Hedge fund Saba Capital Management has offered to buy stakes in three funds run by Blue Owl Capital at steep discounts, as the private credit group works to stabilise investor confidence following the suspension of redemptions at a key retail vehicle, according to a report by the Financial Times.
Saba, led by founder Boaz Weinstein, said it would launch a tender offer allowing investors to sell shares in Blue Owl Capital Corporation II, which this week permanently halted redemptions, as well as two other Blue Owl funds. The offer prices imply discounts of between 20% and 35% to net asset value, enabling investors to exit but at a significant loss.
The move comes amid heightened pressure on Blue Owl and the wider private credit industry, which has been grappling with rising redemption requests and growing scrutiny of loan portfolios, particularly exposure to software companies whose business models may be challenged by advances in artificial intelligence.
Blue Owl recently said it would sell $1.4bn of loans from three funds, including Blue Owl Capital Corporation II, known as OBDC II, in order to return capital to investors and reduce leverage. The loans were sold at 99.7% of stated value, a level the firm said underscored the quality of its assets and could support distributions of up to 30% of the fund’s value.
Weinstein said the tender offer was intended to “help retail investors navigate this challenging period”, adding that private business development companies and interval funds are facing one of their most difficult environments in years as liquidity tightens and redemptions rise.
Saba is also seeking to buy stakes in Blue Owl Technology Income Corp and Blue Owl Credit Income Corp, vehicles where redemptions remain open despite elevated withdrawal requests. The tender offer is being conducted in partnership with Cox Capital Management, which focuses on high-net-worth investors.
Such tender offers are typically associated with periods of market stress and are often viewed by industry participants as opportunistic, given the deep discounts involved. They can also undermine confidence in a fund’s stated valuation, particularly when assets are illiquid.
Blue Owl shares have fallen sharply since the redemption halt was announced and are down significantly year to date. The firm declined to comment on Saba’s offer, though co-president Craig Packer has defended the loan sales strategy, saying it accelerates the return of capital in a way investors find attractive.
Saba is known both for trading market dislocations and for high-profile activist campaigns against closed-end funds.
