Blue Owl Restricts Withdrawals from Two Funds Amid Surge in Redemption Demand

The Blue Owl Capital logo is prominently displayed on an office building in midtown Manhattan, New York City, on February 24, 2026. REUTERS/Brendan McDermid Summary: Investors seek to withdraw up to 41% from tech-focused funds; shares of private asset managers decline; Blue Owl's market cap down 45% in 2026; 90% of investors in the larger fund chose not to redeem, according to Blue Owl. On April 2, 2026, Blue Owl (OWL.N) announced that it is restricting withdrawals from two of its funds due to an unprecedented spike in redemption requests during the first quarter, largely prompted by anxiety over AI's impact on its technology-focused fund. The broader downturn in the market has influenced private credit firms like Blue Owl, with investors reassessing their holdings in response to concerns about valuations and lending criteria following several high-profile bankruptcies. Founded in 2021, Blue Owl represents a growing number of private credit funds facing significant redemption challenges. Investors have been selling assets across the board, particularly those with heavy exposure to the software sector, as advancements in AI threaten to disrupt various industries. Approximately 8% of Blue Owl's nearly $300 billion in assets was previously allocated to software. According to Reuters, investors requested to withdraw $5.4 billion from both funds in the first quarter. This marks a notable trend among firms that have restricted redemptions recently, including KKR, Apollo, and BlackRock. The announcement caused Blue Owl's shares to hit an all-time low during midday trading, with the stock diminished by nearly half its value since the beginning of 2026. Other asset managers in the private sector, such as Ares, Apollo Global, Blackstone, and Carlyle, also saw declines. In terms of unprecedented withdrawals, investors requested to withdraw 40.7% of shares from the $6.2 billion Blue Owl Technology Income Corp (OTIC) fund and 21.9% from the $36 billion Blue Owl Credit Income Corp (OCIC) fund, according to initial data. These percentages represent some of the highest quarterly redemption requests on record, as noted by sources familiar with the situation. Blue Owl indicated that it intends to accommodate only 5% of these requests, citing a significant disconnect between public perceptions of private credit funds and the actual performance of its portfolio. Sam Stovall, chief investment strategist at CFRA Research, stated, “This underscores the illiquidity of this sector.” He advised retail investors to reconsider entering private equity, remarking, “This sector is designed for professionals. It lacks the liquidity of public markets, making it challenging to access funds quickly.” The funds operate as business development companies (BDCs), designed to raise equity paired with leverage to finance loans primarily to mid-sized firms. While some trade publicly, non-traded funds like Blue Owl’s provide investors with quarterly opportunities to withdraw a limited portion of their holdings, generally capped at 5%. Last quarter, Blue Owl permitted OTIC shareholders to redeem 15.4% of their shares. Craig Packer, the funds' CEO, noted in two shareholder updates that elevated tender activity in the first quarter of 2026 reflected increased negative sentiment within the industry amid reports of tender results from peers. Despite these challenges, Blue Owl stated that the downturn in the software sector is creating new opportunities to enhance its portfolio. Previous proposals from Blue Owl, such as merging a public vehicle with a private counterpart and asset sales to fund distributions instead of allowing quarterly redemptions, have met with skepticism from markets. The concentrated nature of redemption requests—where 1% of OCIC shareholders accounted for the majority—suggests that the outflow may be more influenced by institutional investors or wealth management clients rather than widespread retail anxiety. Blue Owl observed that prevailing negative sentiment was particularly acute in its tech fund, which has a more limited shareholder base and higher software exposure. The company commented, “Increased market concerns regarding AI-related disruptions in software companies have significantly impacted investor perceptions of credit risks in this sector.” Reporting by Isla Binnie, with additional contributions from Stephen Culp. Editing by Louise Heavens, Dawn Kopecki, Chizu Nomiyama, and David Gaffen. Our Standards: The Thomson Reuters Trust Principles.