Blue Owl told investors Thursday that it is limiting withdrawals from two of its funds after a historic level of redemption requests came in for the first quarter, with AI-related worries driving an investor exodus from its technology-focused fund.
Private credit firms like Blue Owl have been feeling strain from the market’s recent downturn, prompting some investors to pull back from these investments due to worries about valuations and lending standards following a handful of high-profile bankruptcies. Founded in 2021, Blue Owl has become the poster child for private credit funds that are struggling with a high level of redemptions.
Jittery investors are indiscriminately selling off anything heavily exposed to the software sector as advancements in AI threaten to upend entire sectors of the economy. About 8% of the firm’s roughly $300 billion in assets was invested in software, it previously said.
Blue Owl investors asked to withdraw $5.4 billion in shares between the two funds during the first quarter, according to Reuters’ calculations.
It is the latest in a growing list of firms that have limited redemptions in recent weeks, including KKR, Apollo and BlackRock.
Thursday’s news sent Blue Owl’s shares to a new all-time low of $7.95 in mid-day trading. The stock has been losing ground for months, shedding nearly half of its market value since the start of 2026.
Other managers of private assets, including Ares, Apollo Global, Blackstone, and Carlyle also slid.
Unprecedented withdrawals
Investors asked to withdraw 40.7% of shares in the $6.2 billion technology-focused Blue Owl Technology Income Corp (OTIC) fund, and 21.9% of shares in the $36 billion Blue Owl Credit Income Corp (OCIC) fund, according to preliminary data released by the company. Those percentages rank among the highest quarterly redemption requests the industry has ever seen, a person familiar with the matter said.
The firm said it plans to only fill 5% of the requests, saying there was a “meaningful disconnect” between public sentiment on private credit funds and the underlying performance of its portfolio.
“It’s another reminder about how illiquid this sector is,” said Sam Stovall, chief investment strategist of CFRA Research in New York. He said retail investors thinking about investing in private equity may want to think twice. “It is a sector that is meant for professionals.
“Don’t try this at home. Private credit does not have the kind of liquidity that public markets would have and it’s very difficult to get the money out as quickly as you might want it,” Stovall said.
The funds, structured as what are known as business development companies (BDCs), raise equity and pair it with leverage to finance loans, mainly to mid-sized companies. Some of them trade on public markets, where investors can buy and sell shares. Non-traded funds like Blue Owl’s give investors quarterly opportunities to withdraw a portion of their holdings, which is usually capped at 5% of shares.
