Blue Owl Capital Co-CEO Marc Lipschultz Talks Market Climate
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Bloomberg Audio Studios. Podcasts, radio, news. Blue Owl Capital co-CEO Mark Lipschultz joins us alongside our very own Shinali Basik. Mark, I look at the shares and it's down today, as I mentioned. They're also down about 22% so far this year. Investors are clearly nervous with all the uncertainty over the economy, over tariffs, over policy. If there's a recession, the concern here is about the exposure that private credit funds have.

How do you prepare investors for the kind of markdowns that you may need to take if we do get that kind of downturn? Great to be here today, and actually great to be here during a time of uncertainty, candidly, because our business at Blue Owl

is built exactly for this environment. Look, I won't pretend to understand how stocks trade on a day-to-day basis, month-to-month basis. I'm thankful in the mornings that I work in the private market where I can focus on making the right long-term decisions for both Blue Owl as a company and for our investors.

Things are going really well. And this is the thing about uncertainty. Our business, all our business, all our lines, all our products were built around downside protection, predictability and stability, private credit, real assets with long term leases with investment grade credit worthy counterparties.

These are businesses that were built for this environment. This is actually where we outperform even more. Now there's a baby in a bathwater for now. In fact, if you look at the alt stocks, they've traded literally as they're tethered together. If you watch what's happened for a year to date, it's just this whole group movement. And I think we all understand that shorthand behavior in the marketplace.

And actually this is exactly where the Blue Owl model, both our investment products, but probably even more importantly, our stock is totally different. We don't have any carry. We have fee income, we have permanent capital. So we actually have a business that is continuing to thrive. You have people coming on here right every day, talking about, hey, they need to withdraw their guidance for the year. We're coming on here saying, business is really good, carry on.

is so strange, right? Because you have the NASDAQ 100 only down about 5% this year, but Blue Owl, Aries, Apollo, all down much more than that. What is it that the market is seeing in the big alternative asset managers that they're not even seeing in the big tech stocks?

Yeah, and I fear the answer might be what is it the market's not seeing. I think they're not understanding the durability and the difference that Blue Owl, for example, is now $275 billion roughly. We're a diversified business and...

But again, still, our business model is actually higher growth and more stable and more predictable than some of the best tech companies. And so I'm not sure, I think there probably is a reality that we're still a small segment of the world

and there's still a tendency in times of fear to sort of like act first and refine later, but those who take the time to focus on the blue all stock are gonna recognize great dividend yield, a very predictable high growth business, again, fee driven.

It's not about carry. It's not about transaction fees. We're marching on. So your second biggest business is real assets, and that includes real estate as well as data centers. Meta says constructing these data centers is costing more. That's what we heard from them from yesterday's earnings. What are you seeing? Yeah, so the data center business is one of our best businesses, highest growth businesses in point of fact.

In fact, we just closed our third data center fund at the $7 billion hard cap, nearly double our prior fund. Think about that in this environment. We just doubled that fund size nearly. It's because it works. In fact, that fund is probably 60% already committed and the vast preponderance of that is to people like Microsoft and Amazon. This is why I say this is a fantastic opportunity set for us.

So, you know, data centers, absolutely, when you have supply, demand, and balances, and right now there is clearly a whole lot more demand than there is available supply, particularly when married to the technical expertise required to build that supply. So we're one of very few people in the world, we have 1,000 people in our operations

operations area to design and then be able to operate the body that surrounds that AI brain. So not only are you seeing data center demand really hold up from the big hyperscalers, you are also financing Stargate's first data center in Abilene. This is that big, fancy, soft bank, open AI, Oracle initiative to bring more activity back to the U.S. Are you

Are you involved in financing any other Stargate projects and what's the promise of the initiative? Well we're very excited about being in this initial partnership with Stargate building their premier project. In fact our team was just down there. It's quite a sight to see the scale of this enterprise.

and the partners, the power of that partnership is really exciting. So look, we're happy to be right at the ground floor and I anticipate and hope we'll be a very important partner to Stargate going forward. Look, when you look at data centers, sort of think of a spot, we tend to be there because we have really one of the premier capabilities to both provide capital

in the form as designed. Stargate is more of a traditional triple net real estate structure. When we think about some of like the Microsoft projects, those are data center. They're a little bit different in terms of the exact gives and takes, but the end state is the same. You end up with an extremely long-term commitment from some of the best credits in the world

at really attractive, from our point of view, rates with built-in escalators. What fixed income security has a coupon that goes up every year for decades? I want to go somewhere else in the credit markets now, kind of back to the business you were first really known for here because there are some really interesting things happening in the market. Some would say some funky things happening in the market.

example, you saw some of your rivals, Apollo and Carlyle, buy the first SRT tied to private debt BDCs. And I wanted to ask you in particular about this, because now you're looking at package loans that are being sold in tranches off to private credit firms again. What's going on here? I mean, this does

call back a little bit to what we saw pre-crisis from the banks, does it not in terms of CDO and CDO squared? Do you think that maybe too much is being packaged at this point? So there, look, it's a funky world right now. So I'm sure there are some funky things going on. Blue Owl,

We stick to our knitting. Our business has been built around doing a few things really, really well. We're not off trying to turn an illiquid acid into a liquid acid. We've talked about that. We're not trying to go and find new ways to buy secondary products. We have a massive origination engine.

We go out and we find great companies with great backers and we provide them long-term solutions and we get paid for that and we get a great credit agreement. And that's what we do in credit. And that's why today we still are running since inception at a 13 basis point annualized realized loss rate. We focus on a core set. And by the way, our average company is $250 million in EBITDA.

Mark, how much are you stepping in now? There is clearly some trouble under the surface. You're seeing companies face restructuring. Is Blue Owl going to step in in a much bigger way as we see more of these come to market?

Yes. We are here. We have a lot of capital. We are a reliable partner for people. And at the end of the day, what we've built is a one-stop-shop solutions provider, whether you're a PE-backed company or another public or private enterprise. So absolutely, we are very front-footed. And thankfully, we don't have current problems that are distracting us. And that's endemic to a lot of alts firms. So we can be very much on our front foot.

All right, Mark, really appreciate you joining us today. Mark Lipschultz is co-CEO of Blue Owl Capital.

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