Key Takeaways
- • Saba Capital's discount tender offers for shares in Blue Owl and Starwood private credit funds drew little investor response, as shareholders declined to sell at steep discounts to net asset value.
- • Saba said its tender offers yielded only about $10 million in aggregate face value across 190 separate trades.
- • Less than 1% of Blue Owl Capital Corp. II shares were tendered to Saba's offer, which was priced at a steep discount to NAV.
- • The offers came amid elevated redemptions across most private-credit, non-traded BDCs during the quarter.
- • Blue Owl's board recommended that shareholders reject the unsolicited Cox and Saba tender offer and not tender their shares.
Summary
Saba Capital Management, the hedge fund led by Boaz Weinstein, found limited investor interest in its tender offers for shares of private credit funds managed by Blue Owl and Starwood Capital, according to CNBC. Investors showed little willingness to accept liquidity at a steep discount, a dynamic that emerged during a quarter marked by elevated redemption requests across most private-credit, non-traded business development companies.
Saba said that through these tenders it acquired about $10 million in aggregate face value across 190 separate trades, substantially all of the trades it executed in connection with the Starwood and Blue Owl share offers. Publications covering the offers reported that the purchase volume fell short of the firm's expectations. Saba had proposed buying shares of three Blue Owl funds at discounts reported to be around 35%, with one report citing a 34.9% discount. Less than 1% of Blue Owl Capital Corp. II shares were tendered to the offer.
The campaign was undertaken alongside Cox Capital Management, which the board of at least one Blue Owl fund described as making an unsolicited, minority tender offer. Blue Owl's board strongly recommended that shareholders reject the Cox and Saba offers and not tender their shares. Commentary on the episode characterized Saba's approach as buying pessimism, targeting funds whose redemption pressures have been severe. The episode comes as the private credit market, valued at roughly $307 billion according to one report, faces heightened scrutiny over liquidity in non-traded vehicles.
Saba said that through these tenders it acquired about $10 million in aggregate face value across 190 separate trades, substantially all of the trades it executed in connection with the Starwood and Blue Owl share offers. Publications covering the offers reported that the purchase volume fell short of the firm's expectations. Saba had proposed buying shares of three Blue Owl funds at discounts reported to be around 35%, with one report citing a 34.9% discount. Less than 1% of Blue Owl Capital Corp. II shares were tendered to the offer.
The campaign was undertaken alongside Cox Capital Management, which the board of at least one Blue Owl fund described as making an unsolicited, minority tender offer. Blue Owl's board strongly recommended that shareholders reject the Cox and Saba offers and not tender their shares. Commentary on the episode characterized Saba's approach as buying pessimism, targeting funds whose redemption pressures have been severe. The episode comes as the private credit market, valued at roughly $307 billion according to one report, faces heightened scrutiny over liquidity in non-traded vehicles.
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