Blue Owl Abandons Private Credit Fund Merger Amid Investor Concerns

NEW YORK, NY — Blue Owl Capital has called off the merger of two of its private-credit funds after receiving pushback from investors. The firm had intended to merge its smaller, non-traded fund, Blue Owl Capital Corporation II (OBDC II), with its larger, publicly traded counterpart, Blue Owl Capital Corporation (OBDC).

Investors in the $1.7 billion OBDC II faced restrictions on redemptions until the merger finalized, despite projections of approximately 20% paper losses. Concerns intensified as OBDC shares dropped about 6% on Monday following news of the restricted redemptions.

Sources familiar with the situation indicated that the boards of both funds decided the potential benefits of merging were outweighed by the volatility and negative press surrounding the merger. As a result, they opted to reverse their decision.

Now that the merger has been canceled, OBDC II will permit investors to redeem their investments in the first quarter, marking a return to the fund’s historical quarterly liquidity practice. An official announcement regarding the terminated deal is expected soon.

Blue Owl shares rebounded slightly, rising 2% in premarket trading on Wednesday as investors reacted to the news.