Blue Owl Investors Seek to Pull 39% From $5B Tech Credit Fund

Blue Owl Capital (NYSE:OWL) has continued to see a large influx of redemptions across its private credit funds.

Investors asked for 39% of shares from the firm’s Blue Owl Technology Income Corp. (OTIC), its largest fund focused on technology lending, Bloomberg reported, citing a shareholder letter. Last quarter, investors asked to redeem 38.1% of shares.

"These results underscore the disconnect between the market’s fears of AI disintermediating software and OTIC’s resilient credit fundamentals," Blue Owl wrote, adding that the submissions came largely from investors rejoining queues.

The letter noted that the latest payment brings OTIC’s total liquidity provided to approximately $446 million over the past six months, representing 35% of the original tender requests.

Meanwhile, Blue Owl Credit Income Corp., saw redemption requests ease slightly. Investors asked to redeem 16.8% of shares, down from 18.8% in the prior period.

Blue Owl noted that both funds have returned more than 9% annualized since inception, and the firm expects higher base rates to boost the funds’ earnings potential.

Cliffwater, KKR, Blackstone

Private credit funds have been capping redemptions at 5% in recent months amid rising concerns about asset quality and valuations, particularly in software lending.

Cliffwater LLC’s flagship private credit fund capped redemptions at 5% in Q3 after investors asked to redeem approximately 16% of shares. Cliffwater Corporate Lending Fund told shareholders in a letter that it would fulfill approximately one-third of redemption requests.

Meanwhile, KKR & Co.’s (NYSE:KKR) private credit fund for wealthy clients outside the U.S. has seen redemption requests ease. KKR-Income Trust I, a non-traded private credit fund serving investors in Europe, the Middle East, Africa, and the Asia-Pacific region, received withdrawal requests equal to about 2.5% of its net asset value in Q3.

Blackstone (NYSE:BX) President and COO Jon Gray says investor confidence in private credit will recover and inflows will return despite redemption pressure at the firm’s $77 billion private credit fund and broader concerns about valuations and underwriting. 

Earlier this month, Blackstone kept its flagship private credit vehicles’ quarterly withdrawal limit unchanged at 5% after investors again asked to redeem more shares than the fund was willing to pay back.

Investors sought to tender roughly 10% of BCRED’s shares in the third quarter, similar to the prior quarter, Reuters reported, citing Blackstone’s regulatory filing. 

Photo: T. Schneider via Shutterstock