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Neuberger Berman’s CEO said Tuesday he’s confident Blue Owl’s leadership team will manage through the noise over retail investor redemption requests and that private credit will emerge as a reliable asset class for retirement money over time.
The furor over potential “cracks” in private credit and other jittery headlines are “overdone in many, many respects,” Walker said at Semafor World Economy. “If you were to read the headlines, you would think that folks have lost tremendous amounts of money, and that’s just not the case.”
Blue Owl, the publicly traded alternative asset manager that has drawn headlines for redemption requests from retail investors, grew out of Neuberger Berman’s former Dyal Capital unit, a specialist in acquiring stakes in private-equity firms.
The managers of Blue Owl are “very, very good at credit” and he’s confident they’ll deliver returns to their clients over time, Walker said.
The problem with private credit investments for retail investors is that “it’s too new” and “it’s grown too fast,” he said.
Neuberger Berman has avoided launching any retail funds similar to Blue Owl because of its strong base of institutional investors, but he didn’t rule out an entry into the business down the road.
“We had the good fortune, frankly, of being in a position where we had lots of institutions who were happy” so the firm didn’t have to “go and chase retail clients,” he said. “But I think over time, retail will be a mix, probably a relatively small part of our business and that’s fine.”
Despite the worries in the market over private credit, the retail funds that have been catching attention are still a very small part of the overall business, which remains healthy, he said.
Giving retail investors access to longer-term investments where their money is held for longer periods in return for better potential returns “is a good thing,” he added.
A logical place for private credit investors would be baked into target date retirement funds, rather than a separate vehicle that could be subject to withdrawal requests above the roughly 5% limit.
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Walker has led Neuberger Berman as CEO for 18 years through a period of both organic and inorganic growth through acquisitions to reach AUM of $563 billion, including the February announcement of its purchase of MIO, an employee-owned private investment firm with AUM of $20 billion, from McKinsey & Co.
In 2020, the firm paid an undisclosed sum for Almanac Realty Investors to broaden its real estate solutions business.
Neuberger Berman was also one of the first firms to purchase minority stakes in private-equity firms and established Dyal Capital Partners in 2011 for this business line, before spinning it out to form Blue Owl Capital in 2021.