Brown University has significantly reduced its exposure to Blue Owl Capital Corp's primary private-credit fund, cutting its stake by approximately 53%. According to a recent regulatory filing, the university's endowment held 1.5 million shares of OBDC as of March 31, down from 3.2 million at the close of 2025. The institution retained about 2.6 million shares with Blue Owl's management company.
This move comes at a time when the private credit market, where non-bank lenders provide financing to companies for buyouts, expansion, or refinancing, is under increased scrutiny. Concerns have been raised about redemption demands, asset valuations, and the health of software-industry borrowers. Federal Reserve Governor Michael Barr recently warned that stress in this market could lead to a 'psychological contagion' and a broader 'credit pullback,' though he noted that banks' direct exposure to private credit is not yet 'super worrisome.'
Blue Owl Capital Inc. spent the past week trying to reassure investors of its diversified strategy beyond direct lending. On April 30, the firm reported $315 billion in assets under management. Co-CEOs Doug Ostrover and Marc Lipschultz emphasized that the current market environment favors firms with 'patient capital' and a focus on longer-duration strategies.
The company's quarterly filing revealed total revenue of $753.8 million, up from $683.5 million a year earlier. Net income attributable to the firm doubled to $15.5 million. Fee-related earnings, which reflect management fee profitability, rose to $393.6 million. However, Blue Owl noted softer inflows and higher redemption requests across some non-traded business development companies, even as it attracted $11.0 billion in new capital commitments during the quarter.
Direct lending remains under pressure. Blue Owl's direct-lending arm posted a 1.1% net loss for the quarter, as new loan originations failed to keep pace with repayments. CFO Alan Kirshenbaum stated that the company is reducing its software exposure but emphasized that there have been no 'material negative developments' in the portfolios.
OBDC, described by Blue Owl as a specialty finance and business development company (BDC), focuses on providing direct loans to U.S. middle-market businesses. Its portfolio is largely composed of senior secured loans, which are backed by collateral and offer priority repayment in case of default.
During the earnings call, Lipschultz highlighted a notable transaction: Blue Owl sold roughly half its stake in SpaceX at a $1.25 trillion valuation, locking in returns of about 10 times the original investment. This windfall, he said, should help cushion potential credit losses.
Competition in the private credit sector shows cracks but has not collapsed. Ares Management, a major player, reported a record $30 billion in inflows during the first quarter. CEO Michael Arougheti noted that institutional investors are 'not allocating away from private credit,' though flows from private wealth have slowed.
Investors will get more clarity soon. OBDC is scheduled to release its first-quarter results after the market close on May 6, with a conference call the following morning. That report will likely shed light on whether Brown's recent stake reduction was merely a portfolio adjustment or a signal of broader concerns about Blue Owl's credit risk.
