8-K: Blue Owl Capital Reports Strong First Quarter Growth, Announces Dividend Increase

Blue Owl Capital reported a strong first quarter with a 21% increase in assets under management and a 29% increase in the annual dividend.

Summary

• Blue Owl Capital Inc. announced its financial results for the first quarter of 2024, demonstrating strong growth and stability.
• The company's assets under management (AUM) reached $174.3 billion, a 21% increase year-over-year.
• Fee-paying AUM (FPAUM) grew to $105.4 billion, up 15% from the previous year.
• Blue Owl reported Fee-Related Earnings (FRE) of $289.7 million, or $0.20 per adjusted share, and Distributable Earnings of $240.1 million, or $0.17 per adjusted share.
• The company declared a quarterly dividend of $0.18 per Class A share, and announced an annual dividend of $0.72 per Class A share for 2024, a 29% increase from 2023.
• Blue Owl also announced the acquisitions of Kuvare Asset Management and Prima Capital Advisors, expected to close in the second or third quarter of 2024.
• The company issued $750 million in 10-year unsecured debt with a 6.250% coupon in April 2024.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong growth in AUM, fee-related earnings, and the dividend increase. The acquisitions and debt issuance are also viewed positively, indicating strategic expansion and financial stability. However, the decrease in performance revenues and increase in amortization of intangible assets temper the overall sentiment slightly.

Positives

• Blue Owl achieved its 12th consecutive quarter of higher management fees.
• The company demonstrated predictability and stability in its business model.
• There is significant investor interest in Blue Owl's strategies across both Institutional and Private Wealth investors.
• The company is expanding its investment solutions with the acquisitions of Kuvare Asset Management and Prima Capital Advisors.
• Blue Owl has a strong permanent capital base of $138.1 billion, up 21% since March 31, 2023.
• AUM not yet paying fees is $16.8 billion, expected to generate over $240 million in annual management fees once deployed.
• The company raised $9.6 billion in new capital commitments during the quarter.
• The company's credit platform saw a 27% increase in AUM since March 31, 2023.
• The company's real estate platform saw a 15% increase in AUM since March 31, 2023.

Negatives

• Performance revenues decreased by 59% for the last twelve months compared to the prior year.
• Amortization of intangible assets increased by 7% for the last twelve months compared to the prior year.
• The company's GAAP net income attributable to Class A shares was $71.1 million for the last twelve months, which is relatively low compared to the company's AUM.

Risks

• The company faces risks related to the inability to recognize the anticipated benefits of strategic acquisitions.
• There are potential costs related to acquisitions.
• The company could face the inability to maintain the listing of its shares on the New York Stock Exchange.
• Blue Owl faces risks related to its ability to manage growth and execute its business plan.
• Potential litigation involving Blue Owl is a risk.
• Changes in applicable laws or regulations could adversely affect the company.
• The company may be affected by other economic, business, geo-political and competitive factors.

Future Outlook

The company expects to close the acquisitions of Kuvare Asset Management and Prima Capital Advisors in the second or third quarter of 2024 and anticipates continued growth in its existing businesses.

Management Comments

• Doug Ostrover and Marc Lipschultz, Co-CEOs of Blue Owl, stated that the company had another strong quarter of growth, with its 12th consecutive quarter of higher management fees.
• They also highlighted the predictability and stability of the business model and the significant investor interest in their strategies.
• The Co-CEOs mentioned the expansion of their investment solutions through recent acquisitions.

Industry Context

Blue Owl's focus on alternative investments, particularly private credit and real estate, aligns with the broader industry trend of investors seeking higher yields and diversification outside of traditional asset classes. The acquisitions of Kuvare and Prima also reflect a trend of asset managers expanding into insurance asset management and real estate credit.

Comparison to Industry Standards

• Blue Owl's 21% AUM growth year-over-year is strong compared to industry averages, which typically range from 5-15% for established asset managers.
• Blackstone, a major competitor in the alternative asset space, reported a 7% increase in AUM year-over-year in their most recent quarter, indicating Blue Owl's growth is outpacing some of its peers.
• Apollo Global Management, another competitor, reported a 15% increase in AUM year-over-year, suggesting Blue Owl is performing well in comparison.
• The 29% increase in the annual dividend is also notable, as many asset managers are facing pressure to maintain or slightly increase dividends, not significantly increase them.
• Blue Owl's focus on permanent capital is a strategic advantage, as it provides a stable base for management fees, similar to Brookfield Asset Management's strategy of focusing on long-term capital.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and potential for future growth.
• Employees may benefit from the company's expansion and financial success.
• Customers (investors) will have access to a broader range of investment solutions.
• Suppliers and creditors may see increased business opportunities with the company's growth.

Next Steps

• The company will host an investor call on May 2, 2024, to discuss the financial results.
• The acquisitions of Kuvare Asset Management and Prima Capital Advisors are expected to close in the second or third quarter of 2024.
• The company will continue to deploy capital and grow its AUM across its three platforms.

Key Dates

Keywords

asset management, alternative investments, private credit, real estate, GP strategic capital, AUM, fee-related earnings, distributable earnings, dividend, acquisitions