Blue Owl Capital (NYSE:OWL) Conference Transcript

Summary of Blue Owl Capital Conference Call Company Overview - Company: Blue Owl Capital (NYSE: OWL) - Industry: Alternative Asset Management - Assets Under Management: Nearly $300 billion - Specialization: Private credit, GP solutions, and real assets Key Priorities and Strategic Focus - 2026 Priorities: Focus on execution after a year of integration and diversification in 2025 [4][43] - Margin Improvement: Aim for gradual increase in margins and focus on FRE (Fee-Related Earnings) per share [4][43] - Fundraising Initiatives: Actively fundraising for flagship funds, including a $7.5 billion real estate fund and a digital infrastructure fund expected to be larger than the previous $7 billion [5][6] Fund Performance and Market Dynamics - Private Credit Performance: Underlying portfolio companies show strong performance with average EBITDA of $275 million and low loan-to-value ratios (39% for corporate credit, 30% for software loans) [13][14] - Revenue and EBITDA Growth: Recent growth rates have slowed slightly to 7.5%-8% from 8%-9%, but remain robust [15] - Default Rates: Very few defaults observed, with no new names added to the watch list [15] Wealth Management Channel - Growth in Wealth Channel: $16 billion of inflows over the last 12 months, with a focus on expanding product offerings and geographical reach [22][25] - Market Positioning: Transitioned from an advisor-sub-advisor model to an in-house fundraising model, resulting in a team of over 200 people [24][25] Market Challenges and Outlook - M&A Environment: Deployment rates have been below expectations, but there is cautious optimism for improvement in the M&A environment [10][11] - Concerns from Advisors: Financial advisors express concerns about market conditions, but there is still optimism about the long-term potential of private credit [29][31] New Product Launches - Digital Infrastructure Fund: Recently launched with significant initial capital, expected to scale rapidly [34][36] - Alternative Credit: Less competition than direct lending, with higher expected returns [40][42] Financial Metrics and Future Guidance - FRE Margins: Commitment to improving FRE margins, aiming for around 60% in the future [43][45] - Long-term Growth Target: Targeting $3 billion in FRE, with confidence in achieving this goal [46] Conclusion - Focus on Organic Growth: Current strategy emphasizes growing existing products and managing recent acquisitions rather than pursuing new M&A opportunities [47][48]