BREAKINGVIEWS-Blue Owl previews private credit’s pain trade
Blue Owl Capital Corporation is merging with its non-listed sibling, OBDC II, restricting investor withdrawals during the merger. This move aims to address costly arbitrage due to sagging listed vehicles. OBDC II shareholders can vote on the merger, with a liquidity event planned by 2026. Blue Owl has previously completed mergers to simplify its BDC complex.
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Jonathan Guilford
NEW YORK, Nov 18 (Reuters Breakingviews) -
The $20 bln shadow bank is gating redemptions at a fund pursuing a painful merger. It’s a deal meant to stop costly arbitrage caused by sagging listed vehicles. If yesterday’s qualms, like falling rates and old loans, cause this much trouble, imagine what tomorrow’s will bring.
Full view will be published shortly. Follow Jonathan Guilford on X and LinkedIn.
CONTEXT NEWS
Blue Owl Capital Corporation, a listed business development company known as OBDC and operated by its eponymous parent, said on November 5 that it would merge with Blue Owl Capital Corporation II, or OBDC II, a non-listed sibling.
During the pendency of the merger, investors in OBDC II will be restricted from withdrawing money, the Financial Times reported on November 16. Under the norms of private BDCs, investors can withdraw a limited sum from funds on a regular basis at their stated net asset per share. OBDC instead trades on the open market, where it is currently valued at a discount to its NAV.
In a securities filing, Blue Owl said that OBDC II shareholders will have the right to vote on the merger, and that a liquidity event was planned within a period that runs through 2026. Blue Owl has completed other mergers as part of a plan to simplify its BDC complex. (Editing by Jonathan Guilford; Production by Pranav Kiran)
