(Bloomberg) — Traders pulled round 15.4% of internet belongings from considered one of Blue Owl Capital Inc.’s tech-focused funds, following the car’s determination to dramatically improve the quantity traders might withdraw earlier this month.
The agency allowed traders in Blue Owl Know-how Earnings Corp., a enterprise improvement firm, to withdraw shares equal to about $527 million of the non-traded fund’s internet belongings, in response to a regulatory submitting. Previous to the modification, the fund restricted redemptions at about 5%.
The sharp pullback is among the many clearest indicators but of rising unease round personal credit score, a booming asset class now underneath strain from a mix of high-profile losses, decrease return expectations and elevated scrutiny from regulators and policymakers. BDCs, which pool personal credit score loans, have been hit significantly onerous.
“Within the fourth quarter of 2025, the BDC trade noticed a notable rise in tender exercise, a dynamic we now have lengthy acknowledged as attribute of intervals of heightened market volatility,” Blue Owl mentioned in an investor letter alongside the submitting.
A portion of the redemptions got here from withdrawal requests from rich people in Asia, which account for a good portion of the investor base of the fund — often called OTIC — Bloomberg has beforehand reported.
“We’ve got honored all tender requests ever made in OTIC and, with our focus at all times on our serving traders, we elected to extend the quantity accessible this quarter to proceed to take action,” a spokesperson mentioned in a separate assertion. “Efficiency for OTIC stays sturdy.”
The redemption requests elevated internet leverage to 1.05 occasions debt-to-equity. After cashing traders out, the fund had round $1.4 billion in liquidity accessible together with money, debt and broadly syndicated loans, in response to the letter.
The 17% redemption request, which Blue Owl honored, is the biggest on a proportion foundation that the asset supervisor has ever obtained. Blue Owl operates 5 BDCs, the biggest of which has greater than $33 billion in belongings underneath administration.
To function efficiently, BDCs have to soak up more cash than they return. When redemptions go above 5% for an elevated time frame, internet inflows are put in jeopardy, which may imply the fund could possibly be compelled to promote belongings.
Most funds have the choice to cease traders from taking out money if requests exceed 5% of internet asset worth, partly to handle this threat.
Final yr, OTIC’s Class I shares delivered a 9% return, bringing annualized inception-to-date returns to 10.8%, the agency mentioned. Redemptions for Blue Owl’s largest direct lending car, Blue Owl Credit score Earnings Corp., got here in at 5.2% and totaled about $1 billion.
(Updates with further context beginning in eighth paragraph.)
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