Blue Owl Capital Expands Credit Platform
The investment firm bolsters its middle-market lending strategy following a major merger and portfolio expansion.
February 20, 2025
The private credit landscape moves fast, and Blue Owl Capital is making sure it stays ahead. After a year of growth, a major merger, and an expanded lending platform, the firm is strengthening its position in the middle-market lending space. By scaling its portfolio and refining its investment approach, Blue Owl is focused on delivering steady returns while navigating a shifting credit environment.
Stronger Balance Sheet, Expanded Portfolio
Blue Owl closed out 2024 with $13.2 billion in total investments, up from $12.7 billion the year before. The firm’s net asset value per share landed at $15.26, reflecting stability despite broader market fluctuations. With 227 companies in its portfolio, spanning 30 industries, the firm remains focused on first-lien debt investments, which make up 75.6% of its holdings.
As traditional lenders scale back, demand for private credit is rising. Blue Owl continues to target U.S. middle-market companies, defined as those with earnings between $10 million and $250 million or revenue between $50 million and $2.5 billion. The firm’s strategy emphasizes capital preservation, strong risk-adjusted returns, and a diverse set of financing solutions.
Merger with OBDE Enhances Scale and Diversification
On January 13, 2025, Blue Owl completed its merger with Blue Owl Capital Corporation III (OBDE). The deal increased the firm’s total assets to $18.4 billion, improved portfolio diversification, and boosted first-lien exposure. At the same time, the company maintained a low non-accrual rate of 0.3%, signaling a continued focus on credit quality.
With this expansion, Blue Owl is positioned to deploy capital more effectively and provide more tailored financing solutions for middle-market borrowers. The merger also enhances operational efficiencies, reinforcing the firm’s competitive edge in direct lending.
Funding Structure and Leverage
A well-balanced funding structure gives Blue Owl the flexibility to manage market risks while maintaining liquidity for new investments. As of year-end, the firm’s total outstanding debt stood at $10.08 billion, with a net debt-to-equity ratio of 1.20x.
The firm draws from a mix of financing sources, including:
- Revolving credit facilities: 27.6%
- Collateralized loan obligations (CLOs): 18.5%
- Unsecured notes: 41.8%
- Asset-backed SPV facilities: 12.2%
By maintaining diverse funding channels, Blue Owl ensures stability and efficient capital deployment across its lending platform.
Investment Strategy and Market Positioning
With the traditional banking sector pulling back on middle-market lending, Blue Owl has stepped in to fill the gap. The firm focuses on private, directly negotiated loans, offering borrowers more certainty of execution and customized terms compared to syndicated or public market alternatives.
Interest rate volatility remains a key factor in today’s credit markets, and Blue Owl’s portfolio is structured accordingly. A full 96.4% of its debt investments are floating-rate, helping to offset rate risk and optimize income potential.
The firm is also seeing strong demand in key sectors, including technology, healthcare, financial services, and business services. Internet software and services remains the largest industry allocation at 10.5% of the portfolio, reflecting continued growth in the digital economy.
Expanding into Specialty Finance
Beyond direct lending, Blue Owl is building out its specialty finance portfolio, targeting investments in alternative asset-backed financing. Current holdings include:
- Wingspire Capital – A lender focused on asset-based commercial finance solutions.
- Amergin AssetCo – A platform specializing in transportation asset leasing , including aircraft and railcars.
- Fifth Season Investments – A life insurance-based investment platform.
These investments broaden the firm’s exposure and provide additional income streams, complementing its core credit strategy.
Corporate Sustainability and Governance
Blue Owl has incorporated environmental, social, and governance (ESG) principles into its investment process, with a focus on risk management and long-term value creation. The firm’s corporate sustainability initiatives also extend to internal policies, including its diversity, equity, and inclusion (DEI) efforts and philanthropic programs.
By integrating responsible investment practices and actively managing portfolio risks, Blue Owl is reinforcing its role as a long-term capital provider.
Positioned for Growth in 2025
Blue Owl’s expanded portfolio, strong capital position, and disciplined lending strategy set the stage for continued growth. As traditional financing sources remain constrained, the firm’s direct lending model offers borrowers a reliable alternative.
Heading into 2025, management remains focused on identifying new investment opportunities, optimizing portfolio construction, and maintaining a disciplined risk framework. With a well-positioned credit platform, Blue Owl is poised to navigate economic uncertainty while delivering value to shareholders.
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