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Investors asked to withdraw $4.7 billion across two big Blue Owl funds, slightly down from last quarter but reflecting persistent concerns that private credit — particularly loans to software companies imperiled by AI — are risky bets.
Investors sought to redeem $3.6 billion, or about 19% of their money, at Blue Owl’s flagship fund, and another $1.1 billion, about 38%, at a software-focused lending fund. Blue Owl honored 5% of withdrawal requests, a cap that is standard across the industry to avoid forced liquidation at firesale prices.
The redemptions are down slightly from 22% and 40% last quarter but higher than peer funds run by firms like Apollo and KKR. Blue Owl has been the poster child for investors’ fears about private credit, just as it was the poster child for their enthusiasm on the way up. It marketed its funds heavily to individuals, who tend to be twitchier than big institutions when markets turn, and trumpeted its fast growth.
At its tech fund, known as OTIC, redemptions came largely from Asian family offices, a person familiar with the fund said.
Shares of Blue Owl opened 10% higher on Thursday, suggesting the withdrawals and loan performance were better than stockholders had expected.
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Blue Owl has plenty of cash to meet the limited 5% quarterly withdrawals and repayments by the companies it lent to remain healthier than the pall hanging over private credit would suggest: None of its software loans slipped into delinquent status in the quarter and just 0.2% of OTIC’s book are categorized as unlikely to be fully repaid, the firm said.
The question for the firm, a Wall Street superband formed by veterans of KKR, Goldman Sachs, Blackstone, and Neuberger Berman, is whether it can continue to grow, if and when investors’ fears ease.