Blue Owl Capital Corp, the publicly traded private credit fund, plans to reduce its exposure to software as concerns over artificial intelligence's impact on sector valuations persist. CEO Craig Packer said the share of software assets fell to 16% from 19% in the first quarter, a decline that happened "naturally" as borrowers repaid loans. Packer added, "We're going to continue to be very cautious in software."
A separate smaller fund, Blue Owl Technology Finance Corp, will maintain its software focus but faces higher investment thresholds. President Erik Bissonnette noted increased selectivity, passing on "legacy models" amid the evolving AI landscape.
The broader environment has been tough. Blue Owl's stock, still down 30% year-to-date, has recovered somewhat from March lows. OBDC marked down asset values to $14.41 per share and cut its dividend to 31 cents. OTF reduced valuations to $16.49 per share. Executives attributed the pressure to volatility in public loan markets. Despite earnings strain, Packer cited stable borrower performance and expects growth in direct lending demand. The funds repurchased $85 million in stock in Q1.