Exclusive-Blue Owl considers reviving merger of private credit funds, contingent on fund’s share price, sources say

Blue Owl Capital is weighing reviving a previously abandoned plan to merge its publicly traded OBDC fund with privately held Blue Owl Capital Corporation II if OBDC’s share price recovers—OBDC reported a Q3 NAV of $14.89, has traded between $11.65 and $15.73 this year and closed at $12.34—after investor backlash halted the proposal on Nov. 19. The firm says the move, not finalized, would provide an exit for shareholders, reduce costs and is preferred to an independent IPO for the private fund; any merger would likely be pursued before BOC II’s expected liquidity event in April 2026 or April 2027 and the firm will allow withdrawals from Q1 2026. Analysts note the deal would be accretive given portfolio overlap (OBDC holds $17.1bn across 238 companies; BOC II $1.7bn across 190) and its outcome will be a touchstone for retail access to private credit as the sector faces heightened scrutiny over credit quality.

Analysis

Blue Owl Capital is weighing reviving a previously shelved plan to merge its publicly traded OBDC fund with privately held Blue Owl Capital Corporation II, conditional on an improvement in OBDC’s share price; the merger was paused after investor backlash on Nov. 19 and management said it is not pursuing the merger "at this point" while keeping other options open, including listings or asset sales per co-president Craig Packer. The firm will permit withdrawals beginning Q1 2026 and sources indicated an independent IPO for BOC II is unlikely, making a merger the preferred strategic outcome if market conditions permit.

OBDC reported a Q3 NAV per share of $14.89, has traded between $11.65 and $15.73 year-to-date and closed at $12.34, leaving the fund at a discount that previously implied roughly a 20% haircut for BOC II holders when the merger was first announced. Portfolio scale is lopsided — OBDC holds ~$17.1bn across 238 companies versus BOC II’s ~$1.7bn across 190 — supporting management’s rationale for accretion if a deal is reintroduced.

A merger would reduce costs and provide retail exits and would act as a bellwether for demand in retail private credit amid heightened scrutiny after recent bankruptcies; however, execution risk is material because management says any deal is contingent on OBDC trading close to book and must likely occur before BOC II’s liquidity event expected by end-April 2026 or 2027. Key near-term risks are investor sentiment and continued NAV discounting (signals show mildly negative tone and negative per-ticker sentiment for OWL/OBDC), which could prevent a revisited merger or force less favorable terms for BOC II holders.

Key Decisions for Investors

• Monitor OBDC’s market price relative to Q3 NAV ($14.89) and consider adding exposure only if the discount narrows materially and management announces concrete merger terms
• If you hold Blue Owl Capital Corporation II, consider hedging or trimming positions given the prior ~20% implied haircut risk if a merger is pursued while OBDC trades below NAV, and prioritize liquidity planning ahead of the April 2026/2027 event
• Watch for corporate updates on withdrawal mechanics (Q1 2026), any stated share-price targets from management, or alternative asset-sale/listing plans as near-term catalysts that will change merger probability
• Maintain a cautious stance on incremental private-credit exposure until investor sentiment stabilizes and there is clear evidence that discounts to NAV and sector liquidity concerns have receded