Blue Owl says the structures work. The gates certainly do.
Fee earnings up 9%, GAAP profit down, individuals two-thirds gone from the fundraising mix, and redemption requests at 38% of one fund. A close read of the politest crisis in private credit.
Blue Owl reported second quarter results on 30 July and the top line behaved: distributable earnings up 9%, fee related earnings up 9%, assets at $319 billion, up 12%, revenue ahead of estimates. Marc Lipschultz called it proof of the business's resilience. GAAP net income attributable to shareholders was $11.4 million, down from $17.4 million a year ago, a number we mention because nobody on the call was keen to.
The story is in the funding mix. Blue Owl raised $7.8 billion of new capital in the quarter, and just $1.7 billion came from individuals, down 41% on the prior quarter and 61% on the year. This matters more at Blue Owl than anywhere else, because no big listed manager leans harder on the wealth channel: 42% of its assets. The firm that perfected selling private credit to private clients is watching private clients change their minds.
Some of them would like their money back, too. Repurchase requests at the two non-traded BDCs totalled $4.7 billion in the quarter against a maintained cap of 5% per quarter. At OCIC, the $34 billion flagship, requests came to 18.8% of shares. At OTIC, the technology fund that is 64% software at the exact moment the market is worrying about what AI does to software borrowers, requests hit 38.1%. Peer non-traded BDCs are seeing 9 to 17%. CFO Alan Kirshenbaum offered the sunnier framing that "90% of our OCIC fund investors" did not request a single dollar. True. It is also true that in a vehicle where at most 5% can leave per quarter, the queue is now roughly four years long at the current cap.
Lipschultz's own line was that redemptions have "stayed very concentrated in the products where the narrative and the conversations perhaps got most carried away", which is a graceful way of describing the products his firm marketed hardest. And his conclusion, "I actually think what we know is the structures work", is correct in a way he perhaps did not intend. The structures are working. Gates exist precisely for this, and they are doing their job with distinction.
