Feb 20 - Blue Owl Capital's shares dropped about 4% in pre-market trading on Friday, extending losses from the prior session after the alternative asset manager revealed a plan to repatriate capital from a small debt fund that unsettled investors and weighed on the wider sector.
The stock fell nearly 6% on Thursday and has now lost more than 36% so far in 2025, a decline that has cut the company's market capitalization roughly in half compared with a year earlier.
On Wednesday, the New York-based private capital manager said it would sell $1.4 billion of assets spread across three funds and return the proceeds to investors in a nine-year-old vehicle. The firm also announced it would permanently stop redemptions at one fund, a decision that amplified worries about lending standards in private credit and the sector's links to the beleaguered software industry.
Blue Owl disclosed that the debt being sold represents interests in 128 portfolio companies spanning 27 industries. The largest concentration in that set of loans is 13% in software and services. The company reported that it sold the loans at 99.7% of par value, aligning with its own book marks, which it cited as confirmation of those valuations.
Late Thursday, Blue Owl addressed liquidity at a non-traded debt fund, Blue Owl Capital Corp II. The company said it was not suspending investor liquidity in that vehicle. Instead of restarting a tender-offer process that would have let investors redeem 5% of their capital, Blue Owl said its revised approach "returns six times as much capital and returns it to all shareholders over the next 45 days." The company added, "In the coming quarters, we will continue to pursue this plan to return capital to OBDC II investors."
Market observers have linked the selloff to a longer-running unease about software valuations. Rapid advances in artificial intelligence are cited in market commentary as creating potential disruptions to incumbent business models - a dynamic that has fed volatility in valuations. Those swings have spilled over into private-credit firms that have become major lenders to technology companies, particularly given that the tech sector has frequently leaned on private-credit arranged by private-equity sponsors after traditional bank lending tightened under post-crisis regulations.
The dislocation has also affected larger alternative-asset managers. Apollo Global and KKR saw sector pressure related to valuation uncertainty. "Blue Owl and the alts names continue to be driven by sentiment and headlines," said Crispin Love, an analyst at Piper Sandler.
Separately, a media report on Friday said Blue Owl failed to secure financing for a $4 billion data-center project it is co-developing in Pennsylvania with CoreWeave. The company did not immediately respond to a request for comment on that report. That report followed earlier disclosures that Blue Owl had agreed to finance a major data-center initiative for Meta with a $27 billion arrangement.
Sector implications - The developments have put pressure on the private-credit market and raised questions about exposures in technology-related lending, notably software. Data-center development financing also emerged as a point of focus in recent reporting.