Blue Owl is experiencing a surge in redemption claims for two of its private credit funds, according to a letter to shareholders issued Thursday.
The company’s flagship OCIC fund, which has about $36 billion in assets under management, received redemption claims for about 21.9% of its outstanding shares in the first quarter, the company said. Blue Owl’s smaller technology-oriented fund, OTIC, said it received redemption requests of 40.7% during the same period.
For both funds, Blue Owl set the request cap at 5%. Blue Owl attributed the higher-than-usual requests to “increasing market concerns about AI-related disruption for software companies.”
“We continue to observe a significant disconnect between the public dialogue on private credit and the underlying trends in our portfolio,” Blue Owl said in a letter to shareholders.
“As public market disruption and AI-related uncertainty reshape sentiment, diversification across sectors is increasing, creating opportunities for experienced lenders to selectively deploy capital on improved terms,” the technology-focused letter said.
Blue Owl stock fell about 9% in premarket trading Thursday.
Blue Owl is unique in that it owns two of these non-traded private credit funds, but it is one of the last funds to report redemptions. The company’s redemption rate is many times higher than its peers.
Most companies choose to use the 5% cap, but some, such as Cliffwater and Blackstone, allow a little more reimbursement.
Blue Owl’s OTIC Technology Fund had 17% redemption requests and met them in the fourth quarter. OCIC’s fourth quarter request was 5%.
Both funds have previously attracted interest from hedge funds Saba and Cox, who have made tender offers to locked-up holders at a deep discount.
Blue Owl said that in the most recent quarter, redemption requests for tech funds were amplified by a more concentrated shareholder base, particularly within specific wealth channels and geographies. For its flagship fund, the company said the activity was being driven by a “small investor base”, with 90% of shareholders choosing not to bid.
Both funds had gross inflows, coupled with a 5% gate, resulting in some net outflows.
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