Key Takeaways
- • Blue Owl Capital kept its 5% quarterly withdrawal limit on two private credit funds after investors sought to pull $4.7 billion in the second quarter, down from $5.4 billion in the first quarter, according to Reuters.
- • Redemption requests at the $33.8 billion Blue Owl Credit Income Corp (OCIC) fell to 18.8% from 21.9%, while the $4.9 billion Blue Owl Technology Income Corp (OTIC) fell to 38.1% from 40.7%.
- • OTIC's tender levels remain far above the 9% to 17% range reported by the largest non-traded BDC managers that have disclosed second-quarter results, with software making up 64% of its portfolio.
- • Blue Owl shares rose 6% on the data, though the stock has fallen roughly 56% over the past 12 months.
- • TD Cowen analyst Bill Katz said the update suggests the industry is past the peak of its private credit issues, while cautioning the firm is "far from out of the woods."
Summary
Blue Owl Capital (OWL.N) maintained a 5% quarterly withdrawal limit for two of its private credit funds, as redemption requests remained substantially above that cap despite declining by a few percentage points in the second quarter, according to shareholder letters released Thursday. The New York-based firm said investors sought to withdraw $4.7 billion from the two funds in the second quarter, compared with $5.4 billion in the prior quarter. Shares of the asset manager jumped 6% on the data, which indicated redemption pressure was easing.
The redemption wave follows months of outflows from wealthy investors out of non-traded private credit vehicles, driven by concerns over lending standards and fears of AI-driven disruption at software companies that have borrowed from direct lenders. Non-traded business development companies typically provide liquidity through quarterly tender offers of up to 5% of shares. Market participants expect requests to stay above that threshold for several more quarters, though some analysts believe the second quarter may mark the peak. TD Cowen analyst Bill Katz said the update "reinforces embedded trends that the industry seems to be past the peak of the issues," which should help stabilize the sector into the second half of 2026, while adding the firm is "far from out of the woods."
At the flagship $33.8 billion OCIC, the second-largest non-traded BDC, tender requests fell to 18.8% from 21.9%. The fund said roughly 90% of investors remained invested, and that the shareholder base seeking redemptions was largely unchanged, with a "limited" number of investors making repurchase requests for the first time. OCIC saw $660 million of net outflows over the past three months, according to a person familiar with the matter.
OTIC, the $4.9 billion technology-focused fund, saw requests fall to 38.1% from 40.7%, far above the 9% to 17% seen at the largest non-traded BDC managers reporting second-quarter results. Blue Owl attributed the gap to the fund's concentrated shareholder base and specialized mandate, and OTIC has about 64% of its portfolio in software and some concentration in Asia. New investments into OTIC were light, and it saw $100 million of net outflows. Both funds said they have sufficient liquidity and do not need to sell private loans to meet tender offers. Funds managed by Oaktree and Goldman Sachs were among the major vehicles that posted lower repurchase requests in the quarter.
Blue Owl, formed from a 2021 merger between Owl Rock Partners and the Dyal Capital division of Neuberger Berman, manages five BDCs and had $315 billion in assets under management as of March 31. The firm abandoned a plan announced late last year to merge two of its private credit funds after it stoked anxiety around private credit, and the stock has plunged roughly 56% over the past 12 months through the last close.
The redemption wave follows months of outflows from wealthy investors out of non-traded private credit vehicles, driven by concerns over lending standards and fears of AI-driven disruption at software companies that have borrowed from direct lenders. Non-traded business development companies typically provide liquidity through quarterly tender offers of up to 5% of shares. Market participants expect requests to stay above that threshold for several more quarters, though some analysts believe the second quarter may mark the peak. TD Cowen analyst Bill Katz said the update "reinforces embedded trends that the industry seems to be past the peak of the issues," which should help stabilize the sector into the second half of 2026, while adding the firm is "far from out of the woods."
At the flagship $33.8 billion OCIC, the second-largest non-traded BDC, tender requests fell to 18.8% from 21.9%. The fund said roughly 90% of investors remained invested, and that the shareholder base seeking redemptions was largely unchanged, with a "limited" number of investors making repurchase requests for the first time. OCIC saw $660 million of net outflows over the past three months, according to a person familiar with the matter.
OTIC, the $4.9 billion technology-focused fund, saw requests fall to 38.1% from 40.7%, far above the 9% to 17% seen at the largest non-traded BDC managers reporting second-quarter results. Blue Owl attributed the gap to the fund's concentrated shareholder base and specialized mandate, and OTIC has about 64% of its portfolio in software and some concentration in Asia. New investments into OTIC were light, and it saw $100 million of net outflows. Both funds said they have sufficient liquidity and do not need to sell private loans to meet tender offers. Funds managed by Oaktree and Goldman Sachs were among the major vehicles that posted lower repurchase requests in the quarter.
Blue Owl, formed from a 2021 merger between Owl Rock Partners and the Dyal Capital division of Neuberger Berman, manages five BDCs and had $315 billion in assets under management as of March 31. The firm abandoned a plan announced late last year to merge two of its private credit funds after it stoked anxiety around private credit, and the stock has plunged roughly 56% over the past 12 months through the last close.
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