Blue Owl Capital has pushed back against criticism after a surge in withdrawal requests from two of its private credit funds, suggesting the move reflects “heightened negative sentiment” rather than the vehicles’ performance.
In a filing, shareholders in the Blue Owl Credit Income Corp (OCIC) fund asked to withdraw 21.9 per cent of shares in the three months to 31 March. Meanwhile, investors in the smaller Blue Owl Technology Income Corp (OTIC) sought to redeem 40.7 per cent of shares.
In a statement on LinkedIn, Blue Owl said it believes the elevated tender offer requests reflect “heightened negative sentiment toward direct lending and software in the public discourse and are not a reflection of the underlying performance of these funds, which is robust”.
Both funds have returned around nine per cent annualised since inception, the firm said. It added that the funds are in a “strong position” to meet the five per cent redemption requests as well as future tenders.
“Portfolio performance across Blue Owl’s investment-grade-rated business development companies (BDCs) has remained strong, with high credit quality, consistent income generation, and low non-accruals that are in line with or below industry peers,” the firm said in a statement.
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Concerns around BDC asset quality have been fuelled by scrutiny of their software exposure amid the AI boom, as well as broader worries about corporate credit quality following several high-profile bankruptcies.
While Blue Owl has previously met requests in excess of its five per cent tender offer threshold, the firm said in the filing that, in line with both funds’ structures, it would cap redemptions at that level.
The firm joins the likes of other alternatives managers such as BlackRock in adhering to the five per cent redemption threshold for non-traded BDCs.
Blue Owl added that it continues to see healthy inflows across the wealth channel. For OCIC during the first quarter, the five per cent tender offer, approximately $1bn (£755.6m), was almost fully offset by gross capital inflows.
Net outflows of $116m represented around seven basis points of Blue Owl’s fee-paying assets under management, the firm said. Similarly, for OTIC, net outflows of roughly $52m represented around three basis points of the firm’s fee-paying AUM.
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