Blue Owl faces investor suit over BDC redemptions, liquidity, merger

Blue Owl faces investor suit over BDC redemption strain, liquidity questions and a scrapped merger that allegedly risked a roughly 20% haircut. 

A federal case in New York alleges Blue Owl Capital Inc. and senior executives misled investors about redemption pressure within its business development companies, the firm’s liquidity, and the likelihood of curbing redemptions. The filing, brought by shareholder Alexander Goldman as a putative class action, centers on Blue Owl’s direct‑lending platform and a brief plan to merge Blue Owl Capital Corporation (OBDC) with non‑traded Blue Owl Capital Corporation II (OBDC II). The assertions come from court papers; no court has ruled. 

Blue Owl, which operates across Credit, GP Strategic Capital and Real Assets, manages six BDCs, including OBDC, which trades on the NYSE, and OBDC II, which historically has offered quarterly tender offers at net asset value. According to the filing, Blue Owl told investors across 2024–2025 that there was “no meaningful pressure” on its asset base from redemptions and that it held substantial capital not yet paying fees. The papers contrast those statements with what they describe as rising investor outflows from OBDC II during 2025, citing a near‑doubling of shares repurchased in the August–September window compared with 2024 and about $150 million withdrawn in the first nine months of the year. 

The timeline tightened in late October. On Oct. 30, 2025, Blue Owl reported third‑quarter results that, the filing says, included fee‑related earnings below consensus, fee‑related margins that missed expectations, and a year‑over‑year drop in performance revenue. The stock fell 4.23% that day. 

On Nov. 5, OBDC and OBDC II announced a merger agreement. The announcement stated that OBDC II did not anticipate additional tender offers before closing and set an exchange formula based on each fund’s net asset value and OBDC’s market price. Because OBDC has traded at a discount to the value of its assets, the exchange mechanics implied a potential value hit for OBDC II holders, the papers contend. A Nov. 16 Financial Times article, cited in the filing, reported that the haircut could be about 20% and said OBDC II investors would not be able to redeem before the merger. The article also quoted OBDC’s chief financial officer as acknowledging the potential haircut at then‑current prices and noting that OBDC II might have to limit redemptions if shareholders voted down the deal. Shares of Blue Owl fell 4.72% on Nov. 6, the day after the merger announcement, and 5.8% on Nov. 17 following the article, according to the case. 

Two days later, on Nov. 19, OBDC and OBDC II terminated the merger, citing current market conditions, with plans to reevaluate alternatives. OBDC II indicated an intention to reinstate its tender program in the first quarter of 2026, subject to board approval. 

The suit brings claims under Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b‑5, alleging that statements about redemption pressure, liquidity and the likelihood of limiting or halting redemptions were materially false or misleading. The defendants are Blue Owl Capital Inc., co‑chief executives Douglas I. Ostrover and Marc S. Lipschultz, and chief financial officer Alan Kirshenbaum. The case is docketed as 1:25‑cv‑10047 in the Southern District of New York. 

For advisors and allocators watching private credit and listed BDCs, the litigation spotlights how liquidity promises in non‑traded vehicles interact with corporate actions, the risks embedded in discount‑to‑NAV conversions, and the importance of clear disclosure around redemption trends. The matter also underscores due‑diligence checks on tender‑offer programs and how fee streams tied to BDC structures can be affected when redemptions rise or when market prices diverge from book value. 

No final determination has been made, and the court has not ruled on the allegations.