Blue Owl affirms $13bn target for latest GP stakes fund

Blue Owl Capital disclosed the target it set for a sixth flagship GP stakes offering in the firm’s first-quarter earnings call.

“In the fundraise for GP Stakes VI, we continue to get a lot of interest in that product and we expect fundraising to go very well there. We expect to hit our $13 billion target,” CFO Alan Kirshenbaum said in response to a question.

Kirshenbaum’s comments confirm earlier reports from various media outlets.

With a $13 billion target, Blue Owl GP Stakes VI is slated to bring in roughly the same amount raised by its predecessor, closed in 2022 at $12.9 billion. Blue Owl GP Stakes V is the largest GP stakes pool on record.

The new vehicle has already secured $2.1 billion in an initial close held in the final months of 2023, Blue Owl reported in its year-end earnings call. In addition, more than $400 million of side-car co-investment capital was raised, increasing the total to about $2.5 billion.

Blue Owl’s $55.8 billion GP strategic capital platform, headed by co-president Michael Rees, makes long-dated minority equity investments in North American and European private capital managers at the upper end of the size spectrum. Targets are typically among the top 200 GPs.

Managers backed by the flagship strategy “continue to benefit from two meaningful secular trends: growing allocations to alternatives and GP consolidation,” co-CEO Marc Lipschultz said in the earnings call. Collectively, portfolio firms oversee nearly $1.8 trillion, he said.

Advantage Fund’s first close

Earlier this year, Blue Owl signaled a major expansion in its GP stakes approach. It announced a partnership with Lunate, backed by Abu Dhabi sovereign wealth fund ADQ, to acquire minority equity interests in mid-sized private capital managers. Targets will have assets managed of less than $10 billion.

The mid-cap offering, called Advantage Fund, held an initial close of about $600 million in the first quarter, Kirshenbaum said in the earnings call. Of the total, $500 million was seed capital provided by Lunate, sources told Buyouts.

Advantage Fund’s target is not known, though Bloomberg reported Blue Owl is seeking $2.5 billion.

Mid-market firms are a key source of new opportunity for GP stakes funds. The space is viewed as underserved, with more sellers than buyers. Recently, a crop of specialty funds emerged to fill this gap, among them Bonaccord Capital Partners, Hunter Point Capital, Investcorp Strategic Capital Group and RidgeLake Partners.

Another is Azimut Alternative Capital Partners, which is looking to raise $1 billion for a debut mid-cap GP stakes vehicle, Private Equity International reported.

Blue Owl will now compete directly with these and other funds. Along with capital, it will bring to mid-market managers a substantial business services platform that helps them meet a range of developmental goals and adopt best practices.

Blue Owl GP Stakes V was earning a 34.1 percent gross IRR as of March, according to first-quarter documents, while GP Stakes IV was earning a 64.9 percent gross IRR.