Blue Owl BDC’s CEO Craig Packer speaks throughout an interview with CNBC on the ground on the New York Inventory Trade (NYSE) in New York Metropolis, U.S., Nov. 19, 2025.
Brendan McDermid | Reuters
Blue Owl Capital is contemplating reviving a plan to merge two of its non-public credit score funds if the share value of the bigger fund improves, as the choice asset supervisor evaluates its choices after dealing with investor backlash in opposition to the transfer final week, in response to two folks accustomed to the matter.
The asset supervisor was pressured to desert a transfer to mix its publicly traded OBDC fund and Blue Owl Capital Company II on Nov. 19 after a plan to merge the 2 funds, freezing withdrawals from the smaller fund and providing its holders the value of the bigger fund, rattled buyers.
In a press release to Reuters, nonetheless, Blue Owl co-president Craig Packer denied that the agency was actively contemplating reviving the merger at the moment. “This was a cancellation not a postponement,” Packer stated.
Blue Owl, which noticed a robust purpose for merging the funds to be able to give shareholders an exit and scale back prices, had stated on Wednesday it deliberate to reevaluate alternate options for the funds sooner or later and that it nonetheless noticed benefit in a deal.
The sources, who requested anonymity because the discussions are confidential, cautioned that nothing has been finalized and didn’t specify the timing of such a transfer.
Blue Owl’s plan got here after buyers had proven anxiousness over credit score in latest months, the place just a few high-profile bankruptcies have rattled confidence in credit score high quality. Non-public credit score has attracted explicit scrutiny regardless of executives attempting to supply reassurance, pointing to default charges within the trade that stay comparatively low in comparison with historic intervals of market stress.
Reviving the deal, not beforehand reported, is contingent on the share value bettering in order that the OBDC fund is ideally not buying and selling at a reduction to its web asset worth, the sources added, including that any merger can be more likely to occur earlier than the privately-held OBDC II is due for a so-called liquidity occasion.
Such an occasion is anticipated to occur by the top of April 2026 or by the top of April 2027, in response to a disclosure from the fund. A fund’s liquidity occasion would sometimes confer with a transaction that can money out buyers, executives and staff, by means of choices together with a sale or IPO.
The sources didn’t state a selected share value goal. When Blue Owl initially introduced the merger, OBDC was buying and selling at a reduction to the online asset worth of its holdings, which means that buyers in Blue Owl Capital Company II have been confronted with potential losses of about 20% within the worth of their holdings, in response to an investor presentation from Blue Owl and Reuters calculations.
Blue Owl’s fund disclosed on Nov. 5, when it introduced the merger, that its NAV per share for the third quarter was $14.89. The fund’s shares have traded as excessive as $15.73 and as little as $11.65 this yr, and closed on Friday at $12.34. The agency stated on Wednesday it could permit buyers to withdraw their cash from the primary quarter of 2026.
An impartial preliminary public providing of Blue Owl Capital Company II, which is certainly one of Blue Owl’s earliest non-public credit score funds for retail buyers, is unlikely to be pursued, the sources stated, including {that a} merger between the 2 funds is essentially the most desired end result for the agency and makes strategic sense given the appreciable overlap within the portfolios of the 2 funds.
In tv interviews final week, Blue Owl executives stated the agency would take into account all its choices, together with itemizing the fund or promoting the belongings. “There could also be different choices that we could provide you with within the subsequent few months,” Packer stated in a Bloomberg TV interview.
Blue Owl on Wednesday stated it continues to consider within the deserves of merging the 2 funds, however the agency is “now not pursuing the merger at this level given present market situations.”
Non-public credit score increase
The non-public credit score trade has witnessed an unprecedented increase in recent times, as non-bank lenders have seized on a once-in-a-generation alternative to make giant company loans and seize market share from conventional Wall Avenue lenders who’ve confronted restrictions in making such loans as a consequence of tighter laws.
The fast progress of the trade has resulted in asset managers launching methods to deliver non-public credit score to bizarre buyers. Blue Owl’s capability to deliver its funds to a liquidity occasion the place buyers money out is vital to markets as a result of it might assist decide demand for such investments sooner or later.
As of Sept. 30, Blue Owl Capital Company II’s portfolio consists of stakes in 190 firms value $1.7 billion in combination, whereas OBDC holds investments in 238 firms which are collectively value $17.1 billion, in response to a submitting.
“Probably the most accretive technique to do it could be to merge (Blue Owl Capital Company II) with OBDC – it is the perfect end result for shareholders as a result of there’s accretion in earnings. If OBDC trades near ebook, there’s an actual chance that they’re going to revisit it,” Mitchel Penn, a senior analyst who covers enterprise improvement firms (BDCs) at Oppenheimer & Co, stated in an interview.
Mergers between funds have been pretty frequent within the non-public credit score trade in recent times. Final yr, Carlyle’s publicly traded credit score fund, Secured Lending, struck a deal to take over the agency’s non-public Secured Lending III fund, the agency stated. In 2019, Goldman Sachs merged its publicly traded BDC with its privately held Center Market Lending Corp, it stated in a press launch.
WATCH: Blue Owl to name off non-public credit score funds merger, sources say