According to Connor, the average allocation for options for an investor in Canada, especially private loans, is less than 1%. As the case for diversification away from traditional asset classes continues to strengthen, Blue Owl has an opportunity to swoop in and help address that pressing need.
By gaining exposure to the US private credit space, Connor said Canadian investors stand to benefit from attractive risk-adjusted returns in the current low-yield environment. This asset class also represents a potential hedge against rising interest rates as it provides increased portfolio diversification with low correlation to the public markets.
Blue Owl has an AUM of US$82 billion; Its plan for Canada would allow accredited investors in the country access to the institutional share class of Owl Rock Core Income Corp (ORCIC), a diversified lending fund managed by a division of Blue Owl. That division, Owl Rock, has an AUM of US$34.6 billion, making it one of the largest credit managers in the world.
“We think size is a distinct advantage in the direct lending space because we are one of a handful of firms that are able to lead or anchor debt financing in the upper end of the US middle-market space,” Connor said.
With over US$2.7 billion in AUM across 92 portfolio companies, ORCIC’s scale is nothing to sneeze at. Investors in the fund can also be reassured by the strong credit performance of OwlRock, which Connor said has experienced only a 5ps loss in its entire lending business since inception.