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Blue Owl Shares Tumble After Capital Return Plan
20 Feb
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, 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.
Blue Owl was formed in 2021 through the merger of Owl Rock and Dyal Capital Partners. Its private lending business experienced growth during a period of low interest rates. The firm, alongside other large alternative asset managers, has built substantial portfolios outside traditional markets, now attracting scrutiny over private lending standards and industry overexposure. The recent asset sale included $400 million of loans from another of Blue Owl's publicly traded funds, which the company plans to use for debt reduction.
