Blue Owl shares rise as redemptions ease at flagship funds

Blue Owl’s stock climbed nearly 5% after the firm reported investors requested $4.7 billion of redemptions from two flagship private-credit funds in the second quarter, down from $5.4 billion in the prior quarter.

The largest vehicle, Blue Owl Credit Income Corp (OCIC), with $33.8 billion in assets, saw redemption requests fall to 18.8% of outstanding shares in Q2 from 21.9% in Q1. Blue Owl Technology Income Corp (OTIC), which holds $4.9 billion, recorded requests of 38.1% down from 40.7% the prior quarter. Both funds cap quarterly repurchases at 5% of outstanding shares.

The company reported that roughly 90% of OCIC investors remained invested in the quarter and that the mix of shareholders seeking redemptions showed little change, with limited participation from new investors.

Blue Owl disclosed OCIC held $11.6 billion of cash, cash equivalents and available borrowing capacity at quarter end. The firm calculated that amount would cover about 12 quarters of payouts if repurchases continued at the 5% quarterly limit.

Heightened withdrawal activity followed a period of stress in private credit after several large borrower defaults last year. Other large private-credit managers also reported elevated redemptions in recent quarters. Withdrawals at a major Apollo private-credit fund rose to about 17% of assets in late June from 11% in the prior quarter.

Blue Owl has grown assets under management to roughly $300 billion, in part by marketing private-credit products to wealthy individual investors. The firm’s distribution to retail investors broadened its investor base and increased its exposure to retail flows.

In a letter to shareholders, executives Craig Packer and Logan Nicholson wrote, “We believe OCIC’s strong performance over the past three months has reflected the quality of portfolio fundamentals and contributed to improved investor sentiment.” The company also wrote that “credit quality remained resilient,” supported by solid operating performance across portfolio companies.

While redemption requests declined from the first quarter, they remained above the funds’ repurchase limits during Q2, and market participants expect elevated withdrawal activity to continue for several more quarters.