BLUE OWL CAPITAL INC. Q4 FY2024 earnings call

• Capped off a successful 2024 with record fundraising: $27.5B equity raised in 2024 (75% higher than 2023), over $47B including debt.
• Deployed $52B gross and $16.6B net in credit in 2024, driving 26% FRE growth.
• Focus on innovation in asset classes like direct lending, GP stakes, net lease. Made strategic acquisitions in alternative credit and digital infrastructure.
• Diversification in investment capabilities, sources of capital, and geographic footprint.
• Scale: Ended 2024 with $0.25T AUM, pro forma IPI acquisition gives $265B AUM. Closed merger of OBDC and OBDE, working on OTF merger.
• Strong fourth quarter fundraising: $9.5B equity raised, $18B including debt; private wealth raised ~$4B, institutional raised $5.6B.

In credit, the fourth quarter saw $4.3 billion raised, with $3.1 billion in direct lending strategies. For the year, credit raised $13.9 billion, including $7.3 billion in dedicated wealth products. GP Strategic Capital raised $3.2 billion in the fourth quarter, with the large cap strategy reaching $7 billion raised to date. The mid-cap strategy had a second close, raising $1 billion. Real Assets raised $1.9 billion in the fourth quarter, with $4.9 billion raised for the year. Credit deployment in 2024 was robust with $52 billion gross and $16.6 billion net, showing 26% FRE growth. GP stakes saw partner managers' AUM increase by ~11%, and performance across funds had strong net IRRs (22% for Fund III, 39% for Fund IV, 19% for Fund V). Real Assets deployed over $7.5 billion in net lease, with over 75% committed and a pipeline of $34 billion in transaction volume under letter of intent.

• Dividend for 2025 is $0.90 per share, up 25% from prior year.
• Expect FRE growth in the mid- to upper 20s percent for 2025.
• Fundraising in 2025 expected to be back-ended.
• Incremental $135M management fees anticipated from the listing of the merged software lending BDC.

• Market volatility, including inflationary periods, geopolitical events, rate volatility.
• Slowdown in capital markets could impact fundraising and deployment.
• Competition in the alternatives industry may affect market share.

Q: Glenn Schorr asked about gross to net deployment.

A: Marc responded that gross to net has positive aspects like credit enhancement and power of incumbency, not reflecting a market dynamic change but contextually relevant.

Q: Craig Siegenthaler asked about 2025 fundraising outlook.

A: Marc and Alan stated they are bullish on 2025 fundraising, expecting a meaningful increase from 2024 levels.

Q: Steven Chubak asked about OpEx growth.

A: Alan responded that G&A was up due to factors like mergers and wealth distribution, but FRE margin guidance for 2025 is 57%-58%.

Q: Brian McKenna asked about BDCs.

A: Alan stated the OTF merger is on track to close in early 2Q, with a listing shortly after, and incremental $135M management fees from the software lending BDC.

Q: Brennan Hawken asked about Real Assets and FRE guidance.

A: Alan said IPI acquisition is fully reflected in AUM and fee rates, and FRE growth guidance for 2025 remains mid- to upper 20s percent.

Q: Alexander Blostein asked about M&A pipelines and spreads.

A: Marc said M&A pipeline is showing more activity, spreads are relatively stable, with a steady risk-return profile.

Q: Patrick Davitt asked about alternative credit products.

A: Marc stated Blue Owl has a strong position in alternative credit, expecting to be a key leader, with a good track record and reception.

Q: Crispin Love asked about data centers.

A: Marc said data centers are a strong strategy, with IPI as a pioneer, and AI adoption trends are positive for the strategy.

Q: Michael Brown asked about credit results.

A: Alan said there were strong management fee increases across credit, with contributions from AUM not yet earning fees and Atalaya.

Q: Alex Bernstein asked about gross to net delta.

A: Marc explained that refinancing is due to healthy companies redoing cap stacks, not due to BSL market dynamics, with a healthy portfolio dynamic.

Q: Bradley Hayes asked about deployment cadence.

A: Alan said over $300M in management fees from AUM not yet paying fees can be deployed within about a year.