Blue Owl Capital said fundraising slowed sharply in the second quarter as turmoil in the private credit market caused investors to pull back from its lending business, with the firm raising $7.6 billion over the three months through June, down from $12.1 billion in the same period a year earlier. Within that total, funds raised specifically for its credit business collapsed from $5.8 billion to $1.8 billion, even as the firm still managed a 9% increase in fee-related earnings to $392.2 million, ahead of analyst expectations, and assets under management grew 12% year-over-year to $319 billion. KeyToFinancialTrends notes that a roughly 69% collapse in credit-specific fundraising, arriving alongside otherwise resilient fee earnings, is the clearest possible illustration of a two-speed private credit market: the fee income from assets already under management keeps flowing steadily, while the pipeline of fresh capital willing to enter new credit commitments has narrowed dramatically.
The redemption pressure behind that fundraising slowdown has become severe enough to force direct restrictions on investor withdrawals. Blue Owl this month again limited investor withdrawals from two of its private credit funds after they were hit with the industry's highest redemption requests for a second consecutive quarter, a step that functions as a direct signal of how much retail and institutional capital is trying to exit private credit positions faster than the underlying, illiquid loans can be sold or repaid. KeyToFinancialTrends treats that back-to-back gating of redemptions as more consequential than the headline fundraising numbers alone: a firm limiting withdrawals isn't simply reporting weaker new-money inflows, it's actively managing a liquidity mismatch between investors who want their cash back on relatively short notice and loans that were never designed to be sold quickly.
The specific fears driving that investor retreat center on two distinct risks compounding each other inside a $1.8 trillion market. Investors have grown concerned about lax underwriting standards built up during years when private credit firms massively expanded assets under management as retail money flooded in, alongside growing exposure to borrowers whose businesses are increasingly threatened by advances in artificial intelligence. KeyToFinancialTrends frames that AI-exposure concern as the newer and less understood of the two risks: underwriting-quality worries are a familiar late-cycle story in private credit, but investors now pricing in the possibility that AI could impair a borrower's ability to repay a loan represents a genuinely new category of credit risk that most private credit portfolios weren't explicitly underwritten to withstand.
The strain shows up clearly in the firm's core lending metrics, not just in fundraising totals. Blue Owl's direct lending strategy, which accounts for more than a third of its assets, posted net returns of 1.7% compared with 2.2% in the same period a year earlier, while the firm originated $3.6 billion of deals in the quarter and deployed a net $600 million, sharply down from $9.7 billion originated and $2.5 billion deployed in the prior-year period. Key To Financial Trends closes on that origination collapse, deal volume falling by roughly three-quarters year-over-year, as the number that best captures where private credit stands right now: co-CEOs Marc Lipschultz and Doug Ostrover described the results as reflecting "the resilience of our business," but a firm doing a fraction of its prior-year lending volume while simultaneously restricting investor withdrawals is managing through a genuine credit-market contraction, not simply a temporary pause in an otherwise healthy growth trajectory.
