Blue Owl Caps Redemptions Following Massive Requests From Investors

Blue Owl Capital (NYSE:OWL) capped redemptions in both its funds at 5% after investors requested withdrawals of 22% and 41% in its private credit and technology-focused funds, respectively.

The firm attributed the above-average number of requests to "heightened market concerns around AI-related disruption to software companies."

"We continue to observe a meaningful disconnect between the public dialogue on private credit and the underlying trends in our portfolio," Blue Owl wrote in a letter to shareholders and reported by CNBC.

Shares of Blue Owl stock are down around 2% midday and the stock remains down almost 60% in a year.

Other firms have capped redemptions as the private credit market has come under growing pressure in recent weeks. Rising rates, tighter liquidity and a broader risk-off environment have combined to squeeze a corner of finance that expanded rapidly during the easy money era. 

Oaktree Capital Management elected to fully satisfy all redemption requests, representing 8.5% in its private credit fund for the first quarter.

Meanwhile, Morgan Stanley (NYSE:MS) curbed redemptions after investors sought to withdraw nearly 11% of shares from its North Haven Private Income Fund and JPMorgan Chase & Co. (NYSE:JPM) has begun restricting lending to software companies in its private credit funds. 

BlackRock Inc (NYSE:BLK) limited withdrawals from its $26 billion HPS Corporate Lending Fund after redemption requests surged to 9.3% of the fund's net asset value.

Congress is pressing major private equity firms — including Apollo Global Management, KKR & Co., Carlyle Group, BlackRock and Blue Owl Capital — for detailed disclosures on their private credit operations.

The U.S. House Financial Services Committee wants info on sales practices, leverage, fees, incentives, audits, risk management and potential economic vulnerabilities, according to Bloomberg.

Photo: T. Schneider via Shutterstock