OWL - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to Blue Owl Capital Second Quarter 2024 earnings call. [Operator Instructions] I'd like to advise all parties that this conference call is being recorded. I will now turn the call over to Ann Dai, Head of Investor Relations for Blue Owl.

Ann Dai

Thanks, operator, and good morning to everyone.

Joining me today are Marc Lipschultz, Co-Chief Executive Officer; and Alan Kirshenbaum, our Chief Financial Officer. I'd like to remind our listeners that remarks made during the call may contain forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described from time to time in Blue Owl Capital's filings with the Securities and Exchange Commission. reconciled obligation everyone any non-GAAP on that the which no like statement. We'd measures the assumes in call, remind figures of to we'll are at Investor company Resources to presentation our forward-looking update also on our section The earnings GAAP website available blueowl.com. to refer to Blue we note nothing earnings, per share. on $X.XX purchase to our solicitation a or offer for that quarter this to offer the morning, FRE, and of Please of fee-related of interest $X.XX an Owl financial results any XXXX, distributable in sell share DE, per issued earnings, call constitutes fund. This of an second or an or recording

quarter, of August record payable holders of also XX. August to on per We of dividend second declared XX as a $X.XX the share for

During be the earnings we posted to morning. our presentation, which the call website this we'll to referring today,

to turn to that, that So along. With I'd follow have to like Marc. on please over call hand the

Marc S. Lipschultz

you very record quarter Great. another had acquisitions highly and announcing business. active earnings that reporting much, strategic very Owl Thank diversify quarter, of our second Ann. Blue further a

and Over from of since last quarters prior earnings growth distributable at period. XX strength growth fee and had management fee-related of both have company, months, stability XX% our XX% highlighting the generated And we public the becoming earnings consecutive a year have the we XX growth, FRE business.

have growing appealed investment returns. a of record disciplined looking compelling and to track for income-driven Our approach and investors pool uncorrelated

alternative credit credit continue the options we to of the direct capabilities of Capital financing investors. Recently, finance We very asset-based conjunction, important market believe offer our credit able in lending. and in the today, making record one be brings expand with Owl's synergy we deep Atalaya a about the a legacy create continue and we to participants counterparties scale us opportunities substantial be cycles, range leading acquire Atalaya back, excited announced platform become solutions we to our place through complementing position managers player expertise Blue we increasingly the where and Atalaya will to have of leading in product counterparty right our alternative are an XX-year multitrillion our Management, is dollar in added team the clients with market in intention exactly on strong we and types and think we increasingly to the an team board. Alternative will space. in and strategies offer the to expand to significant pulling market

with when Street's And alone. in we this billion what acquisition the to announced $XX will achieve $XX in we XXXX. I is have Alan later, a for than great talk this more of think Street the case we potential Oak broadly, in roughly investor deeply study we more now offer. broadening a Oak triple Kuvare to and opportunity with with now net offer sets. capabilities real we a acquisition disrupted credit, in minutes. More Management, we of building markets huge companies, alternative asset And few insurance further the Both management solutions critical out estate waterfront solution of base are billion. AUM back X.X Looking Atalaya. AUM have addressable our to hope About was added holistic years lease substantially. Asset about credit

generally senior remaining with of their little acquiring. focused is investment of management and founders change are we in areas to be on teams by the go of the expertise existing Blue to will their day-to-day, continuing employees businesses existing these of their and that integration very vast very see led majority very teams. Owl's or given between little expect footprint overlap smooth, We that The there businesses

all partner a quarters joining Blue to opportunities but plan leaders grow platform, about proprietary infrastructure. and and sharing of firms best-in-class Owl. We of about the for can forward of Kuvare each corporate to global Blue in the these to leading our to institutional to to sponsor done incremental look wanted businesses Blue growing through greater And our their excited and across create Blue critically, we case of Owl to Blue those well Owl We're and leverage very efficiency insurance Owl. what is part rather combined in and They're the XXX-plus platform Owl's create collaborations through wealth of these the firm benefit already scale acquisitions more or each as the these relationships distribution auctions. not businesses selling a enhance The were doing goal is come. platform not entity. Our the

the Moving to quarter. on

the across We less what continue quarter perpetually distributed the see than our quarter redemptions second Gross double reached offered gross what's the $XXX in $X.X million system business. over in $X.X fundraising were billion. of raised the XX% the quarter, products wealth under in totaling AUM. we progress private XX our perpetually higher loans upticks the first points raised second and we from than XXXX. Notably, left products. across into good flows or more to than products Xx more in all the billion despite these than nominal industry, means basis beginning remain of across That Total

a level the performance modest of distributors wealth mid-single of investors in result is and through every with uncorrelated the individual we leaders innings We the very in organizations. early of as which benefits remarkable one the wealth at we're to partnership, in about high-touch diversification allocation the in of overall classes trust channel of portfolios. opportunity very level the and adoption to of of all see low their these built have relationships to begin private they [indiscernible] percentages. What's the alternative service products, as and position incumbency the the think as thoughtful Our private the asset of amount is digit in strong

robust first $XX in billion lien including wealth private out liquid lending, diversified have secondaries, GP the reflecting our of stakes, raised and from $X.X across fundraising lending raised GP ongoing the complementing across equity most a billion more of that across also our challenging. past business. To zoom number and bring to in describe capabilities We slightly, market. XX months, of institutional investors credit, diversification That's flows showing our solid we strategies, a we've XX% to and a and over in equivalent XX an as year months our raised environment continue continue AUM we ago to to over than debt that in view, new lending

and had were in $X.X of we Turning to record performance. higher resulting gross quarter more a law. credit, $XX.X with primarily participate add-ons quarter in business where we billion, deployment. billion Repayments originations to In than decided deals, net new deployment of refinancings the new across of a

see demonstrate in average, value deploy direct time. Direct and the revenue We continue the the in that and is single significant and EBITDA to direct sponsor portfolio the over strong. underlying incremental no privacy or towards gravitating was And are place, to growth of that lending nonaccruals X with borrowers markets syndicated sponsors lending growth existing Ps remain active across was predictability, requests. and to we healthy the whether monetize trend not. in On appetite metrics more compelling, capital step-ups mid-teens and investments remains partnership. high digits proposition in or The more are secular of drawn longer-term lending:

ensure formula key inception. And through been This limiting One, in realized rigorous higher loan very As points to about we we can when there selective. everything to in start basis follow. a our a we is highly losses direct is losses the our lending, underwriting and success X of think to since by straightforward annualized evident is default a two, recovery.

more I think both these demonstrated successfully continue our well. years. perform companies we And very tenants the have to broadly, prior of extremely portfolio over

well-positioned. This sales management manager partner portfolios, for an monetize now the $X.X could the are meaningful managers rapid view the secular in also alternatives The greater partner diversification asset to what over unparalleled of and of reflect scale managers, GP willingness being stakes and trends, is for such solutions and and asset us our opportunity PE management from sponsors consolidation. the trends have our classes and These private quarter, expansion our business in trillion, the we credit, which alt X and which managers to industry. are we're Blue We in lending the across business. In alternative ongoing growth managers pleased the growing seeing in manage wealth. allocations all as direct readily with of funds. observable our some partnerships benefit emergence insurance one GP Collectively, Owl's business, over asset vintage asset uptick observed partner an assets older giving past in formed partner continue across to alternative

we and During stake made the have second quarter, GP mid-cap which third expect quarter. the investment to, close first X for in in our our strategy additional to investments agreed we principle,

additional dynamics last estate or real stake We based V The and would capital, the fundraising remain GP on committed Fund The solutions. Earlier, of have seeing estate billion ahead fund and committed this about some substantially this these quarter fourth large-cap capital fundraise of best year. each we latest that we in strategy progress be for areas during reward us of strategy, making net the by significant, our deploying As could be we approximately for the on the dynamic third achieve time. a digital just similar lease quarter to needs put in for in over strong the care in demonstrating space essential quarter-to-quarter. applies we ability we our confident $X of goal What during finished XX% track anticipate third the deploy is cap in think second our continue on good has same quarter to and an onshoring, billion the retail. Fund believe infrastructure, spoke real year-end, the is we net vintage themes: the we're which we're very the closes alternative are of current we deploying that expectations health we'll is triple for in to in X credit. estate, the at credit very $XX actively behind capital risk seen our visibility. But demand mind, of by rates and keep long attractive real XX lease, on this major focused disruptive in where in which not our months. In very next and important remain We quarter. timing VI, focused to very closed

in compelling rates investment-grade generally leaning to great are the proposition, buying and others few cap are do. at That's high and properties very what tenants we facing Xs, there into doing it. mid- are we We a

see for to fundraising nice functions the continue upward We in step ORENT.

platforms. To direct seen Second our lot we picture triple lending, on GP quarter and the alternative additional all launch Owl continue competitor asset across trends REIT across a the organically We're to it than higher XXX% distribution nontraded with bucking a simple. year positions together, But flows ago, of inorganically. an bring products, Blue growth were and happening strategies. big in and manager lease stakes is net leading very there's

from makes it durable this think me are to entirely have We're is quite track with to our all permanent made our private to compelling our turn generated simple. institutional and in estate presence P&L up a insurance records We global results. and capital with of scale financial of let credit fee discuss growth that model rates, well alternative strong in an that, strong our and credit decades. And and revenue We adding unique distribution leading earnings wealth and capabilities our positioned for and stable business expanding comes best-in-class markets. real and have Alan over position fee-related Almost come. With earnings. teams very

Alan Kirshenbaum

and the to post Marc, strong everyone. morning, quarter we continue results with you, quarter. very and Thank after good We're differentiated pleased

asset As of due by able growth the permanent the anchored FRE to demand capital base fee strong been durability to achieve management both consecutive quarters Marc we investor offer. and earlier, we our mentioned have for strategies of and XX

of some through XX% LTM XX. basis XX% capital DE up vehicles. of from FRE management Management June highlights permanent is go on XX% fees fees key are and up these year-over-year Let's up through XX%. is are an our and

billion second quarter the raised software July equity As our equity $XX close, over of billion you XXXX. in quarter and can we credit $X.X see EDC, in down across which of break nontraded million, [indiscernible] closed the $X.X add in was with last perpetually raised across $X.X Kuvare $X.X solutions pleased We're $XX.X which breadth raised what also was and fundraising in first double and of XX credit, Atalaya which raised now raised GP And the billion, is of In our to billion. rent June, AUM. real new approximately vehicles. equity. In the numbers billion Prima products. for to months. I'll inception. strategic $XXX be our liquid offered of billion for have lending will for our net AUM products AUM in the and to with third billion $XX OCIC Prima since the increasing closing, capital, $XX continue estate, and The across expected billion for cap quarter we raised primarily will second and co-invest And quarter. closed, large of OCIC, $XXX diversified acquisition. acquisition products. lease from or billion, our we in offering across we adding the second early approximately billion remainder strategies on lien raised in forma to X billion we Inclusive fundraising adding insurance strategies, we Asset Pro strategic July, our over came strategy and lending, strategies raised $X.X our Slide of approximately $XX Management the expand XX, over

reminder, substantial as incremental a our of second business. have also management not-yet-paying fees we quarter, annual deployed. $XXX $XX.X earnings in the the once roughly of was embedded fees end As million of corresponding AUM to billion

model gives FRE of incremental private BDCs represent the capital listing XX-month million our us our almost FRE, XX% of any earnings aspects, with items peers upon of business of time. than over higher fees just revenues. quality virtually permanent our last all These our will on a and industry. of combined in These the being XXX% X from and also approximately that management would of have We remaining alone increase $XXX an turn

the Moving net months our to quarter, our brings net originations with of billion. more deployment for platform. deployment. $XX the billion had gross $XX.X credit on funded for a over funded $X.X record than of high last to We billion and $XX.X billion of gross XX This originations

returned XXs XX specifically in XX.X% portfolio XXs second remain in X% Weighted the average our direct the lending software low in last months. credit and high lending and quarter across the Our in portfolio. LTVs over the

strategic the For billion $XX.X our Fund fifth over signs, our bring remaining opportunities, of in invested capital are of with we if for total capital sight us our over billion platform, in funds, capital agreements Stakes V. including commitments through which of into GP GP line $X all principle, across XX% Fund billion continues to our on remained performance IV nearly our And for Fund these for a the V. And letter in or XX% close. with net IRR $XX estate of volume of Fund real intent funds with and of III, strong pipeline contract platform, XX% transaction to for grow available

were invested to earlier, mostly we we've on and capital XX% Fund earn reflecting XX incremental the fees so mentioned a capital, could where investment-grade scale charge can friendly favorably Mark year-end, management by our management providing value capital real a solution fees XX% we months, these tenant risk, reminder, and over the and driven by deployment build-to-suit performance, we're we seeing parks. to estate XX of for reflecting this capital been deploy well across X.X% fully will think take IRR the time get support. With period. roughly XX is arrangements, real to balance the of X.X% before in With for funds strong tenant rate The are and with as favorable our second between next demand broader has this this are flexible sheet cap a efficient vintage solutions. Many next lease creation the be opportunities, our partnerships. estate VI to market solutions-based opportunities the committed position committed. as portfolio our of market for realized which fully very to could net These credit-worthy and such gross end regards out premium strong this the our comparing across the And As months be last to quarter net we the strategy seeing for the we returns year. us for for

Okay.

a with off thoughts. Let's wrap few closing

accretive be levels Atalaya, remaining to We the which needs goal, that. this to the through per Prima check things: for things, goal track dollar so continued achieved XXXX. for we strong for OTIC on share We've OCIC, Three now track about happen around that first, are: and of or X fundraising to ORENT. be and our announcement which Kuvare, one, continue to acquisitions, talked things in X

to another continue the in step-up seen these year. strong of see upwards this function through We levels where with case half fund for back the in raise of especially coming step ORENT, products have and expected a we

So overall, first good a we pacing track. Two, a we are level on for raise our large-cap this funds fund expect successful at stake we one, GP and on here. are

noted previously, on the little with some a completed than be more OBDE raise our fund are back have listing we expect one, listing year. on is Overall, earlier the we XXXX. the this we As of XXXX will BDCs. three, this more track. And in expectation second our ended of expected of We

We deploy BDC executing for focused outlined last on Day. we that the remain II Investor are during continue strategy the OTF on BDC capital private, to in and we year's

on XX% overall, resulting expect dividend to strong per dollar mid-XX% dividend the track. Bringing being and are rate all this since our we dividend reporting feel we we in low good together, in going goal XXXX a range, in for the a growth So very one, or public. share around third on of CAGR about

we we mentioned have Atalaya a let's saw more is a just Now meaningful years. in what we a that Oak X under akin there doubled earlier for moment, AUM acquisition Street. talk opportunity where Marc Street's Oak little for than about think to our more

of net the lease of me Street, So Holm have team, how that. Since including we've around put some achieved color platform. CIO addition doubled as the let Jesse we Oak the acquiring

the well process net on we amount lease product it $X our our net a in wealth time new all with investments in the created European great all net and lease have And have of together, a started product. launching channel off, out of offerings a exceeding [indiscernible]. Bringing been of VI for to billion Fund pay have deal peers basis the are ORENT its to raising private in a accomplish business. short relatively and We able

than more have doubled We AUM.

tripled capital. almost have We permanent

our we we And fee lease in over raise few triple we for platform to triple based a rate in our created of importantly, in FRE value on increase very environment billion almost the in most and average FRE additional that tough shareholders generated grown funds. have estate our just have XX%. by years have have revenues, We net a management $X real

equally and business are our Atalaya Atalaya about excited together. in not credit if The to team grow industry, of we lot best, of this the acquisition. We the have a one us ahead is runway of, alternative

to We have modestly acquisition next however, more of years, accretive is and Oak we similar accretive think business this we this Blue Owl. mentioned over Street. in for XXXX that It really the as much ramp margin dilutive is, number

continue As our margins over not ultimately okay. are we XX% That's do time, with margins. get them here we businesses may find below believe acquisitions, of to levels. well but with each The acquisitions. can increase the we won't same We always FRE our up to

product deal a value will for us in this and area. a very strategic over expect time accretive area We us fills growth industry huge be for very

level slightly for into the we the go X% being below we margins to this as or XXXX remainder X% year can being year and XX% of see next So the so, for lower.

we into continued call the line and growth; the will management on FRE like has feel and future these revenues, questions. Operator, growth who we growth us all the thank dividend and alternative that business. With FRE last since accomplish listed we inorganic industry we lead to intention in asset to and foreseeable through fees, organic the back have management note, our of everyone for matter have every we to goals the I'd reinvestment confident and led metrics that, can joined the key us: we and very today. industry XXXX, continuing please open for the and On on

Operator

comes first Our Blostein from line question Sachs. the [Operator Goldman Alex with of Instructions]

Alexander Blostein

and quarter net credit as maybe So as on higher opportunities of very gross big obviously first the up and activity volumes high fairly lending, despite level private across step that's the refi deployment well originations well. in as the in direct syndicated a industry. question on market And

would you bit kind So characterize this that I for saw call guess maybe was backdrop how And deployment of would the quarter? broad-based out? particularly talk little deployment a rest the about how gross of in and Anything the year? lumpy you net you

Marc S. Lipschultz

direct Thanks, think Alex. very of lending. Look, about actually power the this quarter it's for a model. I revealing is the environment great And

of together, which I open backdrop. And I the well were tepid incumbent, far have quarter. And not in in gives think, and is broad yet, and are it's you People activity There's positioned as well items, proprietary say, the remains We the course, lot our is ever to been, actually, the are, also dry often meaningful, relative syndicated biggest that time say, just is where add-ons being measure that continue of combination actually we Given market activity. a a noted, think, That's if as angle ultimate originations it to there are sold that and a on then, and very those by that assets as marketplace. powder. do pretty our to was course, no, to PE things. investments the by this thankfully yes, new proprietary. are and And collective of is onetime are will, special that which, sort net I would origination number. of take X of I

from is volume, when think when of point available. And strong all is is market's look have because forward lending demand sort direct always that's quarter really syndicated meaningful direct pretty exact actually data it's we solution. So lending based going of widely the I to the close, indeed capital this strong this then the that we extremely users I choose people is at a will overread on a do. even and can this idea market vary continued quarter think read But by I for every what the indicator what as a

of There's the the extreme durability up. having we're the lending as and some users gets I powder and given privacy know. this part us and think of seeing I solutions deployed. deliver what big capital predictability, to going provide long-term to excited, of can capital. The XPs: think the will that to to read of syndicated amount long-term the more again, is either whether as what And the point, have I there we're that. a that's is market, I'm strength wide said, is just quarter escapable PE huge a a some we we're starting today. But moment market from syndicated have tepid there that this relative dry less going time It active all are Well, few from point, One, relatively at the PE just we get That market. at a to active we open direct a not will And happens. pick the things going gets or trying on. piece activity. not, said, partnership,

very for that we're continued deals. moderation our in robust really doing mean, to a to slight combine what interest be be one cherry from that, forthcoming, to good add and more rates, seeing outlook we'll So point want good. doing I accelerated interest and with people environment, by a this in financings that's I seems which view. And of

good pretty moment. feeling we're like a it's So yes,

Operator

[Operator Instructions] of comes JMP. with next line the Our Citizens Brian Mckenna from question

Brian Mckenna

Okay. Great.

the Blue make about these should think growth deals historical rate? these outcome with out are would legacy relative But like across similar how to all incremental quite the firm. for we all from Street. So recent all you've revenue to deals just Strategically, than and a Oak the round Owl growth rates the sense question the done. on capabilities It the M&A the seem better these a of their growth bit legacy opportunities

trying time? the I'm rate Owl figure growth just these be termite accreted ultimately if of out to So will over Blue deals to

Marc S. Lipschultz

organization but of to not So businesses. have of of I sort time the parts observed, that of We're synergies of going when us of, continuing Blue between to observations X the we into of amount group do those dramatically think but underlying X X. course, before able we investment it's the And ours it make best-of-breed our a permanent plus had synergies, -- infrastructure really capital capabilities, I businesses. important before and the are and said get billion $XX at AUM, X is AUM. and kind the you billion actual will, but and framework and to important think really specifics been investment moment going The look, Owl strategy. leaders and overly of acquisitions, have to joining a X, really Oak announced it intellectual origination increased acquisitions capabilities context if not what it's the use fit my of are this can be to core then the use remarks said our not in about leadership And there's the $XX between doing. What you we people -- I'm to today, we X the you make And we think the selling works. Look our done we at really ago, great say, I us. is equal Blue important try are Owl And have capital. combine where in there it's and to Street. Street, Oak change world-class bring

largest -- had ever the product. our estate year fund have real the record We was created a suite. in last product wealth We've completed

a for with our Blue LPs for seen bring that's world-class So and platform, our to and winner we I how shareholders. the think together these we've Owl winner know capabilities a that

joining, that's of, really, So sort I which think, not is key well, -- selling. observations X observation

auction in an us. things buying they are someone and exits, We join

]. Zohr to Mark [ so have fortunate We are

firm real You estate. can see it in the in the leadership of the and leadership of

of and we -- ] he in finance is asset-based You Ivan I it a of mean superstar on. the leading Atalaya. have world goes [ us, Zinn joining now

read would of the I collection way the assets. that's So

Now what And our accretive Alan, for are on mean does will business? These face. just acquisitions sure this. their it I'm add to

setting near term. very you of we'll they're critical of but for that, long the benefits beyond markets now the the see capabilities in stage so term, inconsequential very large products up And but we're we're doing the kind will, doing the of is addressable What they again, are What if distinctive for capabilities. years the we scheme have is distinctive have where That, XXXX. setting is that key.

today. that provide that market. people only value private a going a combined for solutions at asset-backed, capital, last alternative notion years lender The look of best of, this offer look want When X% Ps those doing Atalaya. Atalaya, to bigger to now lending XX with next same did Blue the years. with XX years We're we like resort do we It's And to has spectacular today, Street nearly a it lending. It's idea what XX asset-backed trillion credits So last do and great XX hey, on it's direct Wall in going And credit. solutions. a Owl lot listen, $X is came results. credit, the finance in go Atalaya asset-backed to not like credit. years we users penetrated the by with direct from best of been It's we're market. certainty. private the things X

into for decade business. of the of direct of Blue you legs world think of credit. kind platform of Owl we can next our what even the that the probably couple now the real this have need And best gives handful just estate one leg version the be lending. Prima, in us we with So in but married credit next years, not

estate over years. real Prima credit, look all thinks, "Oh, gosh, problems X been losses the has losses. doing at XX this everyone XX there". Two in for my business years. had They've say You

that in each boring into deliver characterize there So over into out, all We're turns up with are very focused to and markets. And and exciting. inversions. I talent out turns through will these that exceptional the strategies down do that when pretty go as products that very of you products, to be markets boring and over and with ways it over again, out and doing

Prima. addressable the that's the Prima mix So credit. real in we probably trillion bring estate That's of where market to case $X a

and an created the insurance where coincidence as delivery the insurance capabilities, pieces our perfect of capability now credit insurance that with like alternative marriages we So not these we we've business, but distribution. with critical looking things Prima are now we're management along no at channel. asset-backed Remember, are getting can package insurance, to

together So X XX the years all in us. comes next around what of stage kind for for setting and this the really comes

Alan Kirshenbaum

XXXX. strategy, our potentially next mid-market estate then our and Fund said, good our European first by evergreen organic acquisitions. year And continue keep the around growth a secondary little we layer else, diversified new And with we the which you in -- lien our as really very products, beyond our all to And targeted about talked is -- about in now prepared lending vertical, things bit, grow add a fund a getting when on now then year that everything this we're GP-led we around growing but and our beyond our focused finance estate some things so products real remarks product. we've goal. where GP well lease, all traction strategy, the our about, Fund then talking the in talked to year products in growth up real my for industry-leading far a these share to sprinkle I We're our product. And in do Fund How $X VI. as few Brian, care ended are goal? you level as Mark broaden initiatives left Marc's and of road this health stakes for real this going growth net triple meeting about estate with VI, with So had $X well, we said, inorganically, acquisitions, or investors VII. end are share the you our record to gearing I evergreen talk credit in up,

and layer inorganic industry-leading when So around in you organic we've we How do year. been level This that about XXXX. growth. the well keep is growth what all really talking

Operator

Glen Next Schorr from Evercore the question comes ISI. with line of

Glenn Schorr

on maybe So angle another activity. the deal

just I Oak companies, and had deal asset -- bad has eventually, something great did short in these is So When time, reasonably think environment X about just hurt to the accelerated about different of be other land Street you companies the X on growth investors' it management deals doorstep want period taste why? alone, bunch in I asking bad hasn't environment? And So to agree, And been of your half deal purchase -- didn't. history seems brought that and going you -- textbook a to buy in is a a companies some half you integration with for grew, It It's what's margins. them. usually in some leaves leaving story. a levered mouth.

from better things integrate that the of sure underlying you backdrop brands the the -- one at. we're alternatives growth learn past is, don't make you is looking question firm the what than lever how of traditional the best mistakes significantly do that -- the enough that or My asset managers. enough learn the do of and you think you are and I

Marc S. Lipschultz

Sure.

So noted. together are as we at these right time. that in ought as right look the businesses reflection are These the just form, us. at one-off think came coming mostly These of to I to a we opportunity this

is Prima address does to how And worlds. of think both this a of of partner this do working the business continuing us, So you remaining tandem in This team and Kuvare the in strategic partnerships. really with us with partnership, management leadership tandem team about our insurance is question providing to best leadership Atalaya remaining that I in of is finding strong we're get the the working services. asset in start with

about it you the these is as we Prima that assessment. way, is Blue These direct assess That's we And And that model wear is world-class the it is joining are the just a can the good So I us tell and on, but as important is And you, it us, through firm? for is, key it we about our a It's not one-off financial the can opportunities assessment one the going think the change is absolutely much people. Blue that I very here go when And a activities. we And the at for part constellation team are Owl firm. not jersey. something investing, are we tell fit for or think States. like by lending. cultural a tremendous Atalaya how been Oak strategy? as It's investment And great strategies. is don't [indiscernible]. of the Owl, everyone about, This what model to for been been a they success the GP for model of is a that's Street. talked are operate. But how work. It's the of we we I

here, the the So performance get integration into firm. with to the investment actually, for done the us multiple of full best it's businesses times been of how

So very the to in we moving everything I for muscles that, say feel have built direction. is along have good about we and right the

and M&A feeling much like tell better very we're the will, at. any the understand So you're caution, a you that M&A services. Street is case, noting Oak this much in But if you we I questions, and would to in to template look financial me,

actually came Owl firm. sell that's because actually Blue fact, analogous an very where be set the leadership In firm business, of to this and of then the a senior to actually this analogous a part sized ours, of circumstances team leadership joined

Operator

Research. the from line comes question with next Our Davitt Autonomous Patrick of

Patrick Davitt

AUM probably management FP AUM the inflow surprise. I disappointing and think in the fee to relative a the quarter very positive little was trend

issues that would with have cetera? deployments a timing management so, So full of those, And level maybe et full up quarter like in in the quarter fees skewing Prima, you later full to quarter do showing big what were know aren't if the there run maybe been any the with for all set, quarter? the of rate

Alan Kirshenbaum

the estate Thanks, the any numbers. so some and fees, I just XQ's stakes elevated quarter, had tell that the the GP rate have in both catch-up you to slightly top XQ, the -- didn't of for my run time of Patrick. some on could really at quarter. in closings small off end that head. we accrete very in have And don't we I in real had

Operator

question of comes America. from Siegenthaler Bank with the next Our Craig of line

Craig Siegenthaler

back commentary of the to near the end wanted come We prepared to Alan's margin remarks.

term maybe XXXX XX% see digest little these target? the should $X.XX now, Is long-term about with the as or Where mergers. ] do higher? we a still FRE scale at you to XX% think longer [ that? that So you margin How

Alan Kirshenbaum

it and strategic few over about. very very market, Marc for next [Audio the big addressable numbers Gap] years, talking a and as potential fits us growth area was a

XX%. business, an a haven't So the let's we minute talk growth, business. backwards On we minute had what just look management our and FRE we an take the basis quarter Owl growth had I real overall by When for Blue XX% for been look our a we fees And XX% are than Blue where Owl, that's to basis, for revenues, that's we in since creating quarter Street fee at revenues. LTM a had haven't we that you here? by, LTM haven't management a I been estate lower about had haven't go acquired less Oak on a quarter go by when than there. And go up

looking so what backwards, created. that's And we've

'XX, things of of Now we another That's 'XX X the yet $X fees, revenue were the fundraise, AUM and looking TIC GP at fundraises in out the and XXXX. step-ups forward, from where have there, not you we paying billion think fees. and over CIC about stake then that when BDC end the

about those about question XXXX. When think that just include the XX% previous we're doesn't a think I in few were other raise that's growth our rattled fund fundraising, through growth So versus we all I things, to almost beyond from just equity and that a things year. going where we last double initiative

fueling We're what we're it's and business. our so now growth. accelerating end it's reinvesting And between of the doing, into working. and XXXX. back It's industry-leading

And growth I this year FRE next So XX% accelerate longer-term the we that growth, when margin. you XX% on wouldn't will think, we change an approaching XX% basis, to think number for for just revenue again, year. posted and about that LTM

Operator

next Our with of Research. Chubak line Steven comes the question from Wolfe

Steven Chubak

wanted I to on question fees. ask So X a Part

maybe margin ability book? rate mark-to-market and concern tightening quite meaningful horizon, the to book roll Part just last yields get Just there's amid that what XXs the come were back deeper guess, constructive, from cuts loan to there a defend, be for just contraction? where the 'XX pressure rate And certainly, today to cuts off. in speak sit offset high but some the under could given back to would over I higher-yielding begins fees the relative X spreads comments the going the on to a be for as months, activity, FRE to current there's now spread was I a and XX origination ramping deployment Recognizing hoping expectation greater

Alan Kirshenbaum

we your Sure. that Steven. question, to Look, Thanks grow. business have continues a for BDC

come And down, we as on pressure rates Part fees. so yes, see will X some

from perspectives, also We X going up. fees number a see, of Part

BDC very fees to as lending software still go our the ways fully we'll the prior deploy X Part we OTIC, that quarter go have some to to X going and have deploy continue that's fundraising are capital. We to to BDCs, X still that OCIC deployed strong capital. to to we vis-a-vis are continue continue not and forward. go that at for to see So we we have and continue on have that we'll levels up still BDCs, fully today, and everything

efforts So quarter-over-quarter and continually products. stepping up as these we to will continue see to X Part fees fundraising relates our it offered

Operator

the from Piper Love comes Crispin line with Our next Sandler. question of

Crispin Love

look portfolio? confident just you the how is portfolio that are what Pluralsight any a us you specifically, quality then degradation you give you're when the potential update an at Can versus the in for other the on that, credit in stress you one-off credit seeing And portfolio Are seeing? across elsewhere?

Marc S. Lipschultz

quality environment. Yes. strong is very Credit good. is a This

mid-teens. teens, the in EBITDA grew average, on portfolio Our

So continue a see strong overall performance. we to very

And demand the very or have well. we always down theory, as some find recovery. in great make that to get in change requests is kind, look, running don't to likely nature if look, have a they paid complicated handful requirements or system of simple changes we perform were strong we pretty not fortunately, through they are in the challenges, amendment work We execution, really That's, perform well, of in times, companies of cash for I their And companies rigorous seen have any which will the material the before We one-off course, payment sure that a beast. have -- in described, very revolvers.

very, that right to march credit overall continues quality well. very so put steadily very us on And to leads and actually

about performance Pluralsight, probably on terms care ultimately, Pluralsight, of commenting look, lot We a every one and worth it's Pluralsight's In and recovery. thing. credit every

Owl shareholder, the remember, we're Blue again, fee-based business. For a let's

of are we of directly have a really funds business. yields Owl So the to We carry. part the don't fees, get really, Blue the underlying not

So want a put that as to just I flag. again

business, and together money the our in out And matter business no, I limit it. doesn't do It that's get what those find performance. Also great But most don't the one an a think end small back, At to the that lands. all we'll It's other a that just of drama. our money find we really extrapolate the next just of is tremendous make years. disappointing let's It's of sponsor, all we where few context, almost We'll outcome. training out disappointing get it clear the $XXX for up the the that's we I didn't study private a end But It lot Vista together. lending will management we'll amount $XXX and all little without of Vista, you several to now look, know. business led financing like we all Vista carry for This we'll of sorry, expect, I portfolio. And years, be which to by bought million we who lenders. next about wanted to business and over not be on the obviously, of investments, software it's kind we a it's what or be. [indiscernible], just is and is actually, in with working, But was a few a again, the work. to a IT a Do our from and that day, the of back? don't tuned the lot apologies. here billion it -- make is. on do handoff smooth of Pluralsight mean, loan. great Now care [indiscernible] the of private you supporting not anything of and exact lot us. owning business. not them. is recovery our to sure Very a we and we're It's where can stay out

Operator

UBS. with question Our of the Hawken from next comes Brennan line

Brennan Hawken

seems hit response question wanted and outlook. cut to apologies during Alan, I bit out at the on that it compression the as some also to the my this, done. though the your guys margin have to on on the you around be you your But impacted if up -- confidence margin line you dividend. And reiterated deals by or dollar follow a is of recently

[indiscernible]? anything whether some the or And that, recent you margin not are been just bridge would And better pulling deals is down can that of really have growth? the beyond revenue there be what's so the confirm

Alan Kirshenbaum

to Yes. That's business that Atalaya the in The the do. has over are this as Thank And just margin you for half question. time. a particular, where we don't We investing we margin in the same yet Atalaya get grow up We we whether we're it right, can -- we Brennan. as has -- know these know the acquisitions. transaction roughly can the today.

outlined So what as we I did Street. with Oak

it of So long-term we're trajectory keeping that back confident downward XX% we is making or that we higher could slight have it up, and and feel some time. into swings the before putting strong acquisitions the very we're very the investment over acquisitions. by momentum driven these And but about margin

Operator

from Our of next Cowen. Bill the TD Katz from line question comes

William Katz

I just little dividend want further. to the unpack a bit

grow to driven. year-on-year, low- you think sound does So range $X.XX mid-XX% and you that top the it line in can affirmed this you like and year the

proxy, reasonable get a as XX% take it I $X.XX. if So about

at look numbers. about the and so XXX% I year-to-date rate distributable has been dynamics between And as the payout round dividend, earnings the

if in is potentially import opportunity? dollar? capital move the away here story And So think to I'm the broader argument wondering could on and dividend broader algorithm of about about growth return allocation there just the a a terms talk capital you from a and

Alan Kirshenbaum

Sure. Thank you, Bill.

XXXX. down step year to get we've past seen bring to percent right. been So us low what then dividend XXXX will XXX% ratio, that's time if XXs this the to around over up would communicating That as We're we somewhere growth approaching, we've ratio. investors, XXXX. versus it's XX%, put low look is to That low for where that's really mid a dividend not to back mid -- $X.XX. that And payout targeting payout will we a a

we'll that that keep So eye the the our and Gap] on down we've to in back continued over in then time, dividend and payout And a ratio around share little bit. [Audio goal. $X around bring dividend

Ann Dai

a you're think follow-up. for I on Patrick,

Patrick Davitt

you think kind regular there? closed from about annuity-type on from us inflow ongoing partner of that July of Kuvare, kind should update way see start given annuity you'll Could how insurance to just X. issuance the the on we the quarterly

Marc S. Lipschultz

exciting acquisition we Kuvare want one buy. a us, we to The importantly Yes. very is for buy and I reframe did and didn't what what

paid Getting of bought fashions did Management that Asset operations. abilities both we insurance not manage We in fees Kuvare buy to terms structures and packaged for in So are insurance the companies. the assets delivered business.

not in the are insurance have concept. don't earnings spread-related We business. We

very model. have fee-related We our continue business to important That's earnings. to

an fact, in insurance company size, very start to originations. there accomplished growth the is remains annuities. That of their insurance think good flows. So for what Kuvare active for to been to to has very have terms been, billion They be Japanese continue total it's rate strong issuing year. and $X.X successful was in I successfully that had they've of year in higher quite very market. In XXXX, so. in business say have they They the access, expected to them a The this the for example, impressive

was there. expect XXXX, So rising we're and -- to that again, we from continue

on be of something this on the an dollars for will we So and will, in billions flows of contributing basis. done annual is way it a over that quarterly time basis us fact, expect

billion insurance, channel; our institutional are Remember being key continued growth we leg along and to in So the in one additional as started very question, new this your we the in with $XX happy leaders we $X.X where had another to there to took. And are wealth inflows, wealth. access have come there, note of institutional, of in great those stool, to flows, have of accounts; add assets now as and manage. to set we off of of us we base billion this just you

to originate which is this we to fee-paying us another continue exactly are what for want, long-dated, yet assets. So engine

as are strategies a married, addition these insurance by that, Prima not perfect the with way, for something asset-backed like other capabilities I mentioned, insurance and the lending coincidence, that's users. So

I going to marketplace. the think out to have offer pretty we're something to special

Operator

the And our of question with from Hawken line comes UBS. next Brennan

Brennan Hawken

have rather correctly the deals here. I would -- like good make what's several happened what to is sure some make like together understand together. deals sure pieces guys just And I you seems come quickly. had It done I'm putting you've

together. probably get You're to these bit of realizing longer it's going to pieces put little take all a

we're going compression so to And see next margin year. some

of about guys getting dividend the You the the payout via higher but there to feel kind ratio. still getting and dividend, good you're

it's growth. so by more there? rather earnings right? I driven me course that you or would the -- And that in And ratio than have Do anything correct

Marc S. Lipschultz

Yes.

not a unexpected, Let anything integrate. not try me and course to little complicated Alan add bit, It's it's more that it's correct to that too. it's It's math. can

at acquire impact the continue be optimize integration time, the to, an full margins If the across to planned, some period business. and we going for integrated business, lower whole it's short then until a to you margin complete of as time,

XX% essentially buy in and margin. the say integrate margin do it term. then not plus expect operationalize, about acquire it's will which will to return, be margin lower want fully a something we But So don't short again, anything a to to a in a with something, -- with and we if have the I I lower change expectations. our mathematical and impossibility near margin, it impact but meaningful

focus, more we And deliver So no, measure I whether emphasize. From continue very growth to I to point is what a -- the more and to absolute and of more high is from but dollars. I view, our of, predictable us it's it's in drive do think will view, would and pretty our and rather want is but profitability, opportunity, absolute do we margin FRE do encourage growth what obviously, dividend. point continue -- have revenue on we'd suggest we have obviously would to and of you that investors' want how also transitory,

short short-term be be, be the It are substantially augmenting our success. of absolutely growing for DE FRE, and acquisitions yes, that happens The positioning acquisitions what the measure dividend, the we share But ought actually in this term a plus. here, [indiscernible], that from to to management expect these per are us the case that's particularly think to I we exactly XX% for the dilution long and return to and term. and us don't absolute

Alan Kirshenbaum

$X our share I'll before top and that, a And right just And of about mid-XXs my that any well just we've we been frankly, I about, on, the That's talking growth made CAGR in had to comment low to the dividend XX of guidance number. is of it's add on in years obviously, Brennan, over eye these X.X acquisitions. dividend. for -- prepared our pick let's XX, a if this remarks, is XX% our

that. looks well fantastic feel So and even like better for about growth really as we we trajectory we great about feel talked it, We about beyond our feel what future about XXXX.

Marc S. Lipschultz

any think don't further I we have questions.

to I first, of pleased we forward you, see strategies. all we extremely We're importantly, our second So our with increases. most versus We with looking are Marching for We're look, we where quarter. same exceptional be and pleased pleased, stand. mean the returns telling our things appreciate everyone's of time. delivering really quarter the continuing LPs very straight It was keep the trajectory is here which our is bright. XXth an

stable we march With continue and growth set have on detail about stage the talk set future, ] much acquisitions, plan. highly steady we'll predictable our very strong And the FRE [ and course, in stage, the more the to our dividends. of which, in

had. stand. very we've We with exciting happy opportunities where very we're So think things got

develop out these inorganic what forward enthusiasm positives you us can to as the look see additions. keeping we all all of to our our you and think posted. we you'll organic And we start strategies continuing share of reveal So

Alan Kirshenbaum

everyone. you, of Enjoy the summer. Thank the rest

Operator

now has meeting The concluded.

disconnect. now may You

Blue Owl Capital (OWL) 1 Aug 242024 Q2 Earnings call transcript