iCapital conflicts on display during private credit mess

The financial advice market is seeking as much clarity as possible for opaque valuations and liquidity plans of private credit funds and nontraded business development companies.

At the same time, a leading technology platform financial advisors use to sell alternative investments, Institutional Capital Network or iCapital, is exhibiting its conflicts of interest when it comes to such private credit and BDC managers, including Blue Owl Capital, a closely watched private credit and BDC manager.

Skittish investors and their financial advisors have been dumping BDCs the past few months, worried that the high-yielding funds may be over-exposed to loans in the technology and software sectors, which are under pressure from the rise of artificial intelligence capabilities.

A current concern is that only some retail investors in the limited liquidity funds and BDCs are able to sell their shares back to the investment companies, which typically buyback 5% of the outstanding shares per quarter.

The issue for iCapital? Its investors include a number of Wall Street’s leading firms and alternative investment managers, including Blue Owl, Blackstone and KKR, according to the company’s website.

iCapital discloses this conflict in its Form ADV for iCapital Advisors, an RIA, updated in March with the Securities and Exchange Commission, but its chief investment strategist, Sonali Basak, makes no mention of any conflict in a post this month from LinkedIn.

“This ownership structure raises potential conflicts of interest with respect to Alternative Investments,” according to the Form ADV.

“With the Blue Owl announcement of its tender offer for the first quarter of 2026 this week, we now know much more about the aggregate health of the broader private credit industry,” Basak wrote in a note dated April 3.

“On the headline level though, the level of requests looked big,” she wrote. “At the Blue Owl Technology Income Corp. (OTIC), requests came in at 40.7% of [net asset value], while for the Blue Owl Credit Income Corp. (OCIC) it was 21.9%.”  

“What I'm often told is that there are investors who are also putting in larger requests than they actually want or need, knowing that the redemption level sticks at 5% so they'd likely get pro-rated,” Basak wrote. “This is all to say, like many things, nothing is ever as good or as bad as it seems.”

iCapital has $1.2 trillion assets on its platform and works with more than 2,400 funds, according to the company’s website.

“The head strategist at iCapital supports Blue Owl,” said a senior industry executive who spoke privately to InvestmentNews about the matter. “It would be reasonable to disclose that Blue Owl is an investor in iCapital and that iCapital earns fees from Blue Owl being on its platform.”

“iCapital is a venture-backed group,” said another senior industry executive, also speaking privately about the matter. “The issue is when venture firms have products on such a platform but don’t disclose it as fully as some would want.”  

“That raises the question, is it a problem for a manager to buy the distribution because it didn’t want to pay for building it,” the executive added.

In a statement to InvestmentNews, iCapital said it was “proud” to have asset managers, registered investment advisors and banks as investors.

“Our ownership and partnership structure is described openly on our website, and we communicate it proactively to advisors,” iCapital said. “We operate with a strong focus on transparency and compliance, and we disclose potential conflicts of interest in accordance with applicable regulatory requirements.”