Why did Blue Owl's shares fall recently?

Blue Owl's shares dropped significantly after the firm announced a new strategy for returning capital from a debt fund, which included removing a quarterly withdrawal option and selling $1.4 billion in assets.

What assets did Blue Owl sell?

Blue Owl sold $1.4 billion in assets from three funds, including $400 million of loans from its publicly traded Blue Owl Capital Corp fund, which will be used to pay down debt.

What is Blue Owl Capital Corp II (OBDC II)?

OBDC II is a nine-year-old debt fund managed by Blue Owl, with approximately $1.6 billion in assets, which typically offers investors a quarterly option to withdraw some funds.

Home / Business and Economy / Blue Owl Shares Tumble After Capital Return Plan

Blue Owl Shares Tumble After Capital Return Plan

20 Feb

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Summary

Blue Owl sold $1.4 billion in assets from three funds.
Investors were spooked by a new capital return strategy.
Blue Owl shares fell significantly following the announcement.

Blue Owl Shares Tumble After Capital Return Plan

Blue Owl, a prominent private capital manager, is facing investor concern following its announcement of a new strategy to return capital from a debt fund. The firm recently sold $1.4 billion in assets across three funds and intends to distribute some proceeds to investors in a nine-year-old vehicle. As part of this plan, a quarterly withdrawal option for investors in this particular fund has been permanently removed.

This development caused Blue Owl's shares to drop as much as 10%, closing down 5.9%. The company co-president stated the asset sale would return six times more capital to investors in the Blue Owl Capital Corp II fund this quarter than previously planned redemptions. Such debt vehicles typically offer investors periodic withdrawal options, a program Blue Owl had previously paused in November. Analysts suggest investors interpreted the asset sale as a sign of accelerated withdrawal requests, potentially necessitating forced sales of quality assets.