Blue Owl Speeds Up Payouts in Fund Buying Partnership Stakes With Novel Strategy

(Bloomberg) -- Blue Owl Capital Inc. is selling a slice of one of its funds that buys stakes in private equity firms to another investment vehicle it controls, part of an effort to more quickly return cash to investors.

The GP Stakes III fund is selling about 5% of its assets to Blue Owl GP Stakes Atlas Fund I, a continuation fund-like vehicle it recently launched, according to people with knowledge of the matter. The deal, set to be completed in three stages, will generate an expected $365 million in proceeds and allow GP Stakes III to accelerate cashflows back to investors while retaining majority positions in its investments, the people said.

Blue Owl is one of the biggest players in the business of buying equity interests in the management companies of alternative asset managers, known as ‘general partners’ in Wall Street parlance. It’s raised five funds dedicated to the strategy and is in the process of raising a sixth.

Continuation vehicles have in recent years become an increasingly common way for private equity firms to generate payouts for investors while still hanging onto long-term assets. The Blue Owl transaction was put together over several months to help demonstrate the vehicles’ viability as an exit option for GP stakes funds, the people said.

A representative for Blue Owl declined to comment.

The first of the transactions, which was completed last week at 100% of the fair value of the investments, generated about $179 million, or a 3.85 times gross realized return on the portion of the assets sold, the people said. The two other transactions will occur in May 2025 and 2026.

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