A blue owl sign outside the Seagram Building, 375 Park Avenue, New York City, USA, on Thursday, March 12, 2026.
Michael Nagle | Bloomberg | Getty Images
Saba Capital Management said its tender offer for shares in a non-traded business development company managed by Blue Owl Capital and Starwood Capital was “less than originally expected.”
In early March, hedge fund Saba offered liquidity at a 35% discount to lockup investors in Blue Owl Capital Corporation II (OBDC II), a non-traded private credit fund. Starwood Real Estate Income Trust (SREIT) launched a similar program with discounts of 24% or 29%, depending on share class.
Saba announced on Monday that it was able to acquire approximately $10 million in face value in 190 separate transactions through the auction, “substantially all” from the SREIT. Bidding for Blue Owl stock reportedly failed to yield more than 1% of the asking price.
Investors’ lack of interest in obtaining liquidity at deep discounts comes amid a quarter of increased redemptions in most private credit non-traded BDCs. Blue Owl is one of the poster children of this phenomenon, suspending quarterly redemptions of OBDC II in mid-February, opting instead to regularly return capital through portfolio asset sales. In early April, investors sought to redeem $5.4 billion from two other private credit funds during the first quarter. Like many of its peers, the fund manager capped these requests at 5%.
Following the OBDC II decision, Saba Capital’s Boaz Weinstein told CNBC that the firm saw a market opportunity because “we’re hearing from investors in these funds that they want their money back.” As such, Saba announced on Monday that it is “considering offering bids on a number of additional products, including the Cliffwater Interval Fund and Blue Owl’s OCIC.”
“Saba’s goal is simple: retail investors in these products are entitled to the same access to liquidity that investors in publicly traded BDCs have enjoyed for many years,” Saba said in a statement. “We intend to make consistent and reliable bids in this market.”
The hedge fund announced that following the public activity at SREIT, Starwood Chairman and CEO Barry Sternlicht announced a commitment to inject equity capital to fund investor redemptions. Saba said he “commends” Sternlicht’s decision.
“We believe our entry into this market was a catalyst for that outcome, and all SREIT investors have benefited as a result,” the company said.
Saba said that for OBDC II, with only $332 million remaining in the fund, “the pool of illiquid capital available for bidding was naturally limited.” However, the firm said it expects credit risk to accumulate from 2027 to 2028 and believes “the opportunity for large-scale liquidity provision will expand significantly.”
“Saba believes the question is not if, but when, the sector will experience significant stress,” the company said in a statement on Monday. “Hundreds of billions of dollars of private credit are currently held by retail investors in products with limited or no secondary liquidity. Saba intends to be a consistent source of that liquidity, ensuring that capital can be deployed and ready when the need arises.”
