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Blue Owl Launches Interval Fund to Broaden Access to Alternative Credit

By Mari Nicholson

Blue Owl Launches Interval Fund to Broaden Access to Alternative Credit.jpg

Blue Owl Alternative Credit Fund has been declared effective by the U.S. Securities and Exchange Commission. The fund will operate as an interval fund, a type of closed-end fund that offers investors a degree of liquidity not available in traditional private funds.

The fund is managed by Blue Owl Alternative Credit Advisors II LLC, which has a flexible mandate to dynamically allocate assets across a wide range of alternative credit assets and strategies. The firm defines alternative credit assets as credit investments in markets the advisor believes are underserved by traditional lenders or require non-standard, customized terms. According to the fund prospectus, it will invest at least 80% of its net assets in these instruments, either directly or through other vehicles.

The company is designed to generate current income and, to a lesser extent, long-term capital appreciation.

The fund’s strategy focuses on a broad spectrum of alternative credit, including:

  • Asset-based finance: Investments structured as loans or securities collateralized by assets such as consumer credit, commercial real estate, equipment leases, and aviation assets;
  • Corporate credit: Privately originated and privately negotiated debt investments, including first-lien senior secured loans, mezzanine debt, and other forms of private credit; and
  • Liquid securitized credit: Publicly traded securities like asset-backed securities, or ABS, commercial mortgage-backed securities, or CMBS, and collateralized loan obligations, or CLOs.

The fund will conduct quarterly repurchase offers for 5% to 25% of its outstanding shares at net asset value.

The fund has adopted an “opt out” dividend reinvestment plan, or DRIP. Shareholders that wish to participate in the DRIP will not be required to take any action. A participating shareholder’s distribution amount will purchase shares at the NAV of the fund.

The company is offering three separate classes of shares: Class S, U, and I. The minimum initial investment is $2,500 for Class S and Class U shares and $250,000 for Class I shares.

Shares are offered on a continuous basis at an offering price equal to the fund’s then-current net asset value. Each class is subject to different fees and expenses.

  • Management fee: The advisor will be paid a management fee of 0.75% annually, calculated on the fund’s average daily managed assets.
  • Incentive fee: An incentive fee will be paid quarterly based on the fund’s pre-incentive fee net investment income. It includes a hurdle rate of 1.5% per quarter and a “catch-up” provision.
  • Distribution and servicing fees: Class S and Class U shares are subject to an ongoing distribution and servicing fee, while Class I shares are not.

Blue Owl (NYSE:OWL) is a leading asset manager that invests across three multi-strategy platforms: Credit, Real Assets, and GP Strategic Capital. As of March 31, 2025, it had more than $273 billion in assets under management.

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