Blue Owl software exposure fell to 16% from 19% in the first quarter, as the private credit fund moved cautiously around software assets amid uncertainty over artificial intelligence.
Blue Owl Capital Corp Chief Executive Craig Packer told analysts Thursday the reduction happened naturally as borrowers repaid loans.
Packer said the fund would remain cautious in software and may continue reducing exposure as more repayments come in.
Private equity and credit firms had invested heavily in enterprise software companies during and after the COVID-19 pandemic.
Investors have since grown more cautious about valuations assigned to some software assets as AI reshapes the sector.
Blue Owl Technology Finance Corp will continue focusing on software, but its president, Erik Bissonnette, said the threshold for new investments had “never been higher.”
Bissonnette said the fund was becoming more selective and passing on legacy models as it assessed opportunities in a changing AI market.
Blue Owl Capital Corp marked down the value of its assets by 2.7% to $14.41 per share in the first quarter. The fund also cut its dividend to 31 cents per share from 36 cents.
Blue Owl Technology Finance Corp reduced its valuation by 4.8% to $16.49 per share. Executives said volatility in publicly traded loans had pressured fund asset values.
Blue Owl Capital Corp and Blue Owl Technology Finance Corp bought back a combined $85 million of their own stock in the first quarter.
Blue Owl Capital Corp shares were down 2.4% on the day and 7.7% for the year, while Blue Owl Technology Finance Corp shares fell 5.5% on the day and about 23.5% for the year
