Blue Owl Capital (OWL) 31 Oct 242024 Q3 Earnings call transcript

Good morning, and welcome to Blue Owl Capital's Third Quarter 2024 Earnings Call. [Operator Instructions] I'd like to advise all parties that this conference call is being recorded. I will now turn the call over to Ann Dai, Head of Investor Relations for Blue Owl.

Thanks, operator, and good morning to everyone.

Joining me today are Marc Lipschultz, our Co-Chief Executive Officer; and Alan Kirshenbaum, our Chief Financial Officer. I'd like to remind our listeners that remarks made during the call may contain forward-looking statements which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Blue materially a in those Commission. number time time differ a statements described may with to of filings result of in results from and forward-looking those as from the Actual Securities Capital's Exchange Owl factors, including company update forward-looking obligation statements. to no assumes The any at of We'd of refer available note offer figures third $X.XX DE and distributable our non-GAAP in offer solicitation bluealll.com. Please earnings financial a remind earnings, of an presentation of measures our reconciled on or this issued Owl we'll to an also per share are $X.XX GAAP that the the the for fee-related to an section of quarter Shareholders interest Blue in on FRE or any results website like everyone we earnings XXXX on purchase constitutes nothing to share. call, which that our morning, per fund. This call sell to recording to or

per third a of November dividend We XX on XX. record as for holders quarter, share of also to November payable of declared $X.XX the

referring call the the be morning. posted to website we'll today, we earnings presentation, to our During which this

So follow I'd to Marc. along. With the hand on like to please call that, over that turn have to

Great. you much, Thank Ann. so

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Okay.

few thoughts. Let's wrap up closing with a

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about ones want X of call to but factors, the out. As specific we a think dividend, we variety there incorporating are we are

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this to we of that, believe about, of I'd management metrics alternative the in industry FRE. With we Operator, FRE all we open that everyone call has talk the continue All the line put can management together, revenues and for the to growth we fees, lead who can today. on continue thank questions? asset joined to key like us please

comes question Your of first the with Instructions] [Operator from Blostein line Alex Goldman Sachs.

with originally, us probably payout point But still earnings you that dividend in where of line knowing point? are dividend a what per for guys there. starting in will just to So line dividend the in from, maybe philosophically, assume you how about Kind of guys this color of whole Is how beyond it said earnings, now. total thinking you come ] won't originally, time? give last lot I appreciate you do off just $X.XX obviously line where with the with FRE, dividend said your over grow structure [ about with have total in XXXX you that the you fair the share? payout think in

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from Craig the Siegenthaler question Your of America. line next with of comes Bank

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the Your line Schorr Glenn comes with next question ISI. from of Evercore

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Glenn. you, Thank

of JMP. comes line question from the Brian Mckenna next with Your Citizens

your lending on So direct business. I had question core a

BDC. of through AUM wealth channel well. majority obviously, And the through raised the You've you're raising your private today as

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continues it We've on Yes. wealth, -- all which Look, just wealth engine. wealth commented our record be had in theme, course, Institutional, of again, it well, in you our continued as remains correctly to for obviously across fact, central an a to products. our aggregate us alike, incredible for in investors. we've quarter and

lending and low We product within and continue platforms redemptions. very strong for direct our interest to develop across very platforms

definition billion a credit, vehicles that in basis point. spectacular relevant GP loan done we've what have structure originations we have to deliver on-ramp to results. we've never remember, make any for are sure [ So the exact that investors. What we BDC do look, delivered and healthy either in a in develop, Look, Remember, yields growth participate or of it X is and best as on-ramp have that strategy ] on define of continued is their vehicles. the we our total, wants the [ $XXX a results far want impediment between prospect LP share build wanted to rate has we private one to depending fewer absolutely be do to really, so really sort a and that's good want the running and the ] in we to to a every any loan we option your of is the regard funds, to place. With the the What and we point for had investor loss to the we want how and of do.

in should any experience to program our to best-of-breed to individuals the be that's our in important alike. investor And important results. and us an is investors, really institutions really on-ramp So going and

happy if it So can with be to a want do private people some clearly then cases. you come that. we're GP said, us We've either do BDCs as We become through public can done very it, structure, that BDCs. private to to bespoke LP or for

innovate best to way in is access suited investor. build to the develop, to continue the ramps we'll that So on

the think just more given us where some or I expect But innovative depending LP choices. things again, traditional continuously there's you centers, or to the any think like can, those probably options seen, that's with can putting I We're new in we are to like evolved structures some of about all continue product. fund now great. offered happy alternative if direct think top look the add funds, has mix lending, credit GP those we've to at structures. hyperscale pretty the products of capital people So either market you the into data on on into that areas

all them where develop structure So again, all are access we continue we're meet prefer. to them them drive trying all, not and investors the to they try to provide because our them we'll into

Brian, that have, on some institutional side, also take we evergreen the every structures And will dollars quarter. fundraising continuously in

UBS. the question from comes Brennan with line next Your Hawken of

follow up to on hoping was dividend I the discussion.

clear So about still when can I $XX million are my quarter guys changing wasn't $X.XX, Part have up Is what translate payout last one, like think updated about a that but you still to we're be the to points ratio you to to approach me to remind basis payout not XXX%. us, ratio, about or from you notes, that's you fees. references XXX whether made to number to annual and X right And of $XX it? versus have way it million crystal of thinking the couple the --

those? either there So is in shift of any

XXXX. former going ultimately SOFR Sure. Thanks, Brennan. where The part the for to depend on curve ends up is

think basis was XXX have points So move million. XXX growing to a about business about BDC $XX-plus way the the we is points think right? I basis the we XXXX, using were in in platform,

that we continue again, For XXXX, $XX-plus you [ we, million should ] as look platform. at grow that because to

flex on So ratio. where that depending up, ends SOFR curve payout our will ultimately the

to question, rates again, rates then deploy the then ratio payout necessarily capital where have an curve this lower, the dividend be in be ratio just higher. a question. higher, We'll a strategic is payout may, we'll initiatives. will if more earnings lower come not So in come If currently sitting, have in

how night, oof. And Okay. about man, game that last

of that bit Yes, York -- ], for breaker. a [ was New a hard

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on. shares. of Yes, unfortunately, has changed the management again, the by owns that's how outstanding the exactly focus way -- of own, team XX% we nothing we right. And And

prepared changed I not earnings as out paying So focused may the has remarks, bulk on, dividends. very That the our in in have said of we are at all.

line Research. comes Chubak Your Wolfe from of Steven next the with question

on a to a as sneak the over on firm's the several today years, FRE the So of the to X 'XX you we've the goals. Day few Taking increased been the the channel the on get bread peak of ahead I meet FRE a you're start exception scale that forward sense thinking with journey laid map just next Day? dividend at the step you're back, as call, how reflecting over question wanted algorithm. to greater algorithm various verticals, the off breadth. Investor exclude road to there's to more about the what or growth on out a and many these on with whether of Investor targets lot of focus February you're platform, hearing target, the through any or can Fast offer track industry growth of crumbs you thinking growth wanted years, past

think in lot that. me I can details we forward Let about for and obviously, Alan talk look into the positioning a of And that. fill get then come February X, to bit. a Look, we'll

of a trying have a been chapter sure what monumentally convey has look, to think in the set for is, to successful. we're we next also And lot the stage make the monumentally successful very have I we conviction, table now be chapter. we transparent this fashion

from the a model. our come we're our permanent with growth capital XX% revenues, revenues We still, will business our continue superior of Remember, our view, highest today, to all in outperform because in the of positioned areas and fees. industry

model. few And or ahead the here pause on in you the mean, as intend that And we're continue to carry X years, years. coming on said, led that up predictability I the how the are quarter. We on marching people's to have XXth of to, like. last and we just revisions numbers in other journey. nearly with I'm there been -- many turbulence not looking has consecutive -- durability we and back I multiple every through measure Just are of now, and last years here say, think and would about that And our

just numbers spectacular Now I recent real already should [ fund estate ] our only say, as XX% real that deployed, that's into terms. exact a And to have our in most we'll the you year heard at committed, But old. opportunities get it's We're forward. with or continue products done great mind estate. going organic been you, existing

current of one at distinct in estate, to and how centers, our have acquired centers industries, it's assets, the for million triple estate, IPI. quarter simultaneously, all rather with But but And corporate really synergistic we like deal estate average market $XXX funds, add cap million real AA. X% like and data last something rate it's word and net with over give enormous lease we to real in million properties extension of corporate partner. it's over lease over and far. that we happen say, don't an X.X% investment-grade my mean mean for will are manage are not commitments net ad now want the lease cap already their dedicated to a hyperscale credit a with with data the to organic do real like rating their again, business, across to of $XXX level go X% and I flavor, In how when This just has data only partner hyperscale added and trusted the cap over do to investors is repeat net look $XXX what we rate at the And you credits. we triple then in all of creating growth. I it one right? We the calls centers a at rate. exact I sovereign you choice a counterparties sold a actually so strong and -- another of earnings engine of leaders we over, I to it, nauseam users add for funds unique, our the digress

continue maybe and stage next make well. rhymes we but we're think that what prologue repeat, make it need at organically we doesn't think give what for future. streams least pretty run to new appreciate us I create the history chapter doing is past future, product the So to will going setting and is the the And we both these to the

more speaking, I'll numbers. that, add I'll just Look, can with Steven. XX% be specific So growth. see FRE XXXX, to LTM, you for generally

percent For think mid-XXs growth. should XXXX, I FRE expect you

I XXXX. think I first growth with FRE I I think the for you think, for XXXX, could mentioned earlier, question, mid-XX% expect

I've and talk But think the Beyond the years that, lot We'll repeat ] or course. stay a in in past, exceed. industry can of growth. that more [ what believe we to of meet next tuned, lead we We February on number we X. continue can will about said I

debacle sorry ]. about Yes, [ the last night,

clear, be look for very our happy all We To shareholders. our out LA-based for we're stakeholders.

were [ a York little ] New mourning [indiscernible].

Your Piper with next the of Sandler. comes Crispin question line Love from

your With could that rates, lower Part fees, But rates just needs base on can I you net lower And to question about activity way crystal all you're PE activity, little account just thoughts whether is X you the you of when there you fundraising we that? offsets there math thinking here, but known, mentioning? some said can of into with and that impacts to be pick up take that [ any else understand some ball or And all discuss discussed is there. in broadly. bit the a a do deal curious it's come how anything which share ] well worth

dividend, when volatility? beginning. going to the about the XXXX, se think until of particularly know not couple it's we're answer think but in end Because stage. about of the made we going to XXXX impacts, comments we're be And look, what net today the the per the the of taking given on the the the impacts setting we set to not set adverse call, When could view we to a Absolutely. rather a observations dividend

but in, build And the terms cases for be to low silly, the most those and be, our instance, say, we going to in the possible guess, going naturally yes, setting but not there variable are are don't would low I we so to dividend. to like every factor And want offsets, potential whatever we not rates case have in the I'm to of mean to take speak, around case. I might trying logically, so we're expectations or,

inescapable in Listen, offsets. what are timing I'll and have the not of when come in there at the it and but rates all, -- factored a So increase here we material unknown down call activity. is

the get the that's of it's green equity talking all shoots. the there's $X capital remember, we've sidelines. Now And still heard of -- green for quarters, on shoots, good And trillion private know about sitting to how everyone invested. I many

quarter, it of hope lot we do is starting because which the I today of about didn't ] think not material them first say material prove reasons we a coming, never a [ it there's snapback. [ You know a evidence objectively. still likely snapback, in will heard but hypothesize ], be and us Oh see don't strategy. there a there's it you can't probably I

deployed to to our from they're So material activity. I drives think forward lot in of a environment that for at [ interest lead calculation We the where environment of end us. that. They're rate That origination absolutely a perspective, funds of just activity for And occurring. or us, when places in reloading the are ] activity eventually the offsets. there's capital the look day, there a obviously, stabilizing investment just attractive there's remember, and demand And moderating a should people of us. activity. see and matters pickup for the part And is lot will there's

So landing make comfortable about again, have we're to so trying the today, positive be negative logically cases. trying relatively yes, offsets, spot, are moderated rate come environment. a cases play there than here rather, decidedly to will number, exact but sitting are a sure But into in which speaking more suspect not assuming we we prescriptive

business, to ran growing that you numbers the through strokes. narrow fees, entire to I impact that to talk approach we BDC a our when broad if think I'll have, I I from it's Crispin, okay. X Part so kind about perspectives, that just business. think When Net across some question, impact of And again, extent, X net you

combined. equity We're we in OCIC that of year we're to So continuously OTIC billion $X take a and billion funds. in $X raising at running

up deployment. lending continuing to too. and deploy And We're fundraising X go software BDC, of Part so our fees also will because

for they'll come that so rates. up reason. We go they'll for And suspect down

as think can the down think I a number that year, rate. listing be. XXXX to a that's as little, I will, we lending on a But about can forecast, a step-up. that think of putting so fees as diving of as you a And XQ where use create X BDCs, to base I Part that, on rate And a go our add would though, of maybe for could software you through little, that then you kind kind a run you think use good ballpark off if but platform, a maybe up case aside, potential

question comes with from Research. next Your the Patrick Autologous Davitt of line

gross closed Kuvare added You in I lot few the billion mentioned over last $X of XQ. flow months. acquisitions of a

idea be about, an flow in the layering all all deals XQ of is the thinking the us give $X contribution could of well? from was run XQ? what deals what to of as you billion could and look Atalaya with rate like the Secondly, the scale X from broadly quarterly in right more on of So Kuvare kind

I'll Patrick. this. you, Thank Sure. take

quarter our So products we in mentioned XX% remarks quarter. ago. were fund not year to was that able this this here from of a have I my raise may Over were prepared that raise

strip the estate real insurance little of includes bit bit a of It includes estate includes real little Stakes solutions. It credit. GP that alternative Europe. So a sale, credit, X some

products in a So there. of got number we've

a to going I basis, sharp obviously any rates. But approaching think, on -- billion a $X generally pending depend rates. speaking, on again, think go-forward almost is billion in benchmark I the use good $X it's to or moves

And is that quarterly, in sense Atalaya mix? it's what run at now the like of there a could

couple of over months there. next happening we see let's Atalaya, think things have the I a XX because

we of in ASOPX a next a be half will ], to product. the flagship first have our is of with that And [ which the product us. expect be of raise and the We then wealth-focused offered product. continuously next for out And first year part year

episodic start fundraising And overlaying flagship have then to each the more raise. hopefully And you so see there we'll ramp and grow quarter. that,

we're to really question you're getting ways to what more and layers because add mean, cake more I our those it's is layers. at Yes. adding great layer a

Blue come take And on credit. about we wealth with maybe just are is X, cross-sell. IX, together the new and now bringing in obviously, this for the people. IX Owl, that that which Atalaya, And There It's capabilities cross-sell part an a Owl, is many Italy business of has some question of opportunity, this tremendous. But there XI distribution Blue of And earlier not not. We'll Fund so to a us. for Owl the is in as existing with. great on was the Blue -- opportunity topic the continue. Again, new they're Fund example. institutions, of let's of world Atalaya alternative capabilities the them/now does

So it. to this another slice your ]. [ I us set in one putting these think you're way of assets Each finger on ongoing growth for adds opportunity

You in our phrased it, ultimately into converted focus revenues is. where, FRE obviously,

X now, from now, now, can acquisitions what -- from innovation really we're may are product triple here. Marc was the Street business. akin years really lease with mentioned years term on or where we that prepared Oak from net similar about in short the very thing course, these remarks years one And did X businesses These focused of have we to take our and we're doing X

comes Bill TD Katz Your with of from line next Cowen. question the

the going to FRE wondering if impact key drivers. of NCI. behind this just we I XX% if unpack So do. the was math have right, just margin they're to I'm out could some go of very rates a coming if a can some quarter about unpack appreciate I inclusive to loose do will, to of and you just back that's penciling guidance, numbers, of some the still what you and of

versus than a top rather line more growth understand you of margins? multi-vectored little transactions, I of there opportunity better the to of focus broader mix sort the margin you're of takeaway will, this trying investment transition And of line across here bit I'm is X at the on just top 'XX I appreciate spending areas. grow 'XX versus and to into if looking more beyond could the Part expense be the think that just sort fees. pro the forma the

Thanks. the Bill. for question. thanks Look, course, Of

year start XX% similar ballpark. place this as year. guidance guess current focus So for let's and in with The below XX%, given quarter. slightly year, the previously it I margins on Margins this is that I'll for the we've will be

way XXXX, guidance has XX% there changed nothing the ballpark. by XX%, in of For

a XX%. I want margins. do Over we to term, longer clear, on path focused the we see be to are

accretive focused also on earnings growth. on We're are acquisitions. focused We

do so more come if along, margin we And will deals, lower Atalayas them. accretive

of February focused And a of overall very overall. earnings on we're very earnings I give a outlined X. taste what are we But so focused And growth. to on part I guess, growth think that's bit, we've little

ahead. go Sorry,

interrupted I I'm sorry, you.

XX%, thinking clarify, that NCI? about is just XX%, I'm to apples-to-apples, to Just that gross sure of want make

That's It is gross NCI. right. of

XX%, this the roughly change NCI So be XX% for and XXXX. the year, then quarter's XX% and of gross growth of ballpark in for will same NCI

helpful. Super

Sorry to you, interrupt Marc.

DE that, is we're ] single continue but mapped the been to to at we making, shareholders. for kinds growth, we're us which, was I the those have to you answer last our have XX%. our clarify our we've a and drive have, appreciate our we've hey, -- have since answer all market public, a which for, we we again, you not are clear what the went our over setting the the step that public, just lead make fees [ decisions for to decisions management come outstanding since job the that made compounded best to crystal is and going And sure what's take growth -- steadily quarter, shareholders, stage back, to of deliver of we given on bulk the if look,

our FRE XX% about revenues just at XX%. at XX% and FRE Our and our is dividend

and our develop sure those So that, is think that numerically short-term sort we'll we're -- of at yield excessive trade-offs make and results. you're good sort job pieces trajectory I on do, really is it moments what choose but I to always we this that feel trajectory. to moments, don't think in in mean of onward. that I make continue, counting kind us getting the investments exceptional will to And in to decisions we're And long-term making to and of this place

we be leader job take market care to metrics. Our a continue sure on all of make of is all to that those and

of Your Bedell line from next question Bank. the with comes Brian Deutsche

right back. PE that of one you there you Maybe of sort gave us questions some answered. my fourth guess, million on deployment. Maybe just on I [ in viewing that and just about Most more or initially coming were is of XQ? not as fees that be that will on up? to softer Do quarter ] Any -- potentially are deployment. update, view talked you and like it asked color timing just think -- going back you about it of upon the would and here that that $XXX Marc, sounds the correct? spike into market Or what the might be activated whether

And environment quarters really of mean, a at been quarter. deployment very good. take We quarter environment look where Yes, wide kind has our tepid open. we're this from just the last I market in is and that year, levels. record quarter this or had if a strongest M&A of is syndicated PE exceptional top XXXX. at is tracking really one you M&A on about a

setting we in activity we're or get set of for picking not our and and opportunity a collectively ] we is it pretty have from stage if setting looking you're I read-through, private would market, meaningful Once for an up, the the take an this if. So I actually when, about get -- we and be to frankly, healthy the demand [ moderation the market quarter any mean, extraordinarily upticks. the state solutions. Once syndicated -- again, at the

So high the markets. least PE inactive and year, would it's what for deployment. volume it's in already of syndicated environment Active consider relatively you probably looking market, favorable high, this

happen. bullish you sure we're to trying know view, we're to set a future will So that it And we I deployment. different just a the but take and I fee-paying work about the goes to to I what going realization rapidly the make business. managed the in on. for we just I wouldn't We've growth I wasn't characterize as -- more it's But when come, opportunities will that. And more rapidly, any it's carry to not grow volatile offset, ] right? think quarter math. We're really that talk that down top assets folks converts PE in earnings -- that our switches fees got tell are by view I trying [ in into the the We're in and more our on an offsets and the and opportunities. Again, about very we rapidly targets, that business. conservative revenues to sooner, business or sober the the be clear, and can't I march and to Again, terms go not -- had, of measure,

beat we'll So up march PE with activity, faster. when to picks the drummer

with Your next question from Goldman Blostein comes the Sachs. Alex of line

it's share, per inclusive net is not [ not included I I Just XXXX. for to FRE talk know. IPI couple is of number, all-in That kind the around. clarify, a pending Alan, clarify. that? within you so like That's to just just guidance FRE -- that about right? want of questions an NCI, dollar don't and we is ], got a of mid-XXs When target of

a It's amount. said, that's right. first the dollar you thing It's

the deal, all Right. IPI? And including in,

Yes.

call closing remarks. will Marc the turn I over for back to now Lipschultz

XXth delivered the Well, thank the excited appreciate quarter of growth. -- and consecutive to thoughtful time really have we We're our you, everybody. Look, engagement. we're

back to look few deliver years last are delivered. the of We and excited over kind we've performance the

to we'll in on which we about We're talk We next about February several us. excited to to Times years, excited detail support are look the Halloween. appreciate looking all be more ahead X. your and Happy here, and good

Thank you, everyone.

and Ladies for all that Thank you joining. gentlemen, concludes call. today's

now disconnect. may You