Key Points:
- Fewer than 1% of Blue Owl Capital Corp. II shareholders accepted a buyout offer from Saba Capital Management and Cox Capital Partners.
- Boaz Weinstein sought to buy shares at a more than 20% discount, but the tender offer expired with almost no participation.
- Blue Owl halted regular quarterly withdrawals earlier this year, opting to return capital through periodic distributions instead.
- The firm distributed roughly 35% of its net asset value by mid-April 2026, and expects payouts to exceed 50% by the end of the year.
Retail investors in Blue Owl Capital Corp. II firmly rejected a recent attempt to buy their shares at a massive discount. Saba Capital Management and Cox Capital Partners launched a joint tender offer to purchase shares from existing investors who wanted quick cash. However, the plan completely failed. Fewer than 1% of the fund’s shareholders decided to tender their shares to the buyers. The overwhelming majority of investors chose to keep their money right where it was.
The tender offer targeted investors in one of Blue Owl’s non-traded business development companies. The formal buying window officially expired at the end of last week. The buyers saw almost zero participation from the targeted shareholders. Because demand was so low, the buyers let the offer expire and chose not to extend the deadline. People close to the negotiations shared these details privately, as the official numbers remain unreleased to the public. Spokespeople for Blue Owl, Saba Capital, and Cox Capital Partners all declined to provide official comments regarding the failed transaction.
Boaz Weinstein runs Saba Capital Management. He built a long career as a seasoned activist investor who constantly hunts for distressed assets and nervous sellers. Before launching this tender offer, Weinstein publicly stated he wanted to buy pessimism in the market. He aimed to acquire these specific Blue Owl shares at a steep discount of more than 20%. He calculated this massive price cut based on the fund’s most recent estimated net asset value and its dividend reinvestment price. Upon seeing the lowball offer, Blue Owl executives immediately urged their shareholders to reject the deal and hold their positions.
The shareholders clearly followed the advice of their fund managers. The extremely low percentage of completed sales proves that investors refuse to take a huge financial hit just to exit the fund early. They prefer to hold onto their shares and wait for the true value of their assets to materialize. Selling now would mean cashing out at far less than full value, and fewer than 1% of the owners felt that level of desperation. This strong rejection sends an important signal about the current mindset of private market participants.
The broader private credit market currently manages roughly $1.8 trillion in assets globally. Over the past year, a heavy wave of anxiety swept through this massive industry. Financial analysts openly worry about the degrading quality of private loans as borrowing costs remain high. Rapid innovations in artificial intelligence also pose a direct risk to the software industry, a sector that relies heavily on private credit loans for growth and buyouts. Despite these looming threats, the Blue Owl investors demonstrated that the overall panic has very distinct limits.
To understand this event, one must look at how non-traded business development companies actually work. These specialized funds typically offer limited liquidity windows for investors who want to cash out. Usually, retail investors can only pull out a small fraction of their money every three months. Many of these funds impose strict limits on quarterly redemptions, capping them at 5% of total outstanding shares. When investors execute these regular withdrawals within the limit, they receive the full net asset value of their original investment.
Over the past few months, retail investors started racing toward the exits across the entire private credit landscape. Because so many people requested their money simultaneously, fund managers hit that strict 5% limit almost immediately. This strict redemption cap effectively trapped thousands of investors who wanted to cash out. Buyers like Weinstein saw this traffic jam as a prime opportunity. They assumed trapped investors would gladly accept a 20% discount just to bypass the strict withdrawal limits and secure immediate cash.
The specific fund in question, Blue Owl Capital Corp. II, faced intense public scrutiny at the end of last year. The management team attempted a complex corporate maneuver to solve the growing liquidity problem. They tried to merge this non-traded fund directly with their publicly traded fund, which operates as Blue Owl Capital Corp. Executives believed this merger would provide instant liquidity for their retail investors on the open market.
However, that merger plan quickly fell apart. Investors in the non-traded fund reviewed the details and realized the merger would actively hurt their portfolios. If the deal had gone through as proposed, those holding the non-traded fund would have instantly suffered paper losses on their initial investments. Management faced intense pushback from their clients. They listened to the mounting concerns and ultimately canceled the entire deal to protect the net asset value for their loyal shareholders.
After scrapping the controversial merger, Blue Owl fundamentally changed how investors can get their money back. In February, the firm informed its investors that they would no longer process any regular quarterly redemptions from the fund. The 5% exit window closed completely. Instead, the firm promised to return capital through special, periodic cash distributions as the fund naturally winds down its investments and collects interest from its borrowers.
Blue Owl executives recently updated the shareholders on this new payout strategy. By mid-April of 2026, the firm successfully distributed cash payouts totaling approximately 35% of the fund’s total net asset value. The firm continues to collect loan repayments and plans to pass those directly to the shareholders. This steady stream of cash gives investors a reliable alternative to selling their shares at a massive loss to opportunistic hedge funds.
Fund managers expect these regular cash distributions to grow significantly as the year progresses. Executives project that the total return of capital will reach or exceed 50% of the net asset value by the end of 2026. This aggressive and steady distribution schedule ultimately convinced the shareholders to ignore the cheap buyout offer from Saba Capital and Cox Capital. They clearly trust that waiting for Blue Owl to return their money at full value makes far more financial sense than selling out for a severe penalty today.
