In an evolving AI driven landscape, explore how Blue Owl Technology Lending can identify durable businesses, manage portfolio risk, and capture high-quality opportunities.
As AI reshapes the technology landscape, we believe investors are likely turning to us for our domain expertise to understand AI’s implications for software and, by extension, direct lending portfolios. Blue Owl Technology Lending, not only serves as a source of capital for borrowers, but also as a sophisticated partner to help them navigate this transformation. Key considerations for investing in software in an AI world, can include:
Disciplined credit selection that prioritizes durable competitive moats
Defensive portfolio construction that seeks to offer a risk-adjusted approach to software investing
Active portfolio management that reassesses underwriting assumptions and modestly reweights to sub-categories that we believe are poised to potentially benefit from AI
We are pleased with our high-quality assets and we remain committed to ensuring that Blue Owl Technology Lending’s underwriting, capital allocation, and market positioning are aligned with the AI- driven shift underway.
We hear investor concerns around AI disintermediating software revenue models, but I hope to reassure readers that the software industry has navigated structural pricing shifts before and has the capacity to emerge stronger. In the 2000s, with the advent of cloud-based software, many vendors shifted from “license and maintenance” models to “subscription-based pricing” models, and many companies experienced revenue uplifts as the lifetime value for software-as-a-service (SaaS) exceeded the previous model.1
AI can reshape how customers engage with enterprise software and hybrid pricing models have emerged, blending traditional per-seat fees with variable AI-based usage fees. These models can offset the impact of fewer seats required in an AI world by capturing the potential upside from AI-based usage, with McKinsey noting that AI usage fees can vary by 10x.2 Furthermore, Bain has reported that more than half of software vendors are already experimenting with layering variable components on top of traditional licenses.3 Therefore, the view that fewer seats can reduce revenues may be incomplete, overlooking the industry’s shift toward hybrid pricing models and the meaningful upside that AI add-ons can unlock.
Blue Owl Technology Lending invests in large, market-leading companies aiming to provide mission-critical solutions that have high barriers to entry and where errors, downtime, or security breaches are non-negotiable. These moats can create resilience against AI-driven disruption, supporting strong customer retention and meaningful switching costs. Our portfolios are constructed with defensive characteristics, primarily through first-lien, senior secured loans to private-equity-sponsored borrowers. The borrowers across our technology portfolios have grown in both revenue and EBITDA during the era of AI, underscoring the quality of the companies we invest in and our ability to source durable businesses that can be positioned to adopt and potentially benefit from AI rather than be disrupted by it.
Across our direct lending platform, our technology loans are predominantly top of the capital structure with 80%+ senior secured loans, < 35% loan-to-values supported by 65%+ equity cushion, and 90%+ backed by private equity sponsors. Therefore, while we recognize that AI can be a disruptive technology, we believe that our conservatively investment approach helps our direct lending portfolios withstand downturns.
We are pleased to share that the borrowers of our technology loans have demonstrated strong growth in the era of AI. As of year-end 2025, our technology loan borrowers have, on average generated YoY growth, by ~10% of revenue and ~15% of EBITDA.4 Furthermore, the borrowers of our technology loans have cumulatively grown, on average, ~40% by revenue and ~50% by EBITDA, since the launch of ChatGPT in November 2022, which we believe is widely regarded as the turning point in AI.5 These results underscore our strong borrower quality and durable investment strategy.
From a credit selection standpoint, Blue Owl Technology Lending continues to assess AI readiness and defensibility in every investment, including product roadmaps, proprietary data assets, architecture, pricing durability, and stress testing under AI-enabled competition. While not exhaustive, we prioritize key attributes that we believe can prevent AI disruption, enhance business models with AI integration, and further widen competitive moats.
Businesses with complex enterprise environments, proprietary data sets, and bespoke workflows are generally difficult to replicate.
Regulatory-sensitive industries and mission-critical software require accuracy and transparency that probabilistic software (i.e. GenAI) cannot guarantee. Errors, downtime, or security breaches cannot be tolerated.
Borrowers backed by sophisticated private equity firms that provide financial, operational, and managerial support. Sponsors may fund growth initiatives (i.e. modern technology stacks) that enable AI integration for borrowers, helping them out-innovate and out-compete smaller, more nascent peers.
Our software credits have historically been the strongest-performing segment across our direct lending platform in all market environments. Our technology loans across our direct lending platform continue to demonstrate low losses, minimal non-accruals, and interest coverage above 2.0x, reflecting our disciplined credit selection and the defensive characteristics of enterprise software that lenders favor. Many of our borrowers have already adopted and integrated AI into their software solutions, which have delivered tangible benefits for our technology lending portfolio and, ultimately, for investors. We view this as a snapshot of how AI can create value for borrowers that seek to drive attractive returns for investors.
With an experienced team of ~40 tech-focused investment professionals, Blue Owl Technology Lending has the domain expertise and extensive resources to pressure-test underwriting assumptions, deploy into high-quality opportunities driven by AI, and modestly reweight our portfolio towards sub-sectors that we believe can benefit in an AI landscape. We will also leverage Blue Owl’s firmwide capabilities to evaluate AI-related opportunities, such as GPUs, that can meet our rigorous underwriting standards and align with our strategy.
Despite headline fears, the borrowers of our technology loans continue to remain attractive and accretive for our direct lending portfolios though an AI macro backdrop. We remain committed to ongoing refinement of our underwriting assumptions and portfolio compositions, and look forward to helping you navigate this evolving landscape.
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Endnotes
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