Market turbulence cannot hinder expansion efforts Blue Owl(OWL.US) and the Rio Tinto family office channel deepen their focus on the private equity market

According to the latest news from the Zhitong Finance APP, Blue Owl Capital Inc. (OWL.US) is expanding its specialized team dedicated to bringing ultra-high-net-worth individuals into the private equity market. The institution believes that investors will temporarily set aside recent market anxieties and further increase their allocations in this traditionally limited space.

Currently, Blue Owl is working to restore investor confidence in its flagship retail-end funds while actively seeking partnerships with family offices, covering a range of opportunities from large-scale joint investments to pooled investment tools. A year ago, the company hired Blake Shorthouse from KKR (KKR.US) to lead this business strategy, and the team has now expanded to about eight people.

According to insiders, as of the end of last year, only $9 billion of the $307 billion in assets under management at Blue Owl came from wealthy investor institutions. This highlights the New York-based institution’s optimism about the growth potential of this business.

A global survey of 333 family offices released by JPMorgan last month shows that nearly 60% of family offices have yet to allocate funds to private credit assets, with about 30% planning to increase their allocations in the next 12 to 18 months.

In fact, Blue Owl’s expansion into family capital business began before the current $1.8 trillion private credit industry became turbulent. Currently, the market is rife with concerns about valuations, concentration risks, and liquidity issues. Although industry executives are trying to downplay risks and demonstrate that the performance of underlying portfolio companies remains robust, negative sentiment may still hinder fundraising efforts.

However, JPMorgan’s survey indicates that the number of family offices planning to increase their private asset holdings is 2.5 times that of those planning to reduce them. Furthermore, compared to retail investors, ultra-high-net-worth individuals are seen as more willing to allocate funds to less liquid fund products.

“We consider family offices as long-term partners,” said Shorthouse, head of Blue Owl’s family capital business. “Therefore, when delivering investment capabilities, we typically adopt a flexible, solution-oriented service model.”

Recently, Shorthouse’s team has further expanded, including the transfer of Managing Directors Eric Render and Charlotte Shropshire from the institutional capital team, and the recruitment of Ellie Stoneham from BlackRock (BLK.US) in January. The team now has three members in New York, four in London, and one in Hong Kong.

In recent weeks, Blue Owl and several other large private market institutions faced unprecedented redemption requests for some of their semi-liquid products, which have heavily invested in software companies and other sectors impacted by artificial intelligence (AI).

In November of last year, Blue Owl planned to merge two of its private credit funds, a move that could have led to losses for some investors and was ultimately forced to be canceled, triggering severe scrutiny from the market. After another product under the institution suspended quarterly redemptions and initiated asset liquidation to meet investor redemption demands, the company’s stock price further declined.

To alleviate investor concerns about the industry, Blue Owl executives have been vocal in recent weeks. Craig Packer, head of the company’s credit business, has directly communicated with over a dozen large family offices regarding market dynamics, answering questions and conveying the company’s views on current volatility.

“Family offices typically have flexible capital, shorter decision-making cycles, and a long-term investment perspective,” Shorthouse said. “As we have seen, this makes them valuable partners during times of capital formation difficulties and market turbulence.”

The company’s co-CEO Doug Ostrover stated on Thursday that the previously established distribution team for retail and high-net-worth investors may not have adequately communicated the inherent liquidity limitations of private credit products.

“Neither we nor the advisors selling our products have made this point clear enough,” he said at the Asia-Pacific Financial and Innovation Forum in Melbourne.

However, Ostrover also noted that from the perspective of underlying assets, the performance of its portfolio companies remains robust, and default rates have not increased.

“Currently, we see good growth among the companies in our portfolio, with revenue growth of about 8% to 10%, and profits generally maintaining at this level,” he said.