Bloomberg quotes Greg Stonefield on asset manager Blue Owl restricting investor redemptions
Earlier this week, it came to light that asset manager Blue Owl planned to merge its $1.8 billion non-traded business development company, Blue Owl Capital Corporation II, with its $17.6 billion publicly listed vehicle, Blue Owl Capital (OBDC).
Under the terms of the proposed merger, investors in Blue Owl Capital Corp II would have swapped their holdings for OBDC stock. This threatened paper losses of up to 20% if the deal were to close at the time's share prices, due to the fact that OBDC shares were trading at a 20% discount to the value of its assets.
News of the merger came amidst redemption requests in the non-traded fund exceeding Blue Owl’s pre-set limit in October last month and shares in the vehicle falling by around 22% so far in 2025.
Greg Stonefield, Partner in our Corporate team, comments on Blue Owl opting to restrict redemptions by investors in Bloomberg. Greg explains that any options available to investors to challenge the merger terms ultimately hinged on the investment agreements they signed, and whether the possibility of such a scenario was clearly explained at the outset.
Situations like this highlight the liquidity challenges that can arise in private credit and other alternative strategies, where changes to redemption arrangements can leave the eventual value of an exit far less predictable.
Blue Owl has since called off the merger.
Read the full article in Bloomberg here (subscription required).
