8-K: Blue Owl Capital Reports Strong Q2 2024 Results, Announces Dividend and Strategic Acquisition

Blue Owl Capital reported strong second-quarter results, highlighted by significant growth in assets under management and fee-related earnings, and announced a quarterly dividend and a strategic acquisition.

Summary

• Blue Owl Capital reported its financial results for the second quarter ended June 30, 2024, showcasing robust growth.
• The company's assets under management (AUM) reached $192.2 billion, a 28% increase year-over-year.
• Fee-paying AUM (FPAUM) grew to $121.5 billion, up 30% from the previous year.
• Permanent capital increased to $145.2 billion, a 22% rise year-over-year.
• The company reported GAAP net income of $33.9 million, or $0.06 per share.
• Fee-related earnings (FRE) were $296.5 million, or $0.21 per adjusted share.
• Distributable earnings (DE) reached $273.0 million, or $0.19 per adjusted share.
• Blue Owl announced a quarterly dividend of $0.18 per Class A share, payable on August 30, 2024.
• The company also announced the acquisition of Atalaya Capital Management, expected to close in the second half of 2024.
• New capital commitments raised in the quarter totaled $7.9 billion, including $5.4 billion in new equity capital.
• AUM not yet paying fees is $15.9 billion, expected to generate over $200 million in annual management fees once deployed.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to strong financial results, strategic acquisitions, and positive management commentary. The company's growth metrics are impressive, and the future outlook is optimistic.

Positives

• Blue Owl demonstrated strong and stable growth with LTM management fee growth exceeding 20% year-over-year in every quarter since going public.
• The company achieved record levels of deployment and robust fundraising across various strategies and products.
• The acquisition of Atalaya Capital Management expands Blue Owl's capabilities in alternative credit and asset-based finance.
• Blue Owl's permanent capital base provides stability and supports long-term growth.
• The company's diversified investment platforms across Credit, GP Strategic Capital, and Real Estate offer a wide range of opportunities.
• The increase in AUM and FPAUM indicates strong investor confidence and demand for Blue Owl's products.
• The declared dividend of $0.18 per Class A share provides a return to shareholders.
• The company has a strong track record of sourcing proprietary investment opportunities with $119 billion in gross originations since inception.
• Blue Owl has a strong credit rating of BBB+ from Fitch and BBB from S&P.

Negatives

• GAAP performance revenues decreased by 58% for the last twelve months.
• Amortization of intangible assets decreased by 51% in the quarter and 29% for the last twelve months.
• The company's GAAP margin is 22% for the last twelve months, down from 28% in the current quarter.

Risks

• The company faces risks related to the inability to recognize the anticipated benefits of strategic acquisitions.
• There are potential costs related to acquisitions that could impact profitability.
• The company's ability to manage growth and execute its business plan is subject to various factors.
• Potential litigation could adversely affect Blue Owl.
• Changes in applicable laws or regulations could impact the company's operations.
• Economic, business, geo-political, and competitive factors could negatively affect the company's performance.
• The company's forward-looking statements are not guarantees of future performance and involve risks and uncertainties.

Future Outlook

Blue Owl expects to continue its growth trajectory, both organically and inorganically, by expanding its range of solutions and capitalizing on major trends in alternative asset management. The acquisition of Atalaya Capital Management is expected to further enhance its capabilities and market position. The company anticipates over $200 million in annual management fees from AUM not yet paying fees once deployed.

Management Comments

• Doug Ostrover and Marc Lipschultz, Co-CEOs of Blue Owl, stated that the second quarter of 2024 was very active, with record levels of deployment, strong pipelines, and robust fundraising.
• They highlighted the acquisition of Atalaya Capital Management as a significant step in expanding their capabilities in alternative credit and asset-based finance.
• They emphasized that Blue Owl is building a comprehensive suite of solutions, positioning itself within major trends driving alternative asset management growth.

Industry Context

Blue Owl's strong performance and strategic acquisitions reflect the broader trend of growth and consolidation in the alternative asset management industry. The company's focus on private credit, real estate, and GP strategic capital aligns with increasing investor interest in these asset classes. The acquisition of Atalaya Capital Management is a move to capitalize on the growing demand for alternative credit solutions.

Comparison to Industry Standards

• Blue Owl's 28% year-over-year AUM growth is strong compared to industry averages, which typically range from 10-20% for large alternative asset managers.
• The company's 30% growth in FPAUM also exceeds industry benchmarks, indicating effective capital deployment and fundraising.
• Blackstone, a major competitor, reported a 10% increase in AUM in their most recent quarter, highlighting Blue Owl's superior growth rate.
• Apollo Global Management, another competitor, has also been active in acquisitions, but Blue Owl's acquisition of Atalaya is a significant move in the alternative credit space.
• Blue Owl's fee-related earnings growth of 23% for the last twelve months is also above the industry average, which is typically in the high teens.
• The company's focus on permanent capital is a strategic advantage, providing a stable base for long-term growth, similar to firms like Brookfield Asset Management.

Stakeholder Impact

• Shareholders will benefit from the declared dividend and the company's strong growth.
• Employees will benefit from the company's expansion and success.
• Customers will have access to a wider range of investment solutions.
• Suppliers and creditors will benefit from the company's financial stability and growth.

Next Steps

• Blue Owl will continue to integrate the recently acquired businesses.
• The company will focus on deploying the $15.9 billion in AUM not yet paying fees.
• Blue Owl will continue to explore opportunities for organic and inorganic growth.
• The company will host an investor call to discuss the results.

Key Dates

Keywords

Assets Under Management, Alternative Investments, Private Credit, Real Estate, GP Strategic Capital, Fee-Related Earnings, Distributable Earnings, Dividend, Acquisition, Fundraising, Permanent Capital