Argyle Capital Partners hits year of independence after buying out Oaktree stake

Oaktree Capital Partners is no longer involved with Argyle Capital Partners, ending the former’s involvement in the ag and water assets previously managed under the Blue Sky banner.

Argyle Capital Partners has been 100 percent owned by management for more than a year, Agri Investor can reveal, after the firm’s leadership bought out the minority stake owned by Oaktree Capital Management in September 2021.

The move means Oaktree is no longer involved with Argyle Capital Partners or the funds it manages.

Argyle Capital Partners was previously known as Blue Sky Water Partners and changed its name in August 2019 after Blue Sky Alternative Investments fell into receivership. The subsequent restructure saw Blue Sky’s real assets business transferred into the ownership of Australian Alternative Asset Partners, a wholly owned subsidiary of funds managed by the special situations group of Oaktree Capital Management.

AAAP then struck a deal with Argyle for the latter to continue investment management operations for what were previously Blue Sky’s water and agriculture funds and mandates, which were all previously managed by BSWP.

Oaktree also held a minority stake in Argyle itself, with management of the firm owning a majority stake – the buyout in 2021 has now returned that equity to Argyle’s management such that the firm is 100 percent independent.

Speaking to Agri Investor, Argyle Capital Partners chairman and CIO Kim Morison said the firm was now owned by himself and a few other key management personnel, without divulging further details.

“We’re in control of our destiny,” he said. “We’ve set it up so that we can continue to have ownership by the management team – management of these investments is long term, so we wanted to have people incentivized accordingly to ensure the best outcome for our investor clients.

“Now being fully management-owned, by Australians, helps to have discussions with operating partners so that we can forge great relationships and focus on acquiring assets well, developing them and having them managed by teams on the ground who really do have skin in the game.

“We had thought there were going to be some opportunities with Oaktree, with its various sources of capital pools across private equity, real estate and credit – but it turned out we were better off to do things on our own, so we came up with a mutual agreement and a negotiated outcome.”

Morison said Argyle has continued to build its water fund as well as deploying other capital into agriculture under an investment mandate. He added that the firm’s Strategic Australian Agriculture Fund has begun to realize some investments such that Argyle is “focused on the exits” from that vehicle before “we’ll look to the future as to what to do next.”

Argyle Capital Partners’ total assets under management exceeded A$1.3 billion ($828 million; €842 million) at June 30, 2022. Its flagship vehicle, the Argyle Water Fund, is home to a portfolio of more than A$500 million of Australian water entitlements and has achieved a 10-year annualized total return net of fees of more than 16 percent.

The firm also manages the Strategic Australian Agriculture Fund and other agricultural funds and mandates, which together comprise a portfolio of irrigated permanent farmland and annual row-crop farms.

Agri Investor understands that Oaktree is still involved with some of the other non-agriculture and water Blue Sky assets and business units that it gained control of following the latter’s collapse in 2019.

Oaktree declined to comment for this story. The firm still listed Argyle Capital Partners as a portfolio company on its website at time of publication.