Blue Owl has held quarterly repurchases at 5% in two of its non-traded BDCs, after receiving redemption requests of 41% and 22% in each fund, marking the latest withdrawal spike in semiliquid private credit vehicles.
Blue Owl Credit Income Corp. (OCIC), the larger of the two funds involved, received repurchase requests of 21.9% during Q1. The firm said that it would fulfill its tender offer of 5% on a pro rata basis in a letter to shareholders, representing $988 million of shares.
It said that the activity was driven by a relatively small minority of the investor base, with 1% of shareholders representing the majority of tenders. The fund has a portfolio size of about $36 billion.
The shareholder letter said that the fund is in a strong position to meet current and future tender offers of up to 5%, as it had liquidity of $11.3 billion across cash, undrawn debt, and other liquid assets. The fund also has net leverage of 0.80x debt-to-equity.
“We continue to observe a meaningful disconnect between the public dialogue on private credit and the underlying trends in our portfolio,” the investor letter said, noting that the fund delivered a 9.2% annualized return since inception.
Blue Owl Technology Income Corp. (OTIC), a smaller fund with a portfolio size of about $6 billion, also saw elevated redemption requests in Q1, coming in at 40.7%. The firm said it would fulfill its tender offer of 5%, representing $179 million.
Blue Owl said that redemption activity was elevated across non-traded BDCs in Q1, and that this dynamic was amplified in this technology fund due to its concentrated shareholder base in certain wealth channels and regions, along with heightened market concerns over AI disruption to software companies and the fund’s specialized investment mandate in the sector.
The fund has over $1.3 billion in cash, borrowing capacity, and other liquid assets to meet future tender offers, it said. Its net leverage was 0.82x debt-to-equity.
OTIC was involved in Blue Owl’s $1.4 billion asset sale earlier this year, as the fund trimmed about 6% of its portfolio through a $400 million partial asset sale. The fund also allowed a one-time increase to accept 15.4% of shares last quarter. OTIC fulfilled $712 million of tender requests across the last two quarters, representing about 41% of all shares tendered over that time.
Investor letters for both funds indicated that the decision to hold withdrawals at 5% “was made in accordance with the fund structure, reflecting our commitment to balancing the interests of both tendering and remaining shareholders.”
BDC withdrawal caps are often constructed to roughly align quarterly repurchase offers with natural churn and repayments in the portfolio, minimizing the disruption that could otherwise occur when the semiliquid funds begin spending available capital on funding withdrawals rather than deploying into new deals.
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