Blue Owl Capital Inc. (OWL.US) is expanding a specialized team focused on introducing ultra-high-net-worth individuals to private markets. The firm believes investors will look beyond recent market anxieties to increase allocations to this traditionally under-allocated area. Currently, Blue Owl is working to restore investor confidence in its flagship retail-focused funds while actively seeking partnerships with family offices, covering opportunities ranging from large-scale co-investments to pooled investment vehicles.
A year ago, the company hired Blake Shorthouse from KKR (KKR.US) to lead this business initiative; the team has now grown to approximately eight members. According to sources, as of the end of last year, only $9 billion of Blue Owl’s $307 billion in assets under management came from wealthy investors and their institutions, underscoring the New York-based firm’s optimism about the growth potential of this segment.
A JPMorgan survey last month of 333 family offices globally revealed that nearly 60% have not yet allocated to private credit assets, while about 30% plan to increase such allocations within the next 12 to 18 months. In fact, Blue Owl’s push into the family capital business began even before the current $1.8 trillion private credit industry entered a period of turbulence. Today, concerns about valuation, concentration risk, and liquidity are widespread. Although industry executives have tried to downplay risks and highlight the stable performance of underlying portfolio companies, negative sentiment may still hinder fundraising efforts.
However, JPMorgan’s survey also indicated that the number of family offices planning to increase private market allocations is 2.5 times greater than those planning reductions. Additionally, compared to retail investors, ultra-high-net-worth individuals are seen as more willing to allocate capital to less liquid fund products.
“We view family offices as long-term partners,” said Blake Shorthouse, head of Blue Owl’s family capital business. “Therefore, when delivering investment capabilities, we typically adopt a flexible, solution-oriented service model.”
Recently, Shorthouse’s team has grown further, with the addition of Managing Directors Eric Render and Charlotte Shropshire from the institutional capital team, as well as Ellie Stoneham, who joined from BlackRock (BLK.US) in January. The team now has three members in New York, four in London, and one in Hong Kong.
In recent weeks, several semi-liquid products managed by Blue Owl and other large private market firms have faced unprecedented redemption requests. These products are heavily invested in software companies and other sectors affected by artificial intelligence (AI). Last November, Blue Owl planned to merge two of its private credit funds, a move that could have resulted in losses for some investors. The plan was eventually canceled, drawing sharp market scrutiny. After another of its products suspended quarterly redemptions and began liquidating assets to meet investor payout demands, the company’s stock price declined further.
To address investor concerns about the industry, Blue Owl executives have been communicating frequently in recent weeks. Craig Packer, head of the firm’s credit business, has spoken directly with more than a dozen large family offices to discuss market dynamics, answer questions, and convey the company’s perspective on current volatility.
“Family offices often have flexible capital, shorter decision cycles, and long-term investment horizons,” Shorthouse noted. “As we’ve seen, this makes them valuable partners during periods of capital formation challenges and market instability.”
Co-CEO Doug Ostrover said on Thursday that the firm’s distribution teams targeting retail and high-net-worth investors may not have adequately communicated the inherent liquidity constraints of private credit products. “I don’t think we—or the advisors selling our products—have made that point clearly enough,” he stated during the Asia Pacific Financial and Innovation Symposium in Melbourne.
Still, Ostrover emphasized that, based on underlying assets, the performance of portfolio companies remains solid with no increase in defaults. “We are currently seeing strong growth in our portfolio companies, with revenue increases around 8% to 10%, and earnings growth at roughly the same level,” he added.
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