Blue Owl Capital has restricted investor redemptions from one of its retail debt funds as it sells $1.4bn (£1.04bn) of direct lending investments to boost liquidity.
The alternatives manager, which has been under pressure from redemption requests on its business development companies (BDCs) since 2025, announced in a statement that it has changed the redemption structure of the Blue Owl Capital Corporation II (OBDC II).
Instead of offering investors quarterly tender offers, the fund will switch to quarterly return-of-capital distributions, meaning shareholders can no longer request additional redemptions.
“Going forward, the OBDC II Board intends to prioritise delivering liquidity ratably to all shareholders through quarterly return of capital distributions, which are intended to replace future quarterly tender offers and may be funded by earnings, repayments, other asset sale opportunities or strategic transactions,” Blue Owl, which manages $295bn of assets, said in a statement.
In a move to provide investors with liquidity, Blue Owl said it had entered into separate definitive agreements with four leading North American public pension and insurance investors to sell $1.4bn of direct lending investments from three funds.
The sales come from three of Blue Owl’s BDCs, including debt investment commitments of $600m from OBDC II, $400m from Blue Owl Technology Income (OTIC) and $400m from Blue Owl Capital Corporation (OBDC). Overall, this represents approximately 34 per cent, six per cent and two per cent of total investment commitments for the BDCs, respectively.
No changes were made to the redemption or tender offer structure for OTIC or OBDC.
“Today’s announcement reinforces the rigour of our valuation process and the quality of our direct lending investments,” said Logan Nicholson, president of OBDC II and OBDC. “It also demonstrates our ability to opportunistically deliver value to our shareholders. At this stage for OBDC II, we are pleased to provide a significant liquidity event at fair value while still maintaining a diversified portfolio with strong earnings potential.”
The news comes as OBDC II came under scrutiny in 2025 after Blue Owl sought to merge it with publicly traded fund OBDC, a move that would have left some investors facing losses, as the firm looked to provide liquidity.
Earlier this year, Blue Owl Capital shareholders filed a lawsuit against the asset manager, alleging it failed to disclose pressure on its asset base caused by redemptions from its BDCs, including OBDC II.
The shareholder lawsuit claimed that Blue Owl did not properly disclose liquidity issues and as a result may have been forced to limit or halt redemptions.
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