Shares of Blue Owl Capital Inc. closed at a record low on Monday, capping weeks of declines fueled by mounting concerns over the health of the $1.8 trillion private credit market.
The stock fell 1.4% to close at $8.45, which is below its previous nadir set in late 2022. It hit a record intraday low on Thursday after the firm said it will limit redemptions from two of its private credit funds following a surge in withdrawal requests.
Blue Owl went public in May 2021, through a special-purpose acquisition company merger between Owl Rock Capital Group and Dyal Capital Partners.
Business development companies, a type of private credit fund for retail investors, have been inundated with redemption requests amid growing anxiety around the market’s lending practices and exposure to businesses that are vulnerable to artificial intelligence disruption.
Blue Owl’s shares in particular have become one of the favored ways to bet on a sustained fallout in private credit due to its elevated exposure to software companies that could be displaced by AI.
The stock is coming out of its steepest quarterly decline ever and has posted eight straight months of losses. In early March, bearish bets on the stock reached a record high.
Blue Owl has multiple business development companies, which are one of the key avenues that individual investors can take to access private credit. One of its technology-focused funds saw redemption requests exceed 15% in the previous quarter, a period in which the firm had to scrap a merger of two BDCs after concerns that doing so could end up saddling some investors with steep losses.
In February, Blue Owl said it was selling $1.4 billion of loans to help meet investor withdrawals. Its executives defended the sale in a private call with investors in March. Co-President Craig Packer said there were “no hidden economics or discounts.”
Written by: Georgie McKay and Jordan Fitzgerald @Bloomberg
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