Alternatives firm Blue Owl Capital aims to double its assets under management over the next five years to over $500 billion, after a busy last 12 months of acquisition activity.
“Our established scale businesses have very substantial organic growth,” said co-CEO Marc Lipschultz speaking with Pensions & Investments on the sidelines of the firm’s investor day, adding that “we’ve added the pieces to the chessboard that have even more accelerated growth paths.”
Blue Owl executives pointed to growth in several areas in upcoming years including insurance, private wealth, digital infrastructure and alternative credit as well as cross-selling products to investors. Blue Owl ended 2024 with $251 billion in assets under management. That's up from $102 billion during its last investor day at the start of 2022.
Blue Owl’s burst of acquisitions was a primary driver of the firm’s AUM increase last year.
In April, Blue Owl announced its acquisition of Kuvare Insurance Services, which does business under the name Kuvare Asset Management, as well as its acquisition of real estate lender Prima Capital Advisors. In July, Blue Owl announced its acquisition of Atalaya Capital Management, boosting credit and asset-based finance capabilities. And to cap off the year, in October Blue Owl announced it was buying data center fund manager IPI Partners.
Executives said during the firm’s investor day that the bar is high for any additional acquisitions while the firm digests the four latest acquisitions.
Lipschultz said after a “busy year” that “there’s nothing that we are saying, ‘Oh, that’s a piece we absolutely have to have to skate where the puck is going.’”
But, Lipschultz did point to three areas that could make sense down the line for Blue Owl.
“There are certainly natural areas that would be very suitable for us over time, infrastructure, beyond digital,” he said, pointing to the firm’s expertise in power procurement and management.
Secondaries is another area Lipschultz highlighted.
“Today, we don't have a business where we buy those secondary LP stakes, which are a very active business,” he said. “It would be a very logical addition, if the right platform with the right team” all aligned.
And finally, Lipschultz pointed European direct lending as an area that would be “a logical fit.”
Blue Owl’s recent acquisitions have almost all clustered around businesses with approximately $10 billion in assets under management.
Lipschultz pointed to a bifurcation that happens once managers reach around $10 billion in assets.
“The fork in the road is I either want to become big enough to be one of those broader solutions providers and be on the top of mind for people that need the biggest, best partners, or I need to just say, ‘look, I’m going hunker down in my niche.’”
And Lipschultz does believe that the alternatives industry is now in for a phase of consolidation ahead.
“There'll be these specialty firms that have deep, deep, deep knowledge in a particular spot. And some of those will go it alone successfully. Some of those will, like we have… look to scale, where I want to go, I need to marry up. I think the tough spot for everybody, is sort of that middle ground,” he said.
Today, credit at $136 billion accounts for Blue Owl’s largest area followed by GP strategic capital at $66 billion and real assets at $49 billion.
As private credit markets evolve and the lines between what is public credit and what is private blur, Lipschultz said, “I think we're less keen on the idea of, how do you make privates more public. Because part of the reason people like our solutions is they want us as their partner. If they just wanted the capital, they might have just elected the public solution in the first place.”
