Blue Owl Capital Weighs Reviving Private Credit Fund Merger as Market Conditions Shift

Blue Owl Capital is reconsidering a previously shelved plan to merge two of its private credit funds—its publicly traded OBDC fund and the privately held Blue Owl Capital Corporation II—if market conditions improve, according to sources familiar with the discussions. The alternative asset manager withdrew the proposal on Nov. 19 after investors pushed back against a structure that would have frozen withdrawals from the smaller fund and converted its holdings at the larger fund’s share price.

Despite recent speculation, Blue Owl co-president Craig Packer told Reuters the merger is not currently being revived, emphasizing that the decision was a full cancellation rather than a delay. Still, the firm acknowledged it will explore strategic alternatives in the future and continues to see potential upside in combining the funds, especially given their similar portfolios and the cost efficiencies a merger could deliver.

Sources said any renewed effort would hinge on OBDC’s share price strengthening so that it is no longer trading at a discount to net asset value. When the merger was first announced, OBDC’s discount implied potential losses of roughly 20% for holders of Blue Owl Capital Corporation II. The fund reported a third-quarter NAV per share of $14.89, with shares recently closing at $12.34 after fluctuating between $11.65 and $15.73 this year. A merger would likely occur before OBDC II’s expected liquidity event, projected for late April 2026 or 2027.

While an IPO for Blue Owl Capital Corporation II appears unlikely, analysts say merging the funds would be accretive and offer a cleaner exit path for investors. Blue Owl executives have also suggested other strategic options remain on the table, including a potential listing or asset sale.

The private credit sector continues to grow rapidly as investors seek alternatives to traditional banking channels. Blue Owl’s ability to successfully navigate liquidity events may serve as a broader test of investor appetite for the expanding private credit market.