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Blue Owl has decided to call off the merging of two of its private credit funds after the deal caused some angst among investors, according to people familiar with the matter.

The firm had planned to merge its smaller, nontraded Blue Owl Capital Corporation II (OBDC II), into the larger, publicly traded fund Blue Owl Capital Corporation (OBDC). In doing so, the firm restricted investors in the $1.7 billion OBDC II from redeeming until the deal closed, even as the merger would have meant about 20% paper losses, based on where the $17.1 billion OBDC has been trading.

News of the restricted redemptions caused shares of the parent company – Blue Owl Capital to slump about 6% on Monday. It also added to concerns

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