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Investors Face 20% Losses as Blue Owl Merges Private Credit Funds
16 Nov
Summary
- Blue Owl blocks redemptions in $1bn private credit fund
- Investors in the fund face potential 20% losses in merger
- Merger comes as private credit funds face scrutiny over valuations
As of November 16th, 2025, the asset manager Blue Owl has blocked redemptions in one of its earliest private credit funds as it merges the $1 billion vehicle with a larger $17 billion fund overseen by the company. The merger could leave investors in the acquired fund facing losses of around 20% on their holdings, and they will not be able to withdraw their money until the deal is finalized in early 2026.
The move underscores the risks that retail investors have taken in pouring hundreds of billions of dollars into private debt funds with limited liquidity rights. The merger also comes as scrutiny builds on the valuations and returns of private credit funds, which have caused publicly listed debt funds to trade at steep discounts to the stated value of their assets.
Blue Owl is preparing to discuss the fund merger with wealthy individual investors and financial advisers, as the reception will be a new test on whether these investors have fully understood the risks of investing in private credit. The company's CFO acknowledged that at current prices, the investors in the acquired fund could take a potential 20% haircut on their investments, though he said the merger offered benefits like more liquid shares in the larger fund.
