Blue Owl Capital has seen its shares drop to their lowest level since December 2023 following the firm’s decision to restrict redemptions from one of its oldest private credit funds, according to a report by Bloomberg.
Shares fell nearly 6% on Monday, closing at $13.78.
The alternative asset manager recently announced plans to merge its $1.8bn non-traded business development company, Blue Owl Capital Corporation II, with its $17.6bn publicly listed vehicle, Blue Owl Capital Corp (OBDC). Investors in the non-traded fund will have to wait until the merger closes – expected early next year – to redeem their holdings, which will be converted into OBDC stock. At current market prices, this could imply paper losses of up to 20% for those investors.
Blue Owl described the merger as delivering “the strongest long-term outcome for shareholders,” citing benefits from greater scale, more efficient financing, and enhanced returns. The firm also noted that non-traded fund investors would gain access to OBDC’s higher dividend rate, which has recently distributed 37 cents per share quarterly, versus the non-traded vehicle’s 6 cents monthly.
The move comes amid rising redemption requests, which exceeded Blue Owl’s pre-set limits last month. The firm honoured approximately $60m in redemptions, representing 6% of the non-traded fund.
Despite the share decline, Blue Owl said the fund’s portfolio fundamentals remain strong, attributing market volatility to technical pressures in the BDC sector rather than credit quality. The merger is expected to provide full liquidity for non-traded fund investors and streamline operations across Blue Owl’s private credit platforms.
