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Fewer than 1 per cent of investors in a Blue Owl fund that permanently halted redemptions agreed to sell their shares at a deep discount to hedge fund manager Boaz Weinstein, according to people briefed on the matter.
The limited interest to sell shares in the fund to Weinstein’s firm Saba Capital signals how unwilling investors are to take large losses on their private credit exposure, even as they race out of a litany of funds offered by industry giants.
Saba had offered to buy shares of Blue Owl Capital Corporation II at just 65 cents on the dollar, a discount that failed to entice many of the wealthy individuals who are otherwise stuck in the fund until it winds down.
“Saba’s goal is straightforward: retail investors in these products deserve access to liquidity, just as investors in public [business development companies] have long enjoyed,” the firm said in a statement. “We intend to be a consistent, credible bid in this market.”
Blue Owl, which had advised investors to turn down Saba’s offer, declined to comment.
Saba on Monday said it had nonetheless bought up shares in several private markets funds, including those run by KKR, Starwood Capital and Bluerock. The firm has invested $40mn in KKR’s publicly traded private credit fund, which Saba said was the firm’s “first meaningful foray” into the market.
Weinstein and Saba are known for making savvy bets on dislocations in credit markets. Yet in recent years he has also begun a high-profile activist battle against closed-end funds that trade at a discount to their net asset value.
Weinstein and his partner Kieran Goodwin have been among the most vocal investors to weigh in on the fate of the private credit industry, which has come under intense pressure with tens of billions of dollars in redemption requests since the start of the year.
“Selling assets to meet redemptions would only cause redemptions to further increase,” Goodwin wrote in a post on X earlier this year, without naming any companies or vehicles. “The loans are marked at 100 but a great bid for a private loan would be in low 90s.”
Shortly before he announced his plan to buy shares in several Blue Owl funds, Weinstein said at a conference in February that the industry’s troubles had only begun.
“We’re in the super early innings of the wheels coming off the car . . . for this industry of semi-liquid, contingent liquid products facing rising redemptions, which is going to create its own velocity.”
Saba pointed to the relatively small size of the Blue Owl fund known as OBDC II for the tepid interest, saying the amount of capital available to tender was “naturally limited”.
Despite the limited interest, Saba signalled it would continue to stand by as a buyer of stakes in gated funds.
“As markets evolve and redemption pressures build, particularly given the credit risk we see accumulating into 2027 and 2028, we believe the opportunity set for providing liquidity at scale will grow considerably,” Saba said in a statement.
