cost basis of assets in the liquidation period. Certain closed-end funds pay management fees during the investment period based on drawn capital or cost basis. Additionally, for closed-end funds that pay management fees based on committed capital, the Company may elect to delay the start of the fund’s investment period and thus its full management fees, in which case it earns management fees based on drawn capital, and in certain cases outstanding borrowings under a fund-level credit facility made in lieu of drawing capital, until the Company elects to start the fund’s investment period. The Company’s right to receive management fees typically ends after 10 or 11 years from either the initial closing date or the start of the investment period, even if assets remain in the fund. In the case of CLOs, the management fee is based on the aggregate par value of collateral assets and principal cash, as defined in the applicable CLO indentures, and a portion of the management fees is dependent on the sufficiency of the particular vehicle’s cash flow. For open-end and evergreen funds, the management fee is generally based on the NAV of the fund. For the publicly-traded BDCs, the management fee is based on gross assets (including assets acquired with leverage), net of cash. In the case of certain open-end fund accounts, the Company has the potential to earn performance-based fees, typically in reference to a relevant benchmark index or hurdle rate, which are classified as management fees. The Company also earns quarterly incentive fees on the investment income from certain evergreen funds, such as the publicly-traded BDCs and other fund accounts, which are generally recurring in nature and reflected as management fees.

The ultimate amount of management fees that will be earned over the life of the contract is subject to a large number and broad range of possible outcomes due to market volatility and other factors outside of the Company’s control. As a result, the amount of revenue earned in any given period is generally determined at the end of each reporting period and relates to services performed during that period.

Incentive Income

Incentive income generally represents 20% of each closed-end fund’s profits, subject to the return of contributed capital and a preferred return of typically 8% per annum, and up to 20% of certain evergreen fund’s annual profits, subject to high-water marks or hurdle rates. Incentive income is recognized when it is probable that a significant reversal will not occur. Revenue recognition is typically met (a) for closed-end funds, after all contributed capital and the preferred return on that capital have been distributed to the fund’s investors, and (b) for certain evergreen funds, at the conclusion of each annual measurement period. Potential incentive income is highly susceptible to market volatility, the judgment and actions of third parties, and other factors outside of the Company’s control. The Company’s experience has demonstrated little predictive value in the amount of potential incentive income ultimately earned due to the highly uncertain nature of returns inherent in the markets and contingencies associated with many realization events. As a result, the amount of incentive income recognized in any given period is generally determined after giving consideration to a number of factors, including whether the fund is in its investment or liquidation period, and the nature and level of risk associated with changes in fair value of the remaining assets in the fund. In general, it would be unlikely that any amount of potential incentive income would be recognized until (a) the uncertainty is resolved or (b) the fund is near final liquidation, assets are under contract for sale or are of low risk of significant fluctuation in fair value, and the assets are significantly in excess of the threshold at which incentive income would be earned.

Incentives received by Oaktree before the revenue recognition criteria have been met are deferred and recorded as a deferred incentive income liability within accounts payable, accrued expenses and other liabilities in

the consolidated statements of financial condition. The Company may receive tax distributions related to taxable income allocated by funds, which are treated as an advance of incentive income and subject to the same recognition criteria. Tax distributions are contractually not subject to clawback.

Fair Value of Financial Instruments and Fair Value Option

Fair Value of Financial Instruments

GAAP establishes a hierarchical disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, such as the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

• Level I – Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement. The types of investments in Level I include exchange-traded equities, debt and derivatives with quoted prices.

• Level II – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are directly or indirectly observable. Level II inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. The types of investments in Level II generally include corporate bonds and loans, government and agency securities, less liquid and restricted equity investments, over-the-counter traded derivatives, debt obligations of consolidated CLOs, and other investments where the fair value is based on observable inputs.

• Level III – Valuations for which one or more significant inputs are unobservable. These inputs reflect the Company’s assessment of the assumptions that market participants use to value the investment based on the best available information. Level III inputs include prices of quoted securities in markets for which there are few transactions, less public information exists or prices vary among brokered market makers. The types of investments in Level III include non-publicly traded equity, debt, real estate and derivatives.

In some instances, the inputs used to value an instrument may fall into multiple levels of the fair-value hierarchy. In such instances, the instrument’s level within the fair-value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair-value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. Transfers of assets into or out of each fair value hierarchy level as a result of changes in the observability of the inputs used in measuring fair value are accounted for as of the beginning of the reporting period. Transfers resulting from a specific event, such as a reorganization or restructuring, are accounted for as of the date of the event that caused the transfer.

In the absence of observable market prices, the Company values Level III investments using valuation methodologies applied on a consistent basis. The quarterly valuation process for Level III investments begins with each portfolio company, property or security being valued by the investment and/or valuation teams. With the exception of open-end funds, all unquoted Level III investment values are reviewed and approved by (i) the Company’s valuation officer, who is independent of the investment teams, (ii) a designated investment professional of each strategy and (iii) for a substantial majority of unquoted Level III holdings as measured by market value, a valuation committee of the respective strategy.  For open-end funds, unquoted Level III investment values are reviewed and approved by the Company’s valuation officer. For certain investments, the valuation process also includes a review by independent valuation parties, at least annually, to determine whether the fair values determined by management are reasonable. Results of the valuation process are evaluated each quarter, including an assessment of whether the underlying calculations should be adjusted or recalibrated. In connection with this process, the Company periodically evaluates changes in fair-value measurements for reasonableness, considering items such as industry trends, general economic and market conditions, and factors specific to the investment.

Certain assets are valued using prices obtained from pricing vendors or brokers. The Company seeks to obtain prices from at least two pricing vendors for the subject or similar securities. In cases where vendor pricing is not reflective of fair value, a secondary vendor is unavailable, or no vendor pricing is available, a comparison value made up of quotes for the subject or similar securities received from broker dealers may be used. These investments may be classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions. The Company evaluates the prices obtained from brokers or pricing vendors based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. The Company also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, the Company performs due diligence procedures surrounding pricing vendors to understand their methodology and controls to support their use in the valuation process.

Fair Value Option

The Company has elected the fair value option for certain corporate investments that otherwise would not have reflected unrealized gains and losses in current-period earnings. Such election is irrevocable and is applied on an investment-by-investment basis at initial recognition. Unrealized gains and losses resulting from changes in fair value are reflected as a component of investment income in the condensed consolidated statements of operations. The Company’s accounting for these investments is similar to its accounting for investments held by the consolidated funds at fair value and the valuation methods are consistent with those used to determine the fair value of the consolidated funds’ investments.

The Company has elected the fair value option for the financial assets and financial liabilities of its consolidated CLOs. The assets and liabilities of CLOs are primarily reflected within the investments, at fair value and within the debt obligations of CLOs line items in the condensed consolidated statements of financial condition. The Company’s accounting for CLO assets is similar to its accounting for its funds with respect to both carrying investments held by CLOs at fair value and the valuation methods used to determine the fair value of those investments. The fair value of CLO liabilities are measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Realized gains or losses and changes in the fair value of CLO assets, respectively, are included in net realized gain on consolidated funds’ investments and net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Interest income of CLOs is included in interest and dividend income, and interest expense and other expenses, respectively, are included in interest expense and consolidated fund expenses in the condensed consolidated statements of operations. Changes in the fair value of a CLO’s financial liabilities in accordance with the CLO measurement guidance are included in net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Please see notes 6 and 10 for more information.

Investments, at Fair Value

Investments, at Fair Value

The consolidated funds include investment limited partnerships and CLOs that reflect their investments, including majority-owned and controlled investments, at fair value. The Company has retained the specialized investment company accounting guidance under GAAP for investment limited partnerships with respect to consolidated investments and has elected the fair value option for the financial assets of CLOs. Thus, the consolidated investments are reflected in the condensed consolidated statements of financial condition at fair value, with unrealized gains and losses resulting from changes in fair value reflected as a component of net change in unrealized appreciation (depreciation) on consolidated funds’ investments in the condensed consolidated statements of operations. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

Non-publicly traded debt and equity securities and other securities or instruments for which reliable market quotations are not available are valued by management using valuation methodologies applied on a consistent basis. These securities may initially be valued at the acquisition price as the best indicator of fair value. The

Company reviews the significant unobservable inputs, valuations of comparable investments and other similar transactions for investments valued at acquisition price to determine whether another valuation methodology should be utilized. Subsequent valuations will depend on the facts and circumstances known as of the valuation date and the application of valuation methodologies as further described below under “—Non-publicly Traded Equity and Real Estate Investments.” The fair value may also be based on a pending transaction expected to close after the valuation date.

Exchange-traded Investments

Securities listed on one or more national securities exchanges are valued at their last reported sales price on the date of valuation. If no sale occurred on the valuation date, the security is valued at the mean of the last “bid” and “ask” prices on the valuation date. Securities that are not readily marketable due to legal restrictions that may limit or restrict transferability are generally valued at a discount from quoted market prices. The discount would reflect the amount market participants would require due to the risk relating to the inability to access a public market for the security for the specified period and would vary depending on the nature and duration of the restriction and the perceived risk and volatility of the underlying securities. Securities with longer duration restrictions or higher volatility are generally valued at a higher discount. Such discounts are generally estimated based on put option models or an analysis of market studies. Instances where the Company has applied discounts to quoted prices of restricted listed securities have been infrequent. The impact of such discounts is not material to the Company’s condensed consolidated statements of financial condition and results of operations for all periods presented.

Credit-oriented Investments (including Real Estate Loan Portfolios)

Investments in corporate and government debt which are not listed or admitted to trading on any securities exchange are valued at the mean of the last bid and ask prices on the valuation date based on quotations supplied by recognized quotation services or by reputable broker-dealers.

The market-yield approach is considered in the valuation of non-publicly traded debt securities, utilizing expected future cash flows and discounted using estimated current market rates. Discounted cash-flow calculations may be adjusted to reflect current market conditions and/or the perceived credit risk of the borrower. Consideration is also given to a borrower’s ability to meet principal and interest obligations; this may include an evaluation of collateral and/or the underlying value of the borrower utilizing techniques described below under “—Non-publicly Traded Equity and Real Estate Investments.”

Non-publicly Traded Equity and Real Estate Investments

The fair value of equity and real estate investments is determined using a cost, market or income approach. The cost approach is based on the current cost of reproducing a real estate investment less deterioration and functional and economic obsolescence. The market approach utilizes valuations of comparable public companies and transactions, and generally seeks to establish the enterprise value of the portfolio company or investment property using a market-multiple methodology. This approach takes into account the financial measure (such as EBITDA, adjusted EBITDA, free cash flow, net operating income, net income, book value or net asset value) believed to be most relevant for the given company or investment property. Consideration also may be given to factors such as acquisition price of the security or investment property, historical and projected operational and financial results for the portfolio company, the strengths and weaknesses of the portfolio company or investment property relative to its comparable companies or properties, industry trends, general economic and market conditions, and others deemed relevant. The income approach is typically a discounted cash-flow method that incorporates expected timing and level of cash flows. It incorporates assumptions in determining growth rates, income and expense projections, discount and capitalization rates, capital structure, terminal values, and other factors. The applicability and weight assigned to market and income approaches are determined based on the availability of reliable projections and comparable companies and transactions.

The valuation of securities may be impacted by expectations of investors’ receptiveness to a public offering of the securities, the size of the holding of the securities and any associated control, information with respect to transactions or offers for the securities (including the transaction pursuant to which the investment was made and the elapsed time from the date of the investment to the valuation date), and applicable restrictions on the transferability of the securities.

These valuation methodologies involve a significant degree of management judgment. Accordingly, valuations by the Company do not necessarily represent the amounts that eventually may be realized from sales or other dispositions of investments. Fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the condensed consolidated financial statements.

Recent Accounting Developments

Recent Accounting Developments

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance that changes the fair value measurement disclosure requirements. The amendments remove or modify certain disclosures, while adding others. The Company adopted the guidance in the first quarter of 2019. The adoption did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairments by eliminating step 2 of the goodwill impairment test. This step currently requires an entity to perform a hypothetical purchase price allocation to derive the implied fair value of goodwill. Under the new guidance, an impairment loss is recognized if the carrying value of a reporting unit exceeds its fair value. The impairment loss would equal the amount of that excess, limited to the total amount of goodwill. All other goodwill impairment guidance remains largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The guidance is effective for the Company in the first quarter of 2020 on a prospective basis, with early adoption permitted. The Company expects that adoption of this guidance will not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued guidance that requires a lessee to recognize a lease asset and a lease liability for most of its operating leases. Under legacy GAAP, operating leases were not recognized by a lessee in its statements of financial position. In general, the asset and liability each equal the present value of lease payments. The guidance does not significantly change the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee. The Company adopted the guidance in the first quarter of 2019 under the simplified transition method, which allows companies to forgo the comparative reporting requirements initially required under the modified retrospective transition approach and apply the new guidance prospectively. The adoption did not have an impact on the consolidated statements of operations because all of the Company’s leases are currently classified as operating leases, which under the guidance will continue to be recognized as expense on a straight-line basis. The adoption, however, resulted in a significant gross-up in total assets and total liabilities on the consolidated statements of financial position. The amount of the liability represents the aggregate discounted amount of the Company’s minimum lease obligations as of the reporting date. The difference between the asset and liability amounts represents deferred rent liabilities and lease incentives as of the reporting date that are netted against the asset amount.