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Investors attempted to pull $4.7bn from two of Blue Owl Capital’s flagship private credit funds in the second quarter, underscoring the group’s challenges as it attempts to stem an exodus by wealthy clients.
The outflows from the Blue Owl vehicles round out a painful quarter for the private investment industry, which has suffered from lower returns and an uptick in stress across private credit portfolios.
Redemption requests at the 20 funds across the sector tracked by the FT hit $22bn in the quarter. It was the second consecutive quarter that investors sought to withdraw more than $20bn, with the median request increasing to 8.7 per cent of the funds’ assets. That compares with 7.1 per cent in the previous quarter.
Private credit funds have honoured less than 40 per cent of the redemption requests they have received, the FT analysis shows, leaving more than $14bn of capital locked up in the vehicles.
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Withdrawal requests at Blue Owl’s tech-lending fund and its direct lending fund fell slightly from the previous quarter to $4.7bn, it said on Thursday. They remained elevated, however, at 38 per cent for Blue Owl Technology Income Corp and almost 19 per cent for Blue Owl Credit Income Corp.
Both funds capped withdrawals at 5 per cent, a threshold built into the vehicles that allows Blue Owl to curb redemptions.
The firm told investors in the direct lending fund that it was “encouraged” by the “modestly lower” tender requests, and said the fund’s performance over the past three months had “contributed to improved investor sentiment”.
Blue Owl, which was founded in 2016 and has grown to manage $315bn, has been caught in the centre of the storm engulfing the private credit industry. The firm has relied heavily on private wealth and retail investors to foster its growth, raising more than $72bn from them since its launch a decade ago.
Those wealthy individuals helped provide the New York-headquartered firm with ample firepower to invest, as well as lucrative fees from which to build its business.
The firm earned more than $570mn in management and performance fees last year from three non-traded private credit funds, including the two that said they would continue to limit outflows on Thursday, filings with the US Securities and Exchange Commission show.
The rise of semi-liquid funds, which offer an opportunity for investors to withdraw their money at regular intervals rather than locking it up for years, has opened up private markets to a growing number of retail investors. As money flowed into the funds in 2024 and 2025, investors were largely able to enter and exit with ease.
But as inflows have slowed, some investors have encountered the redemption limits that are a defining feature of the products.
New commitments from retail investors to the private credit industry have also slowed sharply, with Blue Owl’s tech- and direct-lending semi-liquid funds reporting less than $40mn of subscriptions in June. That marks a significant deceleration from last year, when the firm drew in more than $640mn to the two funds each month on average.
Blue Owl’s decision to permanently gate and wind down one of its older private credit funds has added to the pressure facing the investment group and the decision by some smaller investors to look to redeem from its other funds, financial advisers have told the FT.
Shares in the company have fallen more than 40 per cent this year, taking its stock below its $10 listing price.
