Private credit manager Blue Owl (OWL) said Thursday it saw a major wave of requests from investors to pull money out of two of its non-traded funds.
Two of its flagship funds, Blue Owl Technology Income Corporation (OTIC) and Blue Owl Credit Income Corporation (OCIC), faced combined redemption requests of $5.4 billion. But the firm limited those requests to its 5% quarterly threshold for each fund, according to filings.
Investors requested to withdraw 40.7% of total assets from OTIC, which held a value of $3 billion at the quarter’s start. The larger OCIC received withdrawal requests of 21.9% of outstanding shares on a total valuation of $36 billion.
This comes amid a quarter in which Wall Street’s anxiety about private debt has increasingly risen. Blue Owl stock fell as much as 8% in early Thursday trading. Shares are down 46% since the year began.
Read more about Blue Owl’s stock moves and today’s market action.
After accounting for investor flows of $127 million and $872 million into OTIC and OCIC, respectively, the funds saw combined outflows of just $168 million, according to the filings.
In shareholder updates for OTIC, Blue Owl co-founder and head of credit Craig Packer cited “heightened market concerns around AI-related disruption to software companies” as heavily weighing on investor perception, “despite continued strong performance across OTIC’s portfolio companies.”
“We continue to observe a meaningful disconnect between the public dialogue on private credit and the underlying in our portfolio,” Packer said in both fund disclosures.
Both funds had previously met redemption requests above 5% in prior periods, but now they are following an industry trend “to balance the interests of both tendering and remaining shareholders,” according to the filings.
A growing string of private fund giants, such as Apollo (APO), BlackRock (BLK), Morgan Stanley (MS), and others, have imposed redemption limits on certain funds in recent weeks.
The stocks for Apollo, Blackstone, and KKR (KKR) fell between 2% and 4% on Thursday. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)
The private credit world, which rose as a side effect of banking reforms following the 2008 financial crisis, has come under increasing scrutiny. Corporate credit has deteriorated, returns have dropped, and investors have become increasingly anxious about what rapid AI advancements might do to their significant loan portfolios to software companies.