Apr. 29 at 7:06 PM
Investors asked to withdraw nearly a quarter of their allocations, roughly
$5.4B from
$OWL 2 retail-oriented funds last quarter.
The broader Blue Owl Credit Income Corp. saw its requests rise to 21.9% of the fund's total value, or nearly
$4.4B, while Blue Owl's
$3B software lending fund, Blue Owl Technology Income Corp. saw shareholders holding 40.7% of its value ask to sell their shares back to the company, which amounts to just over
$1B
Each each fund was limiting outflows to 5% of its value
New investments in the first quarter meant net outflows were only 1% of the value of OCIC and the general fund, and 2% of OTIC, the tech fund
Note: BDCs are contractually able to cap "tender offers" or withdraw requests at 5%
Note:
$BX has chosen to fulfill upto 7% w/ employees & firm buying into the firm
Blue Owl is a relative newcomer among alternative asset management giants. The firm was created through the 2021 merger of Dyal Capital Partners & Owl Rock, while rivals like
$KKR & Blackstone go back decades. Owl Rock was founded by ex-Blackstone & ex-KKR alum
For Blue Owl, concerns mounted when it proposed a merger between non-traded BDC, Blue Owl Capital Corp, known as OBDC II, and its flagship publicly-listed OBDC, which was trading at a roughly 20% discount to net value. Since the private OBDC II was not marking assets down in the same way, the deal would have locked in losses for investors in the private company if the merger went through.
Unsurprisingly, OBDC II investors were not happy, and the merger was scrapped. Months later, Blue Owl halted redemptions in the fund and said it would sell its assets to draw down OBDC II
The difference b/n public & private market valuations of loans had once been a selling point for the industry's investors, but now, concerns that private valuations were too generous
Blue Owl did, however, sell some assets that appeared to validate its pricing, selling
$1.4B direct lending assets at 99.7% of value, w/
$600M of that returning to OBDC II
In Feb, Blue Owl's CFO told analysts that software loans make up only 8% of the firm's total AUM
Blue Owl's investments in data centers are equity stakes in the underlying real estate, it has also become a prolific lender to data centers - example of this bet is Blue Owl's
$30B data center joint venture with Meta. announced last October, the largest single-site AI infrastructure deal
Goldman: defaults & overdue loans remain relatively low - some borrowers still show double-digit rev & EBITDA growth
Cliffwater Direct Lending Index — over 20,000 middle-market loans representing
$550B in assets — shows realized losses at 65bps as of YE25 vs long-term avg is 100bps. The yield on the index is 9.9%
Stress indicators also remain contained. Payment-in-kind income holds at 7%-8% of BDC total income, well below pandemic peaks. Non-accrual rates sit just under 1% of fair value, below historical norms
Even early warning signals show little deterioration. The share of loans trading below
$80, often a precursor to defaults, has barely moved.
"Private credit is certainly getting a lot of media attention right now, not all of it necessarily nuanced or accurate"
Goldman's conclusion is straightforward - if a broader credit breakdown were underway, these metrics would already reflect it.
Investors in a Blue Owl Capital Inc. fund tendered less than 1% of their shares to Saba Capital Management, led by Boaz Weinstein & Cox Capital Partners
The lack of participation in the tender offer suggests that investors are choosing to hold their shares rather than sell at prices below their original purchase cost - does this mark the turning point for redemptions???
