Blue owl is experiencing high redemption requests for two of its private credit funds, according to letters to shareholders released Thursday.
The company’s flagship OCIC fund, with approximately $36 billion in assets under management, received redemption requests for approximately 21.9% of outstanding shares during the first quarter, the company said. Blue Owl’s smallest technology-focused fund, OTIC, received redemption requests by 40.7% during the same period, it said.
In both funds, Blue Owl chose to cap requests at 5%. Blue Owl attributed these higher-than-usual demands to “increased market concerns about AI-related disruption for software companies.”
“We continue to see a significant disconnect between the public dialogue on private credit and the underlying trends in our portfolio,” Blue Owl said in letters to shareholders.
“As public market disruptions and AI-related uncertainty reshape sentiment, dispersion is increasing across the sector, creating opportunities for experienced lenders to selectively deploy capital on enhanced terms,” the technology-focused letter reads.
Blue Owl shares fell about 9% in premarket trading Thursday.
Blue Owl, which has the distinction of having two such non-traded private credit funds, is also among the latest to report redemptions. The company’s repurchase percentage is several times that of its peers.
Most companies have chosen to use the 5% cap, but some, notably Cliff And black stone allowed a little more redemptions.
Blue Owl’s OTIC technology fund saw redemption requests of 17% in the fourth quarter, which it fulfilled. OCIC requests were 5% in the fourth quarter.
The two funds had previously attracted interest from hedge funds Saba and Cox, which offered tender offers to stranded holders at a steep discount.
Blue Owl said that in the most recent quarter, redemption requests for its technology fund were amplified by a more concentrated shareholder base, particularly within certain wealth channels and regions. For its flagship fund, the company said activity was driven by a “small minority of investors”, with 90% of shareholders choosing not to bid.
Both funds experienced gross inflows, which, combined with the 5% thresholds, resulted in modest net outflows.