Blue Owl: Rees’s pieces must mesh to keep egos and investors sweet

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Personal fairness teams are accustomed to rolling up industries, conjuring up synergies and making fortunes within the course of. It’s trickier to drag off the identical manoeuvre in-house.

In 2020, a Spac merger created listed options asset supervisor Blue Owl. This mixed two well-known companies: Owl Rock and Dyal Capital. The previous was a company lender. The latter pioneered buying and selling in minority stakes of different buyout teams.

There was no apparent hyperlink between the 2. However mixed belongings of simply above $50bn have been excessive sufficient to help a public inventory.

Blue Owl had completed properly sufficient since then, though final 12 months was not a pleasing one for asset managers locked into funding offers and contributors in extremely leveraged transactions. But information broke earlier this 12 months that Dyal founder Michael Rees had fallen out with the Owl Rock aspect, who have been allegedly looking for to oust him.

Throughout Tuesday’s quarterly earnings name, Rees downplayed any rigidity. There was simply the merest trace of dissonance in his resolution to take all his pay for the following three years in Blue Owl inventory. However no less than he’s staying put.

The shares traded down 2 per cent on the day. Blue Owl’s share value is up a fifth in 2023, although that’s far lower than rivals resembling Ares and titans like Apollo and Blackstone.

Blue Owl now has $150bn in belongings underneath administration. It has acquired an actual property supervisor, Oak Avenue, to guide its third leg and insists the disparate items match collectively. All appendages are propelled by regular administration charges from so-called everlasting capital that readily replenishes. In its most up-to-date quarter, per share payment and money earnings have been up 12 months over 12 months.

Funding corporations dream they will outlast any single or group of personalities and obtain institutional standing. Each high-powered Wall Avenue partnership has to steadiness egos with what is nice for the corporate. It’s now Blue Owl’s flip to attempt to clear up that riddle. The important thing might be to extract synergies from itself, not simply companies it buys out.