Key Takeaways:
- Three BDCs managed by Blue Owl Capital announced a $1.4 billion sale of partial assets at fair value as of February 12th, equivalent to 99.7% of par value
- Proceeds from the sale provide liquidity to OBDC II shareholders, as intended since the fund’s formation in 2016, while enabling portfolio optimization for OBDC and OTIC.
- Executives have underscored the portfolio’s strength and the underlying credit quality.
By Exec Edge Editorial Staff
Three business development companies managed by Blue Owl Capital announced on Feb. 18, 2026, that they have entered into separate agreements to sell a total of $1.4 billion of direct lending investments to four leading North American public pension and insurance investors at fair value. Proceeds are earmarked for capital returns and debt reduction.
The sale covers debt investment commitments of $600 million from Blue Owl Capital Corporation II (OBDC II), $400 million from Blue Owl Technology Income Corp. (OTIC) and $400 million from Blue Owl Capital Corporation (OBDC), according to a press release announcing the transaction. Those figures correspond to roughly 34%, 6% and 2% of total investment commitments at each BDC, respectively.
Kroll, LLC provided fairness opinions to each fund’s board of directors. The investments were valued as of Feb. 12, 2026, and sold at fair value, equivalent to 99.7% of par value across all three vehicles.
“We saw strong demand to purchase these investments at fair value from highly sophisticated institutional investors, with interest far exceeding the value of the investments we ultimately chose to sell,” said Craig Packer, Chief Executive Officer of Blue Owl’s BDCs. “This transaction underscores the confidence that large, experienced buyers have in our direct lending platform and has meaningful benefits for all shareholders of these funds.”
OBDC II Capital Returns
The transaction is most meaningful for OBDC II. The fund is a non-traded BDC formed in 2016, prior to the advent of perpetually offered, non-traded BDCs, and it offered liquidity through quarterly tender offers. The $600 million asset sale allows the fund to deliver a return of capital far exceeding those quarterly tender windows, with the planned distribution roughly six times the size of the 5% tender previously scheduled for the first quarter.
Subject to board approval, OBDC II intends to pay a return of capital distribution to shareholders of up to $2.35 per share, or roughly 30% of net asset value as of Dec. 31, 2025, on or before March 31, 2026.
“Today’s announcement reinforces the rigor of our valuation process and the quality of our direct lending investments,” said Logan Nicholson, President of OBDC II and OBDC. “At this stage for OBDC II, we are pleased to provide a significant liquidity event at fair value while still maintaining a diversified portfolio with strong earnings potential.”
Going forward, the OBDC II board intends to replace quarterly tender offers with quarterly return of capital distributions, which may be funded by earnings, repayments, asset sales or other transactions. OBDC II had investments in 183 portfolio companies with an aggregate fair value of $1.6 billion as of Dec. 31, 2025.
OBDC
Packer, in a separate statement accompanying OBDC’s fourth quarter earnings release, offered additional context on how the transaction materialized. “What began as a targeted transaction to provide liquidity to OBDC II shareholders attracted significant interest from sophisticated institutional investors, allowing us to opportunistically extend the sale to OBDC,” he said. “We expect this transaction to reduce leverage, modestly increase portfolio diversity and create additional capacity to invest in compelling new opportunities for the benefit of OBDC shareholders.”
OBDC’s $400 million sale included investments in 74 portfolio companies across 24 industries with an average investment size of $5 million, according to the OBDC earnings release. OBDC also announced a new $300 million share repurchase program, replacing the prior $200 million authorization, after buying back approximately $148 million of its own stock at 86% of book value during the fourth quarter.
“OBDC closed the year with strong fourth quarter earnings and credit performance, reflecting the health of our borrowers and our defensive, senior secured strategy focused on the upper middle market,” said Packer. “Demonstrating our conviction in OBDC’s strategy and long-term value, we repurchased approximately $148 million of OBDC’s common stock during the quarter, accretive to NAV per share and the largest quarterly repurchase activity in our history.”
OTIC
For OTIC, a technology-focused, non-traded BDC, the $400 million sale was comparatively modest at roughly 6% of total commitments. Blue Owl said the sale will free capacity for new deployment in an attractive direct lending environment while increasing portfolio diversification.
OTIC had investments in 190 portfolio companies with an aggregate fair value of $6.2 billion as of Dec. 31, 2025. Pro forma for the sale, OTIC had cash, undrawn debt capacity and liquid loans exceeding $1.6 billion as of Jan. 31, 2026.
The OTIC sale comes amid broader market concerns about private lenders’ software exposure and the impact of AI. During the firm’s Feb. 5 earnings call, Co-CEO Marc Lipschultz drew a distinction between equity valuations and the health of the firm’s senior secured loans, noting that Blue Owl lends at roughly 30% loan-to-value on average and holds first lien positions in nearly all of its technology credits. “We don’t have red flags. We don’t have yellow flags. We actually have largely green flags,” he said.
Lipschultz noted on the call that, since November 2022, Blue Owl borrowers in the tech portfolio have grown revenue by roughly 40% and EBITDA by roughly 50% on a cumulative weighted average basis. Fourth quarter 2025 results were consistent with that trajectory: revenue grew 10% quarter over quarter, and EBITDA rose in the mid-teens.
Broader Context
The $1.4 billion BDC sale arrives two weeks after Blue Owl Capital reported its fourth quarter 2025 earnings, in which the firm disclosed that assets under management surpassed $307 billion and full-year capital commitments reached a record $56 billion. The firm raised over $17 billion in the fourth quarter alone, with a record year for both its institutional and private wealth channels.
The transaction also follows a January 2026 credit upgrade from Moody’s Ratings, which raised Blue Owl Capital Corporation’s senior unsecured rating to Baa2 from Baa3. Moody’s cited the firm’s underwriting and risk management capabilities, noting OBDC’s annual net loss rate of just 27 basis points since its April 2016 inception. Moody’s also upgraded Blue Owl Credit Income Corp. to Baa2 from Baa3 in the same period.
Settlement of the $1.4 billion transaction is expected to close during the first quarter of 2026.
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