Blue Owl Capital Inc., facing a looming deadline to return cash in one of its private credit funds, found four buyers for a $1.4 billion portfolio of loans to help pay out investors: Three of North America’s biggest pension funds and its own insurance asset manager.
Chicago-based Kuvare, for which Blue Owl manages assets, along with the California Public Employees’ Retirement System, Ontario Municipal Employees Retirement System and British Columbia Investment Management Corp. bought the debt, according to people with knowledge of the matter. Blue Owl said late Wednesday that it sold the loans at 99.7% of par value.
The sale of the loans was evenly spread across three funds and was part of a plan to return cash to investors in the firm’s Blue Owl Capital Corp II, which was hit with a wave of redemptions last year. The initial plan to return capital, by merging the fund with one of the firm’s publicly traded vehicles, was scrapped amid scrutiny around losses that some investors would take.
Blue Owl didn’t identify the buyers of the loans, saying only that they included North American public pension funds and insurance firms.
Blue Owl acquired Kuvare Asset Management from Kuvare in a $750 million deal in 2024, which Blue Owl used to form Blue Owl Insurance Solutions, according to a statement. At that time, Kuvare Asset Management had around $20 billion in assets under management.
A representative for Blue Owl declined to comment, as did representatives for Calpers, Omers and BCI. Representatives for Kuvare didn’t have immediate comment.
Bidder interest in the deal was so strong that Blue Owl co-founder Craig Packer on Thursday said that “they would have bought multiple amounts more.”
Speaking on an earnings call, Packer also described the size and price of the sale as “an extremely strong statement,” even as investors dumped the firm’s stock on concerns about rising risks in private credit assets.
The transaction highlights the rising entanglement between private credit and the insurance industry.
Analysts at Barclays warned on Thursday that the deal could provide a template for future transactions where debt held in some of the only publicly visible funds — so-called business development companies — could be shifted into more opaque and more highly leveraged vehicles.
“If similar transactions are repeated frequently, it would deepen the ties between these two parts of the non-bank sector, which could make it more difficult to track the risk,” the analysts wrote.
Citing public disclosures, the analysts also said that some of the assets being sold are likely to make their way into Blue Owl-managed collateralized loan obligations, a popular investment vehicle for insurance companies because of their high ratings and beneficial capital treatment. Those would likely be purchased by Kuvare.
Unlike BDCs, which typically carry leverage of just 1x their equity, CLOs are usually leveraged 9 to 10 times, the Barclays analysts noted.
“It would add additional leverage to private credit assets,” they said.
Packer said on the earnings call that the buyers had “made an arm’s length economic decision and there’s nothing behind the scenes that would in any way undermine that conclusion.”
Alongside the 2024 deal for Kuvare Asset Management, Blue Owl said it also bought $250 million of preferred shares in Kuvare UK Holdings and struck an asset management agreement with the insurer.
Packer on Friday dismissed concerns about the buyers in an interview on CNBC. “The fact that one of the four might be a part of our insurance business, how is it reasonable that that would undermine the other 75% of the sales?” he said.
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