00:00It's time now for a moment of interest. A pair of Blue Owl private credit funds hit with the
00:04industry's largest redemption requests, totaling $4.7 billion, and that has forced Blue Owl to cap
00:10withdrawals for a second straight quarter. Joining us now is Sinead Cruz, a senior editor and author
00:15of the twice-weekly Going Private newsletter. So Sinead, which specific funds are these? Are they
00:21the large ones? Are they smaller ones? Just give us some context here. Sure, yeah. Well, the numbers
00:27from Blue Owl Capital certainly got people talking this morning. It is one of their larger
00:32funds and a smaller fund indeed as well. First of all, the Blue Owl credit income core, the
00:41larger of the funds, saw a smaller redemption request compared with last quarter. The same
00:52with their smaller Blue Owl technology income core, also had a number of requests to exit
01:00that fund. They're both exposed in a way to software, which is one of the key concerns of private
01:08credit investors at the moment. Yeah, that makes a lot of sense. So it feels
01:12like a lot of this is spillover from the first quarter when they had to gate the fund and couldn't
01:17fulfill all the redemption request. Is that right? Yeah, that's right. But as I say, the numbers
01:23look quite bad. But if you take a closer look, there are still reasons to be optimistic that
01:28maybe the panic might be starting to subside. The larger of the funds saw $3.6 billion in dollars
01:37and cents requests, whereas the smaller funds saw $1.1. Now that compares with $4.2 and $1.2
01:45from the previous quarter. So yeah. In a letter that Blue Owl sent to some of the shareholders
01:51today, they did give reasons for people to be optimistic about the future. Firstly, and most
01:59importantly, they pointed out that many of the investors who requested to pull their money were
02:04actually repeat requesters, people who had already asked to take their money out of those funds in
02:11the first three months of the year. Secondly, they're pointing out that actually their liquidity
02:17levels are pretty healthy. And at least in the larger of the funds, they won't need to sell
02:24considerable assets or even a single asset, as Craig Packer pointed out, a single loan asset from that
02:30fund to be able to meet some of the, to be able to meet the requests that were made.
02:35I guess that would explain or help explain why Blue Owl shares are actually higher right now.
02:40The stock is up 4.6%. This idea that perhaps the worst is over and Blue Owl has found a
02:47way to
02:48kind of engage and get its message across to its investors.
02:52Absolutely. I mean, they have been crisscrossing the globe in recent weeks to try and reinforce
02:57that message about private credit. Certainly, they are saying that their returns are still positive,
03:03that the asset class is still performing. And while there are headwinds,
03:09as there are headwinds facing many of the other fund managers within this asset class,
03:14lots of the questions about valuations and the future cannot be answered at this precise moment
03:20in time. So therefore, investors are choosing that maybe they should stick
03:25and see what the next few months brings.
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