Craig Packer, CEO of Blue Owl BDC, discusses the company’s position during a CNBC interview at the New York Stock Exchange on November 19, 2025. On February 20 (Reuters), shares of Blue Owl Capital (OWL.N) fell for a second consecutive session, reflecting investor anxiety surrounding the alternative asset manager’s decision to return capital from a debt fund, which raised fears about private lending standards and a potential liquidity crunch in the industry. The stock has plummeted over 50% in the past year and was down 4% after a 6% drop in the prior session. Investor unease began earlier this week when Blue Owl, based in New York, announced it would divest $1.4 billion in assets from three funds, return the proceeds to investors, and reduce its debt. The decline was compounded by a Bloomberg report indicating the sale of loan portfolios to three of North America's largest pension funds and its own insurance firm, Kuvare, based in Chicago. Investment firms Saba Capital and Cox Capital stated they had proposed to buy shares in three Blue Owl funds at a 20-25% discount to reported valuations. Brian Finneran, managing director at Truist Financial, remarked on the skepticism surrounding the involvement of Kuvare in the loan sales. In an interview, Blue Owl Co-President Craig Packer reassured that all four institutions involved expressed interest in acquiring more assets, questioning how the presence of Kuvare could affect the overall sales. Blue Owl stated that the debt sold was linked to 128 portfolio companies across 27 sectors, with 13% concentrated in software and services. The loans were sold at 99.7% of par value, aligning with the firm’s internal benchmarks, which Packer cited as a sign of the accuracy of their valuations. The firm remains highly selective in lending to software companies. The pressures also extended to larger peers like Apollo Global (APO.N) and KKR (KKR.N), reflecting growing concerns regarding software valuations amid rapid advancements in artificial intelligence. On another note, Blue Owl announced it has permanently eliminated an option for wealthy individual investors to withdraw certain funds from one of its vehicles, Blue Owl Capital Corp II. The firm will return 30% of the fund's net asset value to its investors while ceasing quarterly redemptions. A day later, it clarified that it is not halting liquidity for investors in Blue Owl Capital Corp II, revealing a new plan that will return six times the amount of capital to all shareholders within the next 45 days. Packer emphasized that this adjustment in redemption methods would expedite the process rather than suspend it, stating, 'We believe this is a challenging short-term issue, but our long-term results are robust.' According to Ortex data as of February 19, nearly 12.5% of Blue Owl’s free float is shorted, with short interest climbing by 3.2 percentage points over the last three months. Oppenheimer analyst Chris Kotowski noted that the situation should not incite undue alarm, as the numerous funds and vehicles involved may be affected differently by software issues. As the private credit sector faces increasing scrutiny following notable bankruptcies last year, the industry is under pressure regarding the quality of private credit portfolios and their valuations. Steve Wyett, chief investment strategist at BOK Financial, suggested that the situation reflects broader challenges across private alternatives, highlighting the mismatch between liquid needs from investors and the asset managers’ capabilities to meet those needs. In a separate development, Blue Owl refuted a report by Business Insider claiming it struggled to secure financing for a $4 billion data-center project it is collaborating on with CoreWeave in Pennsylvania, reaffirming its commitment to provide approximately $500 million in bridge financing through March 2026. CoreWeave shares fell by 8.6% in late-afternoon trading.