Q3 Redemption Wave Cools at the Flagships: Blue Owl Requests Fall to $4.2B, Goldman Fund Draws Inflows — but OTIC Still Climbs
The third-quarter tender data revise the redemption story from "bifurcating" to "cooling at the core, persistent at the AI-exposed edges."
The headline numbers (Reuters, Oct 5): "Investors sought to withdraw $4.2 billion from Blue Owl's two non-traded private credit funds in the quarter, down from $4.7 billion in the second quarter and a record $5.4 billion in the first." At the $35.1B flagship OCIC, "requests... fell to 16.8% of shares from 18.8%. Blue Owl said most requests reflected investors resubmitting previously unfulfilled tenders rather than new withdrawal demand." But "the picture was weaker at technology-focused Blue Owl Technology Income Corp., or OTIC, where investors sought to withdraw $1.1 billion, equal to 39% of shares, up from 38.1% in the prior quarter."
The counter-signal: Goldman Sachs' $18.2B GS Credit fund "reported redemption requests equal to 2% of shares, down from 3.2% in the second quarter, while generating about $400 million of gross inflows" — diversified funds are now attracting money again. Evercore analyst Glenn Schorr flagged the real drag: "the more persistent challenge for non-traded business development companies may now be weak new subscriptions, as direct lending could take time to regain favour among wealth-management clients and advisers."
The managers go on offense. Blue Owl's co-CEOs made a rare joint appearance on Semafor's Compound Interest (Oct 8) — their first since "a wave of redemptions fed a market-wide backlash to private credit and sent Blue Owl's shares down by 70%." Marc Lipschultz dismissed a management buyout: "We went public for a reason and that reason stands... Public shareholders are going to benefit from the rise in this stock." Doug Ostrover defended the marks: "we outsource it 100%. We have a pricing service... they give us a mark and we accept it," and the performance claim: "our loan losses over the last 10 years have been 12 basis points... In fact, depending on the index, the syndicated market is 60 to 100 basis points." On the semi-liquid bargain itself: "you should assume there will be periods where you have to wait to get your money." When Hoffman pressed — "there were points over the last year that... half of your investors asked for their money back. That doesn't seem to me like a product that is working" — Lipschultz conceded only that "none of us want to have products where investors are saying... I feel like I should ask for my capital back."
What it means: The resubmission dynamic Blue Owl cites (old tenders rolling forward, not new demand) means the OCIC print understates latent demand to exit; the 39% OTIC number is the cleaner read on AI-exposure sentiment, and it is still rising. The Cox Capital tender for OTIC Class I shares priced ~37% below value — distressed-level pricing for the exit-impatient. The strategic question in the open OTIC thread (restructure, split, or merge the fund) remains live ahead of the Blackstone Q3 call Oct 22, which will show whether peers announce comparable structural responses. Refinancing risk around 2028 is the managers' own stated next test: "stronger borrowers should be able to extend loans on tighter terms, while weaker credits may need to reduce leverage materially or could ultimately be sold or handed over to lenders" (Blue Owl management, via Reuters).