Blue Owl Permanently Halts Redemptions at Fund Aimed at Retail Investors
Blue Owl Capital has announced that its non-traded BDC, Blue Owl Capital Corporation II (OBDC II), will permanently suspend quarterly tender-offer redemptions. Instead, the fund will return capital to investors through episodic distributions funded by earnings, repayments, asset sales, or strategic transactions.
The decision to halt redemptions was triggered by a sharp increase in redemption requests, with investors withdrawing $150 million in the first nine months of 2025, a 20% increase compared to the same period in 2024. In Q3 2025, redemptions nearly doubled to $60 million, representing approximately 6% of the fund’s net asset value.
The halt is also tied to a planned merger of OBDC II into Blue Owl’s publicly-traded BDC, Blue Owl Capital Corp. (OWL). The merger will convert OBDC II shares into OWL shares at a price that implies a 20% haircut for OBDC II investors.
The news has triggered a negative market reaction, with OWL shares dropping by approximately 7.8% on the day of the announcement. The forced conversion and the prospect of a 20% haircut have heightened short-term risk aversion, suggesting further downside pressure of 5-10% in the next few trading days.