Blue Owl Capital’s management has assured investors that its software lending portfolio remains in “pristine” condition, despite market concerns fuelled by an AI-driven sell-off. The company’s co-chief executive officer, Marc Lipschultz, stated during an earnings call that the software loan book is robust, showing no signs of deteriorating performance or significant losses. Blue Owl Capital, which manages over $US307 billion in assets, has approximately 8 per cent of its portfolio invested in software loans. Blue Owl Capital provides alternative capital solutions and asset management services.
Lipschultz emphasised the strong equity cushion protecting the software debt, noting an average loan-to-value ratio in the low 30 per cent range. He conveyed confidence in the portfolio’s health, stating, “We don’t have red flags. We don’t have yellow flags. We actually have largely green flags.” He further asserted that the tech portfolio is the most secure among all of the company’s holdings.
Recent fears surrounding the potential disruption caused by artificial intelligence in the software sector have unsettled credit and equity markets. These concerns extend beyond potential losses on loans to companies facing revenue challenges due to technological advancements. The mere perception of future disruption could hinder borrowers’ ability to refinance loans or secure support from private equity sponsors.
Despite Blue Owl’s assurances, its shares have continued to decline, mirroring broader market apprehension. The firm’s shares, already down approximately 23 per cent year-to-date, further decreased on Thursday, trading 3.9 per cent lower near 2pm in New York, after trading at even lower values earlier in the day.
