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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is Bloomberg markets An. I'm Shinali Bassek and it's

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Speaker 2: time now.

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Speaker 3: For the stock of the hour.

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Speaker 2: Blue Owl hit an all time high on Friday, and

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Speaker 2: it's one of the largest players in the private credit market.

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Speaker 2: It recently helped fuel this rally with strong earnings that

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Speaker 2: highlighted asset growth and a dividend increase. And like we

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Speaker 2: saw with Goldman Sachs today, Blue Owl also last year

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Speaker 2: formed a partnership with Abu Dhabi.

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Speaker 3: Wealth fund Mulatla Management.

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Speaker 2: The moves highlight the growth in the one point seven

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Speaker 2: trillion dollars private credit market, which has more than doubled

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Speaker 2: in size over the past five years. Joining us now

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Speaker 2: is Mark Lipschaltz, Blue Owl Capital.

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Speaker 3: Co CEO and co founder.

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Speaker 1: Mark.

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Speaker 3: You know, let's start with the Middle East here, because

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Speaker 3: this is.

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Speaker 2: Such a highly watched story, the amount of money that's

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Speaker 2: coming in from the Middle East, from Mudabola in particular here,

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Speaker 2: and you also had for your dial Funds also announced

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Speaker 2: a recent partnership with a different Abu Dhabi based fund.

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Speaker 2: How do you describe the need from capital from across

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Speaker 2: the world.

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Speaker 1: Well, thank you again for having me here today.

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Speaker 4: And the need for private solutions remains strong for one

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Speaker 4: really important reason, which is it works as a matter

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Speaker 4: of investment results for the people that are participating, whether

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Speaker 4: those are institutions, which we see whether as you said

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Speaker 4: with Mubadala, or our partnership in GP Strategic Capital with Lunette,

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Speaker 4: these our long large strategic partnerships to really build out

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Speaker 4: asset opportunities together, but also for wealth.

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Speaker 1: And individual investors.

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Speaker 4: At the end of the day, it's a solution that

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Speaker 4: delivers results, and I.

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Speaker 1: Think that's why we're seeing the continued interest.

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Speaker 4: It's also a marketplace private credit in particular or GP

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Speaker 4: Strategic Capital where domestic adoption US adoption by institutions has

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Speaker 4: been earlier soon, and the interest is picking up in

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Speaker 4: places like the Middle East.

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Speaker 3: And an Asia underweight relative, yeah.

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Speaker 4: Underweight relative, And I think that's part again also the

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Speaker 4: evolution of the market getting to a place where the

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Speaker 4: returns and the risk return we're compelling enough that they

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Speaker 4: get enthused in those markets as well, and we've seen

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Speaker 4: that now in Middle East, Asia and elsewhere.

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Speaker 2: How do you think about this from a footprint perspective,

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Speaker 2: We've reported a lot about your inclinations to open offices abroad.

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Speaker 3: Where are you putting the next leg of talent at LUEWL.

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Speaker 4: So we are opening an office in Abu Dhabi now,

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Speaker 4: reflective of exactly this conversation that we're having about the

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Speaker 4: importance of that marketplace and that market opportunity.

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Speaker 1: We already have tent.

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Speaker 4: Offices as a firm. It is important to be on

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Speaker 4: the ground. It is important to be able to spend

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Speaker 4: time with our investors' time with companies that we're going.

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Speaker 1: To invest in. Now.

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Speaker 4: Where we invest as a firm, as you know, is

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Speaker 4: very heavily US centric.

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Speaker 1: That has worked well.

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Speaker 4: We're sitting here today with exposure in terms of our

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Speaker 4: triple not at least real estate business, in terms of

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Speaker 4: our credit business, in terms of state heavily centered around

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Speaker 4: the US and the US economy and markets are pretty strong.

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Speaker 4: So we do like that as a matter of deployment.

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Speaker 3: You know, you mentioned the private world channel.

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Speaker 2: You guys, a lot of your rivals have been really

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Speaker 2: expanding in private networth here high individuals. How much opportunity

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Speaker 2: is there and frankly, do you see fees coming down?

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Speaker 2: There's a big question about these BDC structures and other

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Speaker 2: high network channels having higher fees than your traditional institution

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Speaker 2: would have the leverage to negotiate. Do you see high

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Speaker 2: net worth also getting fee cuts.

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Speaker 4: So you and I've talked about this before, but I

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Speaker 4: started in alternatives in nineteen ninety five.

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Speaker 1: Wasn't called alternatives and that word hadn't been coined.

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Speaker 4: And at that time, your average institution at a single

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Speaker 4: digit percentage of their assets in what would later be

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Speaker 4: called alts, and now.

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Speaker 1: Today it's twenty five percent.

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Speaker 4: Probably individuals are in that single digit percentage today and

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Speaker 4: the very benefits that of a NERD to the institutions,

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Speaker 4: I mean, the reason it has gone from five to

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Speaker 4: twenty five is because it were and so individuals now

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Speaker 4: have the opportunity with providers structuring products the right way

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Speaker 4: to deliver results, for them to participate in the benefits

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Speaker 4: of these otherwise historic products they didn't have access to.

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Speaker 1: So with wealth, we have from the day.

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Speaker 4: We started the firm been committed to building an institution,

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Speaker 4: a structure, a set of products at a DNA to

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Speaker 4: serve individuals as true peers to institutions. They participate when

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Speaker 4: we do a credit product, they participate in the same loans.

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Speaker 1: This is really delivering the institutional opportunity.

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Speaker 4: And that's actually quite particular to blow and it also

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Speaker 4: is quite particular to an investment you make. Over eight years,

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Speaker 4: we've been spending years and tens of millions of dollars

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Speaker 4: to build the infrastructure to support that audience. As for fees,

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Speaker 4: look at the end of the day, the net result

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Speaker 4: is a very very strong one for institutions and for individuals.

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Speaker 4: And actually I would not characterize as the case that

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Speaker 4: institutional fees are lower than an individual fees. Actually I

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Speaker 4: think it varies quite a bit by product. I think

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Speaker 4: both are getting a very good and fair result.

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Speaker 2: When we talk about it, compression, another big question out

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Speaker 2: there is compression of returns. Potentially, you look at all

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Speaker 2: this capital flooding into the industry and you have to

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Speaker 2: wonder whether you're going to get the same returns in

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Speaker 2: the next five ten years as you have most more recently.

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Speaker 1: Supply and demand.

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Speaker 4: So it is true that supply of private credits increased,

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Speaker 4: but so is the demand.

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Speaker 1: The demand has increased partly because we have.

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Speaker 4: This large structural amount of private equity capital. As you

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Speaker 4: well know, wide range of different numbers, but I've seen

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Speaker 4: numbers as high as two and a half trillion dollars

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Speaker 4: of dry powder around the world in private equity that

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Speaker 4: will be deployed that will utilize credit. So actually, when

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Speaker 4: I think about dry powder in institutional hands for private

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Speaker 4: equity and dry powder in the hands of private lenders

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Speaker 4: direct lenders in particular, it's.

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Speaker 1: Not really that different from where it was a few

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Speaker 1: years ago.

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Speaker 3: Else, Yeah, keep going.

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Speaker 1: Well.

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Speaker 4: I was just going to add one other thought though, too,

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Speaker 4: which is, let's also I think and keep in mind

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Speaker 4: that there's all this legacy debt that's been issued in

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Speaker 4: the public markets, much of which I think has an

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Speaker 4: opportunity to come to the private markets and benefit from

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Speaker 4: what we offer. Private credit has grown because we deliver

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Speaker 4: predictable private partner like solutions, and there are many people

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Speaker 4: who before didn't have that option and now do well

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Speaker 4: that option.

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Speaker 2: Is it a good thing to talk about at this

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Speaker 2: particular moment in time when we spoke just a couple

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Speaker 2: of months ago the leverage finance markets, we're really just

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Speaker 2: looking for that opportunity to reopen at greater scale. They

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Speaker 2: are opening, and they are certainly opening again. How is

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Speaker 2: that compressing spreads here? When you're looking at the opportunity

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Speaker 2: from private credit versus the syndicated loan market.

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Speaker 4: Right now, Look the markets are opening, and well, people

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Speaker 4: often find it surprising.

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Speaker 1: I say it this way. That's good news.

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Speaker 4: It is good news because look, we need vibrant capital markets.

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Speaker 4: Private capital is not the singular solution, nor is liquid

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Speaker 4: capital the singular solution.

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Speaker 1: Together they create a more active market.

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Speaker 4: We will gladly take the enhanced opportunity deal flow m

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Speaker 4: and a activity that comes with having a more enabled marketplace.

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Speaker 4: As for spreads, listen, spreads will move up and spreads

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Speaker 4: will move down as different dynamics markets open. Market clothes

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Speaker 4: the nature of perceived risk in the marketplace. But at

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Speaker 4: the end of the day, private credit and the way

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Speaker 4: we run our business is all about picking the best

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Speaker 4: credits with the best sponsors and delivering attractive spread and

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Speaker 4: incremental return, and an attractive one over what might.

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Speaker 1: Be available in the liquid market.

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Speaker 4: So there'll be some peaks in some valleys, but all

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Speaker 4: of those have allowed us and we've been in both. Right,

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Speaker 4: We've been in zero straight environments with wide open markets

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Speaker 4: in twenty twenty one, and we've been in closed markets,

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Speaker 4: and our products work in both.

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Speaker 2: So just about a minute left here, there's a lot

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Speaker 2: of conversation about the big banks entering the private credit

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Speaker 2: space Jamie Diamond, JP Morgan building their own effort as well.

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Speaker 2: Do you see Blue Owl partnering with a bank?

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Speaker 1: Wire?

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Speaker 3: Why not?

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Speaker 4: Happy to partner with banks, happy to partner with any institution.

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Speaker 4: We've built a business around creativity and around being that

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Speaker 4: type of partner, partner to the borrower, or partner to

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Speaker 4: someone else that has a role to play in that

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Speaker 4: value chain. We are delighted to partner with banks.

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Speaker 1: Again, what do they have?

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Speaker 4: They have a certain set of corporate relationships that are

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Speaker 4: very powerful, and they do a lot for those companies that.

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Speaker 1: We don't do.

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Speaker 4: They do things like foreign exchange and do things like

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Speaker 4: cash management. We, on the other hand, are a very

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Speaker 4: much natural and much steadier home for the liability, so

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Speaker 4: to speak, for the loan. We buy and hold loans.

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Speaker 4: We have long term capital for long term needs. And

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Speaker 4: over the last year, in fact, over just lastingly a

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Speaker 4: few weeks, it reared its head again. When you take

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Speaker 4: short term capital like deposits and you use them for

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Speaker 4: long term things like loans, someday, that tends not to

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Speaker 4: be a great match. And so private capital has I

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Speaker 4: think proven over the last couple of years. It's a

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Speaker 4: real stabilizing influence. But again it's not one or the other.

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Speaker 4: So yeah, I see a very positive world from both.

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Speaker 2: You'll have to come back with us when you do

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Speaker 2: ink that partnership, Mark, A lot of people have their

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Speaker 2: eyes on just that advent. Blue Owl Capital co CEO

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Speaker 2: and co founder Mark Libshelves, we think you for your time,