Blue Owl’s $1.4B Loan Sale Sets Up 30% NAV Payout for OBDC II Investors
Blue Owl Capital is selling $1.4 billion of direct lending investments from several of its business development companies to four North American public pension and insurance investors, a move that will unlock a substantial payout for shareholders of its non-traded Blue Owl Capital Corporation II (OBDC II) and reposition capital across the platform.
The portfolio, consisting of 97% senior secured debt across 128 companies in 27 industries, will be sold at 99.7% of par value as of February 12, with settlement expected in the first quarter. Internet software and services represents the largest sector exposure at 13%.
The largest portion of the sale, $600 million, comes from OBDC II. Publicly traded Blue Owl Capital Corporation (OBDC) and Blue Owl Technology Income Corp. (OTIC) will each contribute $400 million.
For OBDC II shareholders, the transaction is transformative. The fund intends to distribute up to $2.35 per share, roughly 30% of its net asset value at year-end 2025, on or before March 31, a payout six times larger than the 5% tender offer previously contemplated.
Craig Packer, CEO of Blue Owl’s BDCs, said institutional demand exceeded the amount ultimately sold.
Going forward, OBDC II’s board plans to replace quarterly tender offers with quarterly return-of-capital distributions funded by earnings, repayments, asset sales or strategic transactions.
Blue Owl said the sale enhances balance sheet flexibility and supports redeployment into what it called an “attractive direct lending environment,” while modestly improving portfolio diversification.
The transaction follows a turbulent stretch for Blue Owl. Last fall, the firm encountered significant investor backlash over its proposed merger of publicly traded OBDC with non-traded OBDC II. Critics argued the deal would have effectively pushed OBDC II shareholders into a listed vehicle trading at roughly a 20% discount to net asset value, while limiting their ability to redeem shares during the transition. Blue Owl ultimately abandoned the merger in November, pointing to market conditions.
Kroll provided fairness opinions to each BDC’s board in connection with the transaction. The settlement of the sales is expected to be completed in the first quarter of 2026.