Credit

Diversified Lending

Diversified lending focuses on directly originating loans to middle and upper-middle market companies that are diversified by borrower, sector, sponsor, and position size.

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Understanding diversified lending Our approach Our solution Insights & resources Important information
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A growing market

Direct lending's market growth over the past decade has been driven by two main trends:

  • Banks reducing loans to small and mid-sized companies
  • Private equity’s continued growth, which is often backed by private credit financing

We believe these trends are expected to persist, potentially fueling the opportunity. 

Understanding diversified lending

Learn more about the direct lending asset class, diversified lending strategy and potential benefits for borrowers and investors.

Direct lending

Direct lending is where a single or a small group of non-bank lenders (or direct lenders) provide financing solutions directly to a private company (or borrower) who often seek loans to finance growth opportunities and their day-to-day operations.

The direct lender and borrower directly negotiate customized solutions that suit the needs of both parties. These borrowers are typically privately held and/or owned by private equity firms and are looking for a reliable alternative to a bank.

Reasons to consider diversified lending

Diversified lending provides investors access to the private markets alongside three key potential benefits.

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Attractive income potential

Direct loans have historically earned higher yields compared to traditional fixed income.

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Capital preservation

With senior secured loans and tighter lending covenants, direct lending may offer risk mitigation measures.

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Differentiated exposure

Diversified lending offers investors exposure to private companies across a wide range of sectors and end markets.

Direct lending has been a source of potential income

Direct lending has provided an 8% total return or higher approximately 78% of the time.

Cliffwater Direct Lending Index Performance

Annual total returns since inception

Annual income returns since inception

Annual Update. As of December 31, 2022. Past performance is not a guarantee of future results. This is for illustrative and informational purposes only. All investments involve risk of loss, including loss of principal invested. Indices listed do not represent benchmarks for the funds but allow for comparison of a fund's performance to an Index. There can be no assurance that historical trends will continue during the life of any fund. An investor cannot invest directly in an index. Index performance does not reflect fees and expenses. The indices presented represent investments that have material differences from an investment in a non-traded BDC, including those related to vehicle structure, investment objectives and restrictions, risks, fluctuation of principal, safety guarantees or insurance, fees and expenses, liquidity and tax treatment.

Blue Owl's approach

As a market leader in direct lending, we’re differentiated by our scale, independence, investment approach and track record.

$ 0 B+
AUM
0
deal funnel
$ 0 B
originated since inception1
0 K
deals reviewed since inception1

A history of compelling risk-adjusted performance

Our robust sponsor network of private equity partners, combined with our disciplined underwriting process, has driven our strong credit performance.

  • Our highly selective investment process – from deal sourcing and deal screening to due diligence and investment committee review – has resulted in 525+ total deals closed, approximately 5% of all deals sourced.

  • We have deployed $65B+, while achieving an annual loss rate of 0.06% across the direct lending platform.

View important information

Average annual loss rate 2,3

Breaking down our investment process

Our relationship-oriented approach provides private companies with sizeable commitments to facilitate transactions and support their growth needs with certainty, speed and transparency throughout the investment process.

Origination

Our independent origination process is driven by our extensive network of industry contacts and portfolio company relationships.

Our solution

Through a perpetually non-traded business development company (BDC), we offer one diversified lending solution, OCIC, that provide investors access points to our Credit platform.

Non-traded

Blue Owl Credit Income Corp. (OCIC)

OCIC is a perpetually non-traded business development company that originates loans to, and makes debt investments in, US middle-market companies.

Learn more about OCIC
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Individual investors, please contact your financial advisor for more information.

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Endnotes

  1. Since the inception of Blue Owl's credit platform in 2016.
  2. Average annual loss rate based on total annual net realized losses across all investments divided by the average aggregate quarterly cost of investments. The loss rate is based on the average loss rates in each year since inception from 2016 to ‌‌‌‌​​‌​​​‌​​‌​​‌​​‌​‌‌‌‌​​‌‌​​​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​‌‌‌‌‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​‌3Q23‌‌‌. Loss rates by fund: OBDC (-0.17%), OBDC II (-0.12%), OBDC III (-0.08%), OCIC (-0.05%), OTF (-0.04%), OTF II (0.00%), OTIC (0.00%), OFLF (0.00%), OLF (0.00%).
  3. Source: SP LCD, Cliffwater, JP Morgan. Market loss rates calculated as average loss rates and defined as: for loans, based on SP LCD default rates for all loan $ defaults as percentage of total outstanding and calculated as default*(1 – average historical Recovery Rate) from 2016 to 1Q23; Direct Lending based on Cliffwater Direct Lending Index realized gains/losses from 2Q16 to ‌‌‌‌​​‌​​​‌​​‌​​‌​​‌​‌‌‌‌​​‌‌​​​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​‌‌‌‌‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​3Q23‌‌‌; High Yield Bonds based on JP Morgan Default Monitor annual defaults and calculated as default* (1 – average historical Recovery Rate) from 2016 to ‌‌‌‌​​‌​​​‌​​‌​​‌​​‌​‌‌‌‌​​‌‌​​​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​‌‌‌‌‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​‌‌‌‌‌‌‌‌‌‌‌‌‌‌​‌‌3Q23‌‌‌; Recovery rates for loans of range from 48-63% by year and 22-55% for bonds and are based on JP Morgan Default Monitor, May 1, 2023

    Past performance is not indicative of future results. This is for illustrative and informational purposes only. All investments involve risk of loss, including loss of principal invested. Indices listed do not represent benchmarks for the funds but allow for comparison of a fund's performance to an Index. There can be no assurance that historical trends will continue during the life of any fund. An investor cannot invest directly in an index. Index performance does not reflect fees and expenses. The indices presented represent investments that have material differences from an investment in a non-traded BDC, including those related to vehicle structure, investment objectives and restrictions, risks, fluctuation of principal, safety guarantees or insurance, fees and expenses, liquidity and tax treatment. Total Deals Reviewed and Closed Excludes add-ons, syndicated transactions, equity-only deals, and transactions for existing borrowers.

Important information

Unless otherwise noted the Report Date referenced herein is as of September 30, 2023.

Past performance is not a guarantee of future results.

Assets Under Management (“AUM”) refers to the assets that we manage and are generally equal to the sum of (i) net asset value (“NAV”); (ii) drawn and undrawn debt; and (iii) uncalled capital commitments.
The webpage presented is proprietary information regarding Blue Owl Capital Inc. (“Blue Owl”), its affiliates and investment program, funds sponsored by Blue Owl, including the Blue Owl Credit, GP Strategic Capital Funds and the Real Estate Funds (collectively the “Blue Owl Funds”) as well as investment held by the Blue Owl Funds.

An investment in the Fund entails a high degree of risk. Prospective investors should consider all of the risk factors set forth in the "Certain Risk Factors and Actual and Potential Conflicts of Interest" of the PPM or Prospectus, each of which could have an adverse effect on the Fund and on the value of Interests.

An investment in the Fund is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity associated with an investment in the Fund. Investors in the Fund must be prepared to bear such risks for an indefinite period of time. There will be restrictions on transferring interests in the Fund, and the investment performance of the Fund may be volatile. Investors must be prepared to hold their interests in the Fund until its dissolution and should have the financial ability and willingness to accept the risk characteristics of the Fund's investments.

There can be no assurances or guarantees that the Fund's investment objectives will be realized, that the Fund's investment strategy will prove successful or that investors will not lose all or a portion of their investment in the Fund.

Furthermore, investors should not construe the performance of any predecessor funds as providing any assurances or predictive value regarding future performance of the Fund.

The views expressed and, except as otherwise indicated, the information provided are as of the report date and are subject to change, update, revision, verification, and amendment, materially or otherwise, without notice, as market or other conditions change. Since these conditions can change frequently, there can be no assurance that the trends described herein will continue or that any forecasts are accurate. In addition, certain of the statements contained in this webpage may be statements of future expectations and other forward-looking statements that are based on the current views and assumptions of Blue Owl and involve known and unknown risks and uncertainties (including those discussed below) that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. These statements may be forward-looking by reason of context or identified by words such as “may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue” and other similar expressions. Neither Blue Owl, its affiliates, nor any of Blue Owl’s or its affiliates' respective advisers, members, directors, officers, partners, agents, representatives or employees or any other person (collectively the “Blue Owl Entities”) is under any obligation to update or keep current the information contained in this document.

The information presented contains case studies and other discussions of selected investments made by Blue Owl Funds. These discussions provide descriptions and certain key aspects of such investments presented for informational purposes only and are intended to illustrate Blue Owl’s sourcing experience and the profile and types of investments and investment strategies which may be pursued by Blue Owl. The types and performance of these investments (i) are not representative of the types and performance of all investments or investment strategies that have been made or recommended by Blue Owl and (ii) are not necessarily indicative of the types and performance of investments that Blue Owl may seek to make, or be able to make, in the future. Any future investment vehicle that Blue Owl may sponsor or advise in the future, may pursue and consummate different types of investments in different concentrations, than those selected for illustrative purposes in this webpage. Further, references to investments included in illustrative case studies are presented to illustrate Blue Owl’s investment processes only and should not be construed as a recommendation of any particular investment. Past performance of any investment described in these illustrative case studies is not indicative of future results that may be obtained by any Blue Owl funds, and there can be no assurance that any such fund or other vehicle will achieve comparable results.

This webpage contains information from third party sources which Blue Owl has not verified. No representation or warranty, express or implied, is given by or on behalf of the Blue Owl Entities as to the accuracy, fairness, correctness or completeness of the information or opinions contained in this webpage and no liability whatsoever (in negligence or otherwise) is accepted by the Blue Owl Entities for any loss howsoever arising, directly or indirectly, from any use of this webpage or its contents, or otherwise arising in connection therewith.

All investments are subject to risk, including the loss of the principal amount invested. These risks may include limited operating history, uncertain distributions, inconsistent valuation of the portfolio, changing interest rates, leveraging of assets, reliance on the investment advisor, potential conflicts of interest, payment of substantial fees to the investment advisor and the dealer manager, potential illiquidity, and liquidation at more or less than the original amount invested. Diversification will not guarantee profitability or protection against loss. Performance may be volatile, and the NAV may fluctuate.

Performance Information:

Where performance returns have been included in this webpage, Blue Owl has included herein important information relating to the calculation of these returns as well as other pertinent performance related definitions.

This webpage is for informational purposes only and is not an offer or a solicitation to sell or subscribe for any fund and does not constitute investment, legal, regulatory, business, tax, financial, accounting, or other advice or a recommendation regarding any securities of Blue Owl, of any fund or vehicle managed by Blue Owl, or of any other issuer of securities. Only a definitive offering document (i.e.: Prospectus or Private Placement Memorandum) can make such an offer. Neither the Securities and Exchange Commission, the Attorney General of the State of New York nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or Private Placement Memorandum is truthful or complete. Any representation to the contrary is a criminal offense. Securities are offered through Blue Owl Securities LLC, member of FINRA/SIPC, as Dealer Manager.

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