Alternative asset manager Blue Owl alights on Canadian wealth space

Firm to offer Canadian accredited investors first-time access to institutional-quality, middle-market lending capabilities

Alternative asset manager Blue Owl alights on Canadian wealth space

Accredited investors in Canada looking for a way to diversify their portfolios will soon have another private debt firm in their corner.

Blue Owl Capital, a leading alternative asset manager that deploys private capital across direct lending, GP solutions, and real estate strategies on behalf of institutional and private wealth clients, has unveiled plans to bring its institutional middle-market lending capabilities to Canadian accredited investors.

“We think Canada is an enormous wealth market, encompassing over $4 trillion dollars in terms of IIROC-licensed investment advisors & family offices in size, yet underserved from an alternative perspective,” Sean Connor, a managing director and president of Blue Owl Securities, told Wealth Professional in an email.

According to Connor, the average allocation to alternatives, specifically private credit, for an investor in Canada amounts to less than 1%. As the case for diversification away from traditional asset classes grows ever stronger, there’s an opportunity for Blue Owl to swoop in and help satisfy that pressing need.

By getting exposure to the U.S. private credit space, Connor said Canadian investors stand to benefit from attractive risk-adjusted returns in the current low-yield environment. That asset class also represents a potential hedge against rising interest rates as it provides increased portfolio diversification with low correlation to public markets.

Blue Owl boasts an AUM of US$82 billion; its plans for Canada would allow accredited investors in the country access to the institutional share class of Owl Rock Core Income Corp (ORCIC), a diversified lending fund that’s managed by a division of Blue Owl. That division, Owl Rock, has an AUM of US$34.6 billion, putting it among the world’s largest credit managers.

“We think size is a distinct advantage in the direct lending space as we are one of the handful of firms able lead or anchor debt financings in the upper end of the US middle-market space,” Connor said.

With over US$2.7 billion in AUM across 92 portfolio companies, ORCIC’s scale is nothing to sneeze at. Investors in the fund can also be reassured by the strong credit performance of Owl Rock, which Connor said has experienced only 5ps of losses across its whole lending business since inception.

“ORCIC co-invests alongside Owl Rock’s existing products, so Canadian investors will get access to the same opportunities as Owl Rock’s institutional clients,” Connor said. “Blue Owl has also built a team on the ground in Canada dedicated to focus on educating financial advisors and clients.”

Connor said the fund is currently available through a local access vehicle for investment in Canada with monthly subscriptions.

“We are extremely excited to bring our direct lending solutions to a new market and offer Canadian investors access to one of the most attractive segments of private markets,” Doug Ostrover, CEO and co-founder of Blue Owl, said in a statement.