Activist Hedge Funds Move into Private Credit with Deep-Discount Tender Offers
The liquidity freeze and gating decisions across the private credit and alternative asset sectors have attracted aggressive activist hedge funds seeking to exploit the gap between reported Net Asset Value (NAV) and investor desire for liquidity.
Saba Capital's Unsolicited Tender Offers
In early March 2026, Boaz Weinstein’s Saba Capital Management (in partnership with Cox Capital Partners) launched highly publicized, unsolicited tender offers targeting locked-up retail investors in non-traded funds:
- Blue Owl Capital Corporation II (OBDC II): Saba offered to buy shares in the gated private credit BDC at a steep 35% discount to NAV.
- Starwood Real Estate Income Trust (SREIT): Saba offered to buy shares in the gated real estate fund at a 24% or 29% discount (depending on the share class).
Tepid Initial Response
On April 27, 2026, Saba disclosed that the results of its tender offers came in "below initial expectations," revealing that most retail investors were unwilling to accept such severe haircuts to obtain immediate cash.
Saba acquired only $10 million in aggregate face value across 190 separate trades, with "substantially all" of the volume coming from SREIT shares. The tender for Blue Owl's OBDC II failed to attract more than 1% of the outstanding shares. Saba noted that OBDC II's available pool of capital was naturally constrained because only $332 million remained in the fund after prior redemptions and gating.
Catalyst for Sponsor Action
Despite the low tender volume, Saba claimed its activist entry forced fund sponsors to act. Following Saba's public tender for SREIT, Starwood Chairman and CEO Barry Sternlicht committed to injecting equity capital to fund investor redemptions. Saba cited this as a major victory, claiming its entry acted as the primary catalyst for the sponsor's capital injection.
Outlook and New Fund Launches
Saba is forging ahead with its strategy, announcing plans to provide bids on other illiquid products, including the Cliffwater Corporate Lending Fund (an interval fund) and Blue Owl's Core Income Corp (OCIC). To fund this expansion, Saba is reportedly raising a new $1 billion fund dedicated to purchasing souring or gated private credit and real estate stakes.
Saba maintains that the combination of near-term gating and massive maturity walls building in 2027 and 2028 will eventually force a major reckoning, and it plans to establish itself as a permanent liquidity provider of last resort—at steep discounts.
"In early March, the hedge fund Saba offered liquidity to locked-up investors in Blue Owl Capital Corporation II (OBDC II), a non-traded private-credit fund, at a 35% discount. It launched a similar program at Starwood Real Estate Income Trust (SREIT) at a 24% or 29% discount, depending on the share class." — CNBC: Saba Capital finds little appetite for tender offer of shares in Blue Owl, Starwood private credit funds
"Saba’s goal is straightforward: retail investors in these products deserve access to liquidity, just as investors in public BDCs have long enjoyed,” Saba said in a statement. “We intend to be a consistent, credible bid in this market." — CNBC: Saba Capital finds little appetite for tender offer of shares in Blue Owl, Starwood private credit funds