Blue Owl struck by $5.4bn of redemption requests

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Private credit investment firm Blue Owl Capital was struck with a mammoth increase in redemption requests in the first quarter, with investors seeking to withdraw roughly $5.4bn from two of its flagship funds as questions intensify about the health of the asset class and the firm at its nexus.

The company on Thursday disclosed that withdrawal requests at its tech-lending fund, known as Blue Owl Technology Income Corp, had surged to 40.7 per cent of the fund’s $3bn value. Requests to exit the New York-headquartered firm’s marquee $20bn direct-lending fund, called Blue Owl Credit Income Corp, shot to 21.9 per cent of the fund’s value.

Blue Owl said it had limited withdrawals to 5 per cent at both vehicles, a threshold embedded in many private credit funds that once crossed allows a manager to close the door to redemptions.

The limitation on outflows highlights the risks to individual investors who had flocked to so-called non-traded private credit funds over the past three years in periods of stress. Those wealthy individuals had been promised access to higher-yielding investments in exchange for limited liquidity.

The decision to cap redemptions also underscores the pain being felt at Blue Owl, the relative newcomer to the private investment world, and which now manages more than $300bn.

Shares of the company fell more than 7 per cent in trading in New York on Thursday, taking its stock price decline to more than 47 per cent this year.

The sell-off had accelerated on Wednesday, the day after investors had to decide whether to submit requests to redeem from the two funds. The market had braced for double-digit withdrawals at both vehicles, according to people briefed on the matter.

Blue Owl’s two vehicles, which use leverage to amplify returns and multiply their ability to invest, managed portfolios worth more than $42bn at the end of 2025.

The attempted exodus by investors eclipsed redemption requests experienced by Blue Owl’s largest peers, many of which have already limited withdrawals, underscoring investor concerns with its vehicles.

KKR on Wednesday said it had capped redemptions from one of its non-traded funds, following similar moves by rivals at Ares Management, Apollo Global and BlackRock’s HPS Investment Partners.

In the first quarter, investors have attempted to pull roughly $19bn from direct lending funds, the popular private credit vehicles that provide loans directly to companies and private equity firms, without a bank as an intermediary.

The funds, which hold investments worth roughly $275bn, have in aggregate honoured just over half of the withdrawal requests they have received, according to FT calculations.

The redemptions will complicate the pitch that private investment managers plan to make as they target the more-than $10tn US retirement system, which the industry views as its next big engine of growth. The Trump administration this week said it would provide new rules to help open popular tax-deferred 401k savings accounts to private investments.

The US Treasury separately on Wednesday said it would seek to meet with regulators that oversee the insurance industry to understand the risks stemming from private credit, a catch-all moniker for an asset class that has ballooned to include far more than corporate loans such as those provided by the Blue Owl funds that limited redemptions.

Craig Packer, Blue Owl’s co-president, said in an investor update that he believed the uptick in redemptions reflected a “period of heightened negative sentiment toward the asset class that has intensified as peers have reported tender results”.

“While we believe market perception has driven elevated tender activity, underlying credit fundamentals across our portfolio have remained resilient,” he added. “We continue to observe a meaningful disconnect between the public dialogue on private credit and the underlying trends in our portfolio.”

Blue Owl earlier this year permanently halted redemptions from one of its older funds as executives moved to wind down the vehicle.