Blue Owl Capital Inc. (NYSE:OWL) shares fell 2.3% on Thursday after the company announced a change to the liquidity terms for one of its retail-focused private credit vehicles.
The New York-headquartered alternative investment firm said investors in Blue Owl Capital Corp II (OBDC II) will no longer have the option to redeem shares on the customary quarterly schedule. Instead, the fund will return capital through periodic distributions that will be funded by loan repayments, asset sales or other transactions. That approach reverses an earlier plan to resume quarterly redemptions this quarter.
The decision came after Blue Owl revealed on Wednesday that it had sold roughly $1.4 billion in direct-lending investments across three funds, including OBDC II, Blue Owl Capital Corporation, and Blue Owl Technology Income Corp. Buyers in those transactions included North American public pension funds and insurance companies.
Company officials framed the move as a shift in how OBDC II will handle outflows, replacing predictable quarterly liquidity with distributions tied to the timing of underlying asset realizations. For retail investors accustomed to receiving a portion of their capital back each quarter, the change introduces a different mechanism for retrieving proceeds.
The broader context underscores a potential liquidity constraint for retail participants in the private credit space. While investors in these funds are typically allowed to redeem a portion of their holdings each quarter, the payouts can be limited or suspended if redemption requests exceed pre-established thresholds.
Market reaction and mechanics
Shares of Blue Owl slid after the announcement, reflecting investor response to the altered redemption policy for OBDC II. The firm’s sale of direct-lending assets to institutional buyers was disclosed as the proximate event preceding the distribution policy change.
What this means for investors
For holders of OBDC II, liquidity will now depend on when the fund realizes cash through repayments or asset sales rather than on a fixed quarterly cadence. The note from the firm explicitly states that distributions will be made from loan repayments, asset sales or other transactions.
Because the company has not resumed quarterly redemptions as previously planned, retail investors face altered timing for access to capital held in the fund.