Blue Owl says "unprecedented" rise in withdrawal requests. What about the shares?

Blue Owl Capital reported a sharp rise in withdrawal requests from two of its private credit funds in the first quarter. In the case of one of them, focused on the technology sector, the figure amounted to almost 41% - 2.6 times more than in the quarter before. Bloomberg called such a surge in investor demands unprecedented for the $1.8 trillion market. Blue Owl's shares were down nearly 9% in trading on April 2, a collapse that also affected rival securities.

Blue Owl Capital received requests from investors in the first quarter for withdrawals from two funds totaling $5.4 billion, the company said in a letter to shareholders cited by Bloomberg and the Financial Times.

Investors in the company's largest fund, the $36 billion Blue Owl Credit Income (OCIC), requested a withdrawal of 21.9% of shares in the three months (through March 31). That figure was only 5.2% in the previous quarter. In the slightly smaller Blue Owl Technology Income (OTIC) fund, withdrawal requests reached 40.7% versus 15.4% three months earlier. This is a "formidable" rate of growth, the FT noted. The two funds managed portfolios worth more than $42bn at the end of 2025, the newspaper added.

Blue Owl capped withdrawals at 5%, following the lead of other private-loan players including Apollo Global Management and BlackRock, as well as Morgan Stanley. So far, both Blue Owl funds have honored requests and above that limit, Bloomberg noted. For the larger OCIC, that means fulfilling requests for about $988 million, while about $3.2 billion will remain in the fund. In OTIC's case, that's $179 million in payments and about $1 billion in investor funds remaining, the agency calculated.

In trading on Thursday, April 2, Blue Owl shares were down 8.7% at one point, hitting an all-time low on the exchange, though they have since trimmed the decline to about 2%.

Following Blue Owl, the shares of competitors - Blackstone, Apollo Global Management, KKR & Co and Ares Management- started falling. They fell by about 3% and also partially recovered their losses.

Blue Owl Capital securities showed the sharpest quarterly decline in its history and have been falling in price for eight months in a row, Bloomberg writes. In early March, the volume of short positions on the securities reached a record level, the agency added.

Investors have become more cautious about private lending after a series of high-profile problems and concerns that AI development could hit software developers that actively depend on direct lending, Bloomberg explains. The withdrawal restrictions underscore the risks to private investors who have been heavily invested in non-public private lending funds during periods of market turbulence over the past three years, the Financial Times writes. Such investors were promised access to more profitable instruments in exchange for limited liquidity, the publication recalls.

Blue Owl co-president Craig Packer said in a note to investors that the rise in bids reflected "a period of heightened negative sentiment towards the asset class, which intensified following the release of tender results from competitors", the FT quoted.

"While we believe the increase in repayment activity is driven by market perception, the fundamentals of the loan portfolio remain solid," added Packer, "We continue to see a significant gap between public rhetoric around private lending and actual trends in our portfolio.

According to Jefferies, software accounts for about 20% of portfolio exposure at business development companies (BDCs), the publicly traded counterpart to private credit funds, CNBC writes. Concerns about default risks in the sector have prompted a small but wealthy group of institutional investors to exit many such funds, the channel says.

The number of defaults on private loans in the U.S. could jump to 15%, UBS strategists warned in late February.

Additionally, Blue Owl came under special scrutiny after the collapse of a merger deal between two BDC funds in November and the subsequent significant increase in requests for withdrawals from the technology fund in January, Bloomberg recalls. In February, the company also came under scrutiny for selling $1.4 billion in assets while fully suspending quarterly redemptions in one of its retail funds.

This article was AI-translated and verified by a human editor