U.S. asset manager Blue Owl hit by class action after retail redemptions squeeze private-credit fund

Blue Owl Capital, a major U.S. alternative asset manager, faces legal and liquidity scrutiny after rapid outflows from a private-credit vehicle. A class action filed in New York alleges the firm quietly limited withdrawals as investor concern accelerated, following what plaintiffs describe as a concentrated surge of redemptions earlier in the year. According to the complaint, roughly $150 million exited the OBDC II fund over the first nine months — about a 20% increase versus the prior period — prompting emergency responses from management. Public reassurances of stability clash with financial disclosures that show meaningful pressure on fee income and a sharp reduction in performance fees for the latest quarter. The filings point to approximately $376.2 million in fee-related earnings while performance revenues plunged about 33% year over year to near $188,000, amplifying the fund’s funding challenges. Redemption requests later in the period reportedly doubled to roughly $60 million, equivalent to about 6% of the fund’s capital, compounding liquidity management issues. Plaintiffs assert that a proposed merger between the publicly traded BDC and its private sibling would have enabled a freeze on redemptions until deal completion, effectively locking retail holders into depreciating positions. Management withdrew the merger proposal in November after investor pushback and stock pressure, but the litigation and perceived shortfall in capital have already impaired strategic underwriting capacity. The firm’s retreat from a potential role in financing a large data-center project has been portrayed as evidence of tightening risk appetite and reduced willingness to take on very large commitments. This episode underscores structural tensions when retail investors gain exposure to illiquid private-credit pools that lack traditional liquidity buffers. For regulators and counterparties, the case raises questions about disclosure practices, gating mechanisms and whether retail shareholders were treated equitably. Operationally, asset managers concentrated in hard-to-liquidate assets risk higher funding costs and reduced deal flow if investors demand greater exit flexibility or scale back allocations. In short, the suit represents both a reputational setback for a large player and a broader stress test for efforts to broaden access to private markets.