Blue Owl Holds Redemptions From One Of Its Funds. Valuations Scenario Analysis Of Private Equity, Private Credit Companies

 

Blue Owl, the leading global private equity, private credit, real estate alternative asset manager announced it is holding redemptions from one of its retail funds Blue Owl Capital Corp. II (OBDC II), a private, retail-facing debt fund, and instead will return capital through periodic distributions funded by loan repayments, asset sales or other strategic transactions.

The stocks of the leading global private equity, private credit, real estate, infrastructure asset managers Blackstone, KKR, Apollo, Carlyle, Ares, CVC fell most more than 5 % yesterday along with 6 % fall of Blue Owl's stock.

Some investors and analysts say this holding of redemptions of one of Blue Owl's funds might be a precursor to a financial crisis much like the holding of redemptions of two structured credit funds of Bear Stearns and BNP Paribas was for the great financial crises and Great Recession of 2008/2009.

There are three possible scenarios:

1) Quick recovery scenario. The stocks of  Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC are down circa 30 % from their recent peaks in the last rolling year. The stocks of  Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC could fall more, down more than 45 % from their recent peaks.

However, the stocks of  Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC would stage a recovery if things brighten up and it becomes clear that the Blue Owl, Tricolor and First Brands recently were one off events and the stocks of  Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC would rise substantially from their lows and surpass their peaks by high margin on the artificial intelligence, AI boom and the money that Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC have invested in AI companies.

Probability of this scenario is 40 %

2) Muddling through. It becomes clear that  Blue Owl, Tricolor and First Brands are serious cases, Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC loose tens of billions of USDs of their assets under management on these and other private credit bankruptcies. After some time the stocks of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC will recover some lost ground but remain below their peaks in 2-3 years from now. Here a positive could be if the AI boom continues and Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC make some of the lost money on AI technology companies investments.

The probability of this scenario is 40 % 

 3) Full blown credit, financial and economic crisis.

The  Blue Owl, Tricolor and First Brands events are followed by many other bankruptcies. The credit delinquencies spread from Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC etc. private equity, private credit, real estate asset managers to the banks JPMorgan, Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, Wells Fargo, UBS, Deutsche Bank, Barclays etc. banks which have financed the private equity giants. Banks stop lending, people cut down on consumption, firms decrease drastically investments and the financial crisis becomes economic and  global and deep. Much as in 2008/2009. Large banks failures are possible.

The probability of this scenario is 20 %.

The most likely scenario is slow recovery for Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC etc. stocks and business, but recovery nonetheless, according to Wolfteam Ltd.'s projections and estimates.