Blue Owl gains 10% on SpaceX investment win

Blue Owl, a US private credit firm, rose 10% in trading after executives said on its first-quarter earnings call that the company had made about 10 times its money on a SpaceX investment.

The firm also said it had sold about half of the stake at a US$1.25 trillion valuation.

An executive on the call said Blue Owl first lent to SpaceX and later made an equity investment.

This underscores how private credit funds can hold both loans and shares.

Blue Owl has faced investor concern over its exposure to software companies.

The management said loan-to-value ratios in that segment have weakened but there is still a buffer before losses would be recorded.

🔗 Source: CNBC

🧠 Food for thought

Implications, context, and why it matters.

Blue Owl has a broader business mix

Investor attention has centered on software lending from the earnings discussion, yet direct lending makes up 37% of Blue Owl Capital Inc.’s total assets under management (AUM), the total value of assets it manages for clients 1.
Real assets account for 27% of AUM. GP strategic capital makes up 22%. GP strategic capital covers investments in asset management firms, often through minority stakes in the companies that run investment funds 1.
Other units are holding up well. Its net lease strategy, a real estate model where tenants usually pay taxes and maintenance, returned 14.7% in the past 12 months. That beat the FTSE REIT index, a benchmark for listed real estate investment trusts, by more than 1,100 basis points. Its digital infrastructure strategy also joined an Amazon-announced US$12 billion data center campus investment with development by Stack Infrastructure, a data center developer 1.

AI worries are colliding with private credit basics

Blue Owl shares fell 26% during an 11-session slide before the earnings call. The drop captures how AI fears around software companies can hit lenders before loan losses emerge 2.
The main risk is a thinner equity buffer for lenders. Blue Owl said loan-to-value ratios in its software portfolio rose from the low 30s to the low 40s, which leaves private equity owners with less room to absorb losses 1.
The episode also exposes a strain in private credit. Illiquid loans are hard to sell, yet investors still want cash. Blue Owl earlier changed liquidity terms in a tech- and software-focused Business Development Company (BDC), a type of investment vehicle that lends to smaller businesses. It replaced voluntary quarterly redemptions with mandated “capital distributions,” a step many read as a freeze on redemptions even though management called it an acceleration 3.