Blue Owl Capital disclosed that withdrawal requests for its two flagship private‑credit funds slowed in the third quarter, suggesting the industry’s recent redemption pressures may be abating. Investors sought to pull $4.2 billion from the funds in the latest tender offers, down from $4.7 billion in the prior quarter.
Reduced redemptions at OCIC
The Blue Owl Credit Income Corp (OCIC), a $35.1 billion non‑traded business development company, saw its withdrawal rate drop to 16.8 % from 18.8 % in the previous quarter. OCIC repurchased 5 % of shares, the standard cap for such vehicles, and noted that most new tender participation consisted of investors resubmitting previously unfilled requests.
OTIC still faces higher demand
By contrast, the Blue Owl Technology Income Corp (OTIC) continued to experience elevated redemption activity. Investors sought to withdraw $1.1 billion, representing 39 % of the fund’s shares, only slightly above the 38.1 % level recorded in the prior quarter. The fund attributed the high demand to its concentrated shareholder base and a portfolio heavily weighted toward software companies.
Industry context
Private‑credit funds have grappled with record‑breaking redemption pressures this year, driven by concerns over lending standards and the potential impact of artificial‑intelligence‑related software risks on borrowers. Executives across the sector argue that the pressure reflects perception rather than underlying fund performance.
Major private‑credit managers have adhered to the customary 5 % redemption cap, keeping overall withdrawal requests elevated as investors continue to resubmit unfilled tenders. Blue Owl’s executives previously credited strong product performance for the recent decline in redemption demand.
Outlook
Analysts note that the slowdown in withdrawal requests could be a positive sign for the broader private‑credit market, especially as floating‑rate assets in these funds stand to benefit from a tightening interest‑rate environment. However, the sector remains vigilant, with some funds still facing redemption backlogs above industry averages.
Blue Owl, formed in 2021 through the merger of Owl Rock Capital and the Dyal Capital Partners division of Neuberger Berman, now manages five BDCs across various strategies and reported $319 billion in assets as of June 30. The company’s stock has fallen roughly 45 % over the past year.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
