Blue Owl Investors Ask to Withdraw $4.7 Billion From Flagship Funds.

Blue Owl has become a closely watched barometer of the health of private credit because it was one of the first fund managers in the industry to raise money from wealthy individuals, quickly increasing the assets it managed to about $300 billion. Now, its reliance on retail clients has become a liability, as withdrawal requests threaten the firm’s fee revenue.

In the previous quarter, investors had requested a total of $5.4 billion from the two funds, equal to 22% of the larger fund and 41% of the technology-focused fund. Blue Owl opted to cap redemptions in both funds at 5%, a built-in feature intended to avoid having to liquidate the funds’ hard-to-sell corporate loans to meet withdrawals. Withdrawal requests at Blue Owl remained higher than those at other large private-credit funds, despite the slowdown in the second quarter.

Withdrawal requests at 20 private-credit funds tracked by FT totaled more than $22 billion in the second quarter. Private-credit funds have been dealing with a surge in redemption requests since high-profile defaults last year sparked concerns about the health of their investments.

Executives have said concerns about private credit are overblown, but they expect redemption requests to remain elevated for some time.