Blue Owl Limits Redemptions on Private Credit Funds After Massive Exit Requests

(Bloomberg) -- Blue Owl Capital Inc. volition bounds redemptions from 2 of its backstage recognition funds aft facing a surge successful withdrawal requests that is unprecedented among large firms successful the $1.8 trillion market.

Investors successful its $36 cardinal Blue Owl Credit Income Corp. fund, 1 of the industry’s largest, asked to propulsion 21.9% of shares successful the 3 months ended March 31, according to an capitalist letter, up from 5.2% successful the anterior period. The smaller Blue Owl Technology Income Corp. saw shareholders inquire for 40.7% back, compared with 15.4% 3 months earlier, according to a abstracted letter.

Both funds had antecedently met the requests successful excess of its 5% tender offer. This time, though, Blue Owl said it would articulation manufacture peers successful capping redemptions astatine that level, “in accordance with the money structure, reflecting our committedness to balancing the interests of some tendering and remaining shareholders.”

For the bigger fund, OCIC, that amounts to $988 cardinal of redemptions honored and astir $3.2 cardinal remaining successful the fund, portion for OTIC it means redeeming $179 cardinal and keeping astir $1 cardinal of investors’ cash.

Explainer: Why Private Credit Is Facing a Sudden Investor Exodus

While Blue Owl joins manufacture peers including Apollo Global Management Inc., Ares Management Corp. and BlackRock Inc. successful sticking to their redemption threshold connected non-traded concern improvement companies, the magnitude of the requests underscores however Blue Owl has recovered itself squarely successful the mediate of worries astir backstage credit.

Blue Owl shares fell arsenic overmuch arsenic 8.7% connected Thursday to a grounds intraday debased of $7.95.

Skittish Investors

Investors person grown skittish astir backstage recognition aft immoderate high-profile collapses and concerns implicit AI disrupting bundle companies that relied heavy connected nonstop lenders. But Blue Owl recovered itself peculiarly successful the spotlight aft a scrapped merger betwixt 2 BDCs successful November and past outsized withdrawal requests from its tech-focused BDC successful January. In February, it was scrutinized implicit a determination to merchantability $1.4 cardinal of assets portion restricting quarterly withdrawals wholly from 1 of its retail-focused funds, alternatively returning superior to investors successful the finite beingness vehicle.

Both Blue Owl funds, which person returned much than 9% annualized since inception, said they’re successful a “strong position” to conscionable the 5% redemption requests and aboriginal tenders. OCIC and OTIC had $11.3 cardinal and $1.3 billion, respectively, crossed cash, disposable borrowing and liquid Level 2 assets arsenic of the extremity of February, according to the letters.