Alternative investment firm Blue Owl Capital is not planning to follow in the footsteps of competitors who have been setting up marketplaces for private credit loans.
Blue Owl has grown into one of the giants of the booming private credit industry by offering bespoke and generally confidential loans to borrowers. Marc Lipschultz, the co-chief executive officer of Blue Owl Capital, said on Feb. 6 that trading these loans on some sort of exchange would dilute the value they offer clients, such as privacy.
“Our version of private credit is indeed, private,” Lipschultz said during an interview on Bloomberg Television.
“When you borrow from us, we are your partner to the end,” he added.
One of Blue Owl’s biggest competitors, Apollo Global Management, said on Wednesday that it was working with banks to build an operation that would allow it to trade and syndicate the private loans that Apollo and other firms originate.
Most loans in the $1.7 trillion private credit market remain on the books of the firms that did the original deals. That has been an appealing aspect of the private credit market for many borrowers.
But Apollo’s moves are only the latest salvo in the effort to expand the private credit industry by creating a secondary market for the loans — moves that have blurred the line between private and public markets.
Golub Capital, another player in the private credit industry, began expanding its own trading operation last year, Bloomberg reported. These kinds of efforts will need to grow if Apollo and other firms are to be successful in their push to create private credit ETFs.
Lipschultz said he has “great admiration for Apollo and if this creates more access points for more people to participate in private credit, I always welcome innovation.”
He said, though, that Blue Owl has “no aspiration to turn a private market into a public market — that already exists.”
New York-based Blue Owl was created almost half a decade ago through the combination of the alternative investment firms Dyal Capital and Owl Rock. Blue Owl had over $250 billion in assets under management as of Dec. 31.
“It’s clearly a time that scale matters,” Lipschultz said. “We are at the stage where it is a bit more about the big getting bigger.”
Lenders like Blue Owl, which started in the middle market, now help finance some of private equity’s largest buyouts as well as a wide range of other lending. Blue Owl this week finalized the acquisition of $2.4 billion of consumer loans from the fintech firm Pagaya Technologies.
