Blue Owl Capital Seeks $1.5 Billion from Minority Stake Sale

Blue Owl Capital Inc. plans to raise approximately $1.5 billion through the sale of minority stakes in various private asset management firms. This initiative involves transferring interests in the Dyal Capital Partners IV fund, which includes stakes in notable companies such as HPS Investment Partners, Clearlake Capital Group, and Golub Capital. Financial institution Goldman Sachs Group Inc. is advising on the transaction.

The stakes represent ownership shares in the management companies, distinct from the funds they oversee. By creating a new investment vehicle, Blue Owl aims to attract a fresh set of investors. The debt issued from this vehicle will be supported by the revenue generated from its holdings. As these stakes typically provide steady income streams, they appeal to investors seeking long-term capital opportunities.

A recent slowdown in deal-making and fundraising has prompted alternative asset managers to explore novel avenues for returning cash to investors. This trend has led to an increase in the sale of minority stakes, particularly appealing to insurance firms looking to diversify their portfolios.

According to sources familiar with the matter, the new entity, which will also be managed by Blue Owl, plans to issue three debt instruments rated A, B, and C, along with an equity tranche. The pricing details for these tranches are still under negotiation.

Existing investors in the Dyal Capital Partners IV fund will not have the option to transfer their positions to the new structure. These investors include the Minnesota State Board of Investment, STRS Ohio 80th Inc., South Yorkshire Pensions Authority, and the Alaska Permanent Fund Corp., as documented by Bloomberg.

The original fund, which closed on $9 billion in 2019, has reported an internal rate of return (IRR) of 34.4% to date. In addition to HPS, Clearlake, and Golub, the Dyal Capital Partners IV fund holds stakes in several other firms, including Veritas Capital, Towerbrook Capital Partners, Bridgepoint Group, Quantum Energy Partners, Cross Harbor Capital Partners, and RXR Realty. All these stakes will be incorporated into the new investment vehicle.

Blue Owl and Goldman Sachs have chosen not to comment on the transaction at this time. As the financial landscape continues to evolve, this move by Blue Owl reflects a strategic effort to adapt and capitalize on new market conditions.