This is a ramping up of an investment crisis which is growing in the USA but thankfully not in the UK and Europe.
Private credit group Blue Owl will permanently restrict investors from withdrawing their cash from its inaugural private retail debt fund, backtracking from an earlier plan to reopen to redemptions this quarter.
This is a spectacular about return from one of America’s largest private equity fund managers
The New York investment group on Wednesday said investors in Blue Owl Capital Corp II would no longer be able to redeem their investments in quarterly intervals but that the company would instead return investors’ capital in episodic payments as it sells down assets in coming quarters and years.
And the FT is making its readers just what this means
The decision underlines the risks facing retail investors, who have ploughed hundreds of billions of dollars into funds with limited liquidity rights.
It’s also a big problem for Blue Owl which is suffering a loss of confidence from its shareholders and the market.
This is not good for shareholders and it certainly isn’t good for retail customers
So where is Blue Owl going to be able to sell its private bond assets to get the liquidity to satisfy its retail customers?
It [Blue Owl]said pension funds and insurance companies would buy the loans at an average of 99.8 per cent of their carrying value using new vehicles to be managed by Blue Owl.
Surely they don’t mean the pension and insurance companies that have been buying into and buying out our UK pension schemes?
If I was the PRA, I would be looking long and hard at what is happening with Blue Owl because if these private market bonds are being relied on to pay UK pensions , they should be very worried indeed.
The lock in of Blue Owl’s Capital Corp II’s retail investors, comes at a bad time
Wednesday’s deal comes amid heightened scrutiny into the quality of private credit loans after a number of high-profile defaults and rising fears over the exposures portfolios have to software companies vulnerable to AI disruption.
We have been selling UK insurers to American insurers. They include PIC, Just and Utmost. American buy-out money is cheap but is it backed by private credit that will never be repaid? Blue Owl worries me a lot.
An earlier canary in the mine
In late 2025, the U.S. auto-parts supplier First Brands Group collapsed, filing for Chapter 11 bankruptcy with over $10 billion in debt.
The fallout significantly impacted UBS, which held over $500 million in exposure through its O’Connor hedge fund unit and other credit platforms. The crisis centered on “supply chain financing” (securitized invoices) that lacked sufficient collateral.
Key Details of the Collapse
• The Failure: First Brands failed to refinance $6 billion in loans amid concerns over “opaque” off-balance-sheet financing.
• The UBS Connection: UBS’s O’Connor unit was so heavily impacted that its planned sale to Cantor Fitzgerald faced renegotiation.
• The Outcome: UBS began winding down affected funds and writing down assets by over 10%, with investigators probing “irregularities” in the pledged collateral.
This event drew sharp comparisons to the 2021 Greensill Capital scandal, which previously crippled Credit Suisse before its own merger into UBS.
Hello Henry,
Will US insurers buy out our pensions etc
For what it’s worth, I too am worried at the implications.
Reference your earlier blog regarding the sale of Schroders to Nuveen: your text was headed with an illustration regarding Quilter’s & SJP. Perhaps they too and others are also considering informal bids. Citywire today has drawn attention to the Times article where JO Hambro (a Schroders investor) has warned that Schroders was undervalued by £9.9bn. Hambro’s believe that the deal had been agreed at a discounted price. If true, nice for Nuveen…?
I suggest that we look at the larger situation. The UK’s biggest ally (they saved us twice during the last century) has alarmingly become unpredictable and unreliable. In trade it has overturned the recognised international GATT agreements etc by the raising/lowering of tariffs at whim. Foreign policy, for the second time in a few months, is being conducted with warships; where will that end? At the recent Munich Security Conference their message (although dressed-up in softer language) was just a reiteration of their previous view i.e. Europe cannot rely on the USA. No doubt welcome words to the Russians and Chinese. In the US, intimidation of Jerome Powell, Chairman of the FED is well advanced, as it is against other members of the various administrations. I have read that, out of spite they have blocked some/all of the IT systems of the International Criminal Court at the Hague. If they have done it there, they could easily do it to us.
So: putting all this together, what are the risks that, if it suited the US, they would overturn the international finance agreements. Meaning, that the US firms could easily transfer all their UK funds to the US, leaving just shell companies here. Furthermore, if those US companies decided to sell their UK branches on to other US firms etc and there were trading failures, I suggest that it would be doubtful if they could be easily resolved from the UK.
Sorry for this dystopia but it does worry me.
Kind regards,
Tim Simpson