Blue Owl signage in front of the Seagram Building at 375 Park Avenue in New York, USA, on Thursday, March 12, 2026.
Michael Nagle | Bloomberg | Getty Images
Saba Capital Management said tender offers for shares in unlisted business development companies managed by Blue Owl Capital and Starwood Capital were “below initial expectations”.
In early March, hedge fund Saba offered liquidity at a 35% discount to locked-down investors in Blue Owl Capital Corporation II (OBDC II), an unlisted private credit fund. The company launched a similar program with Starwood Real Estate Income Trust (SREIT) at a discount of 24% or 29%, depending on the share class.
On Monday, Saba said that through the tenders it would be able to acquire a total face value of about $10 million in 190 individual deals, “substantially all” of SREIT. The Blue Owl stock offering reportedly failed to raise more than 1% of the offering.
Investors’ lack of interest in raising liquidity at a deep discount comes on the back of a quarter that saw increased redemptions across most non-traded private credit BDCs. Blue Owl was one of the poster children of this phenomenon, stopping quarterly redemptions under OBDC II in mid-February and opting instead for regular return of capital through portfolio sales. In early April, investors sought to repay $5.4 billion from two other private credit funds in the first quarter. Like many of its competitors, the fund manager has chosen to limit these applications to 5%.
Following the OBDC II decision, Saba Capital’s Boaz Weinstein told CNBC that they “heard from investors in these funds that they wanted their money back,” which is why the firm saw a market opportunity. As a result, Saba announced on Monday that it was “considering making offers for a number of additional products, including the Cliffwater Interval Fund and Blue Owls OCIC.”
“Saba’s goal is clear: retail investors in these products deserve access to liquidity, just as investors in public BDCs have long enjoyed,” Saba said in a statement. “We want to provide a consistent and credible offering in this market.”
The hedge fund said that Barry Sternlicht, Starwood’s chairman and CEO, announced a commitment to provide equity capital to fund investor redemptions following his public stint at SREIT. Saba said it “commends” Sternlicht for this decision.
“We believe our entry into this market was a catalyst for this outcome and that all SREIT investors benefited,” the company said.
Saba said that with regard to OBDC II, “the pool of illiquid capital available for tender was of course limited,” with only $332 million remaining in the fund. However, the company said it expects credit risk to accumulate in 2027 and 2028 and expects “the ability to provide large-scale liquidity to increase significantly.”
“Saba believes the question is not whether this area will experience significant stress, but when,” the company said in Monday’s statement. “Hundreds of billions of dollars in retail loans are currently held by retail investors in products that provide limited or no secondary liquidity. Saba intends to be a constant source of that liquidity – providing and keeping capital ready as need increases.”
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