The episode plays to concerns on what the limits should be about opening the private credit asset class to a wider universe of investors.

Late last week, private credit group Blue Owl pushed back against reports saying that it is halting liquidity in a retail debt fund.  

The saga concerns the Blue Owl Capital Corp II (OBDC II) fund. Media reports said investors would no longer be able to redeem their holdings in quarterly intervals. Instead, the company would return investors’ capital in episodic payments as it sells down assets in coming quarters and years.

For some time it has been argued that if retail investors enter the relatively illiquid asset class of private credit – a sector that is sometimes called “shadow banking” – they might fall foul of adverse market conditions. The attempt to "democratise" access to areas previously dominated by large institutions and ultra-wealthy clients has raised concerns in the wealth management industry.

After a query from WealthBriefing on Friday, the New York-headquartered firm said in a statement: “Contrary to what has been reported by some, we are not halting investor liquidity in OBDC II.

“In fact, we are accelerating the return of capital. This asset sale will return 30 per cent of OBDC II investors’ capital at book value to shareholders equally on a pro rata basis. Instead of resuming a 5 per cent a quarter tender, where only tendering investors get a small portion of their capital back, we are returning six times as much capital and returning it to all shareholders over the next 45 days. In the coming quarters we will continue to pursue this plan to return capital to OBDC II investors.”

Reports (Financial Times, Bloomberg, Reuters, others) quoted the firm as saying the fund “intends to prioritise delivering liquidity ratably to all shareholders through quarterly return of capital distributions, which are intended to replace future quarterly tender offers and may be funded by earnings, repayments, other asset sale opportunities or strategic transactions.”

On 18 February, Blue Owl announced financial results, including that it was selling $1.4 billion of credit investments. Blue Owl reported net investment income per share of $0.38 per share at the end of December last year, falling from $0.47 a year before. The company had investments in 234 portfolio companies with an aggregate size of $16.5 billion at fair value, down from $17.13 billion on 30 September last year.

“This strategic transaction enhances balance sheet flexibility, modestly increases portfolio diversity and creates additional capacity to deploy capital into attractive, risk-adjusted investment opportunities,” it said. 

“What began as a targeted transaction to provide liquidity to OBDC II shareholders attracted significant interest from sophisticated institutional investors, allowing us to opportunistically extend the sale to OBDC. We expect this transaction to reduce leverage, modestly increase portfolio diversity and create additional capacity to invest in compelling new opportunities for the benefit of OBDC shareholders,” Craig Packer, Blue Owl’s CEO, said. 

Reports noted that OBDC II has been closed to redemptions since November 2025 after it abandoned efforts to merge it with a larger publicly traded credit fund managed by Blue Owl.

OBDC II is not publicly traded. It offers investors the option to take out cash every quarter at the fund’s stated value, generally up to 5 per cent of net assets.

In recent years, there has been a growth of “evergreen” and semi-liquid funds to give retail, affluent and high net worth investors access to areas such as private equity. This publication has reported on whether the sector is sufficiently prepared for a negative market shock or a recession. (See articles here and here.)