Blue Owl private credit funds redemptions capped at 5% after steep requests

Blue Owl is experiencing elevated redemption requests for two of its private credit funds, according to letters to shareholders issued Thursday.

The firm’s flagship OCIC fund, with about $36 billion in assets under management, received redemption requests of about 21.9% of shares outstanding during the first quarter, the firm said. Blue Owl’s smaller, tech-oriented fund, OTIC, received redemption requests of 40.7% during the same period, it said.

In both of the funds, Blue Owl opted to cap requests at 5%. Blue Owl attributed the higher-than-usual 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 said in the shareholder letters.

“As public market dislocations and AI-related uncertainty reshape sentiment, dispersion is increasing across the sector, creating opportunities for experienced lenders to deploy capital selectively at improved terms,” the technology-focused letter reads.

Shares of Blue Owl fell roughly 9% in premarket trading Thursday.

Blue Owl, which is unique in having two of these non-traded private credit funds, is also among the last to report redemptions. The firm’s percentage of redemptions is multiples higher than its peers.

Most firms have opted to use the 5% cap, but some, including Cliffwater and Blackstone allowed slightly more redemptions.

Blue Owl’s OTIC technology fund saw redemption requests of 17% in the fourth quarter, which it fulfilled. OCIC’s requests were 5% in the fourth quarter.

The two funds previously drew interest from hedge funds Saba and Cox, which extended tender offers to locked-up holders at a steep discount.

Blue Owl said in the most-recent quarter, its tech fund’s redemption requests were amplified by a more concentrated shareholder base, particularly within certain wealth channels and regions. For its flagship fund, the firm said the activity was driven by a “small minority of the investor base,” with 90% of shareholders electing not to tender.

Both funds saw gross inflows, which combined with the 5% gates resulted in modest net outflows.