1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:07,080 --> 00:00:09,280 Speaker 2: I'm standing by with Mark Libschaltz, who of course is 3 00:00:09,280 --> 00:00:13,920 Speaker 2: the co CEO of Blue Owl. Focuses heavily on private markets, 4 00:00:13,960 --> 00:00:16,120 Speaker 2: but of course you're a publicly traded firm and I've 5 00:00:16,160 --> 00:00:19,720 Speaker 2: seen significant appreciation this year in the markets. 6 00:00:19,960 --> 00:00:21,720 Speaker 3: When you think about the path. 7 00:00:21,480 --> 00:00:24,480 Speaker 2: Forward, is it really going to be tried and true 8 00:00:24,640 --> 00:00:27,800 Speaker 2: vanilla private credit that's driving the growth from blue Owl 9 00:00:28,120 --> 00:00:29,720 Speaker 2: or is it going to be something else given that 10 00:00:29,760 --> 00:00:33,400 Speaker 2: you've made so many acquisitions in spaces outside of traditional 11 00:00:33,479 --> 00:00:34,080 Speaker 2: direct lending. 12 00:00:35,000 --> 00:00:37,120 Speaker 1: So for blue Owl and always a treat to be 13 00:00:37,159 --> 00:00:40,280 Speaker 1: here with you For blue Owl, I think three words 14 00:00:40,400 --> 00:00:44,879 Speaker 1: would I would focus on. There is scaling, there is innovation, 15 00:00:45,920 --> 00:00:47,000 Speaker 1: and there's diversification. 16 00:00:47,240 --> 00:00:48,640 Speaker 3: And those three together. 17 00:00:48,440 --> 00:00:50,680 Speaker 1: I think are the kind of words I'd keep in 18 00:00:50,680 --> 00:00:52,840 Speaker 1: mind when I think about the future of blue Owl. 19 00:00:53,159 --> 00:00:56,040 Speaker 1: Take direct lending. It is a fantastic business. We're one 20 00:00:56,080 --> 00:00:58,800 Speaker 1: of the market leaders. We've been able to deliver outstanding 21 00:00:58,920 --> 00:01:03,040 Speaker 1: results for our investors are LPs, which ultimately is the 22 00:01:03,080 --> 00:01:06,560 Speaker 1: customer base, and as a result, that's going to continue 23 00:01:06,600 --> 00:01:09,360 Speaker 1: to be a great business. But that's about incumbents and 24 00:01:09,480 --> 00:01:12,400 Speaker 1: leading with scale and we're fortunately one of those people. 25 00:01:13,080 --> 00:01:14,160 Speaker 3: That's a great business for us. 26 00:01:14,160 --> 00:01:17,280 Speaker 1: But when you look forward backward, that was a great 27 00:01:17,280 --> 00:01:18,080 Speaker 1: place ten years ago. 28 00:01:18,120 --> 00:01:19,400 Speaker 3: We identified that opportunity. 29 00:01:19,400 --> 00:01:22,800 Speaker 1: Ten years ago we identified private wealth as a channel 30 00:01:23,040 --> 00:01:26,040 Speaker 1: that's become a huge opportunity. People almost looked at us 31 00:01:26,040 --> 00:01:28,520 Speaker 1: cross eyed when we started that ten years ago. So 32 00:01:28,800 --> 00:01:32,160 Speaker 1: thankfully we've established great positions there. That's about continuing to 33 00:01:32,319 --> 00:01:36,440 Speaker 1: scale diversification. As you said, we've added products organically and 34 00:01:36,480 --> 00:01:40,600 Speaker 1: inorganically by acquisition. And then innovation to me is really 35 00:01:40,640 --> 00:01:43,440 Speaker 1: the tag where the matters most, which is it's about 36 00:01:43,480 --> 00:01:46,920 Speaker 1: going where the markets are going next. Private credit, it's 37 00:01:46,959 --> 00:01:48,840 Speaker 1: not that the story has been told, but we know 38 00:01:48,880 --> 00:01:52,520 Speaker 1: what the story is. What's new and next and important 39 00:01:52,520 --> 00:01:56,840 Speaker 1: for our shareholders and our investors is the alternative credit business. 40 00:01:56,920 --> 00:01:58,440 Speaker 3: That is to say, asset back credit. 41 00:01:58,720 --> 00:02:02,560 Speaker 1: It's data centers and the digital economy, digital infrastructure. That's 42 00:02:02,600 --> 00:02:05,080 Speaker 1: where we're going next. That's where the innovation is really 43 00:02:05,120 --> 00:02:05,840 Speaker 1: going to come from. 44 00:02:06,120 --> 00:02:09,200 Speaker 3: And the next leg of really I think very attractive growth. 45 00:02:09,280 --> 00:02:12,800 Speaker 2: You know, now that you are integrating these acquisitions, what 46 00:02:12,840 --> 00:02:14,800 Speaker 2: are the numbers to support that growth? I know that 47 00:02:14,840 --> 00:02:17,120 Speaker 2: you and I have talked about asset back to finance, 48 00:02:17,120 --> 00:02:20,640 Speaker 2: for example, and that by definition the growth would be faster. 49 00:02:21,320 --> 00:02:23,360 Speaker 3: So what do these growth rates look like? 50 00:02:23,400 --> 00:02:25,560 Speaker 2: And these businesses outside of direct lending. 51 00:02:26,160 --> 00:02:27,640 Speaker 3: So while use this. 52 00:02:27,560 --> 00:02:30,880 Speaker 1: By kind of templar example, think about the real estate business. 53 00:02:30,919 --> 00:02:34,720 Speaker 1: We acquired Oak Street market leader in triple net lease. 54 00:02:34,960 --> 00:02:38,440 Speaker 1: Here's a business we're already we have since acquisition. Our 55 00:02:38,720 --> 00:02:42,280 Speaker 1: latest fund doubled in scale from the prior one that's 56 00:02:42,280 --> 00:02:44,919 Speaker 1: already largely committed. We'll be back in market next year 57 00:02:44,960 --> 00:02:47,919 Speaker 1: with the next vintage of that product. Oaks Street has 58 00:02:48,080 --> 00:02:50,799 Speaker 1: tripled as a part out just in the last few 59 00:02:50,880 --> 00:02:54,280 Speaker 1: years and very importantly, through a tumultuous time in the 60 00:02:54,320 --> 00:02:58,359 Speaker 1: generic word real estate has delivered outstanding results and it 61 00:02:58,400 --> 00:03:01,959 Speaker 1: is perfectly positioned for and less soot forward looking on 62 00:03:02,200 --> 00:03:07,040 Speaker 1: shoring digital infrastructure again in sort of the form we've 63 00:03:07,040 --> 00:03:09,400 Speaker 1: done today with people like Oracle, where we've been able 64 00:03:09,400 --> 00:03:12,600 Speaker 1: to build data centers at a complexes and own that 65 00:03:12,960 --> 00:03:15,280 Speaker 1: buildings the physical buildings like we. 66 00:03:15,200 --> 00:03:16,960 Speaker 3: Have done as market leader in Oak Street. 67 00:03:17,240 --> 00:03:19,639 Speaker 1: That's a perfect template for where we're going with things 68 00:03:19,760 --> 00:03:21,120 Speaker 1: like the acquisition of Atalaya. 69 00:03:21,560 --> 00:03:22,680 Speaker 3: We've got it fully integrated. 70 00:03:22,720 --> 00:03:25,880 Speaker 1: We have a great integrated operation between now our asset 71 00:03:25,880 --> 00:03:29,480 Speaker 1: back credit and our direct lending credit. And what that 72 00:03:29,520 --> 00:03:33,520 Speaker 1: means is we can originate share ideas, share opportunities and 73 00:03:33,760 --> 00:03:37,320 Speaker 1: do in now direct lend, do in asset back credit 74 00:03:37,360 --> 00:03:39,560 Speaker 1: what we did over the last ten years in direct lending, 75 00:03:39,920 --> 00:03:42,240 Speaker 1: which is, we believe become one of the market leaders 76 00:03:42,280 --> 00:03:45,520 Speaker 1: in that case and probably a seven trillion dollar addressent market. 77 00:03:46,280 --> 00:03:48,360 Speaker 2: When you think about the private credit world right now, 78 00:03:48,360 --> 00:03:50,880 Speaker 2: there's a new player in town in a much bigger 79 00:03:50,920 --> 00:03:54,080 Speaker 2: way now with Blackrocks acquisition of HPS. What does that 80 00:03:54,120 --> 00:03:57,400 Speaker 2: mean to you to have You know, HPS has been around, 81 00:03:57,440 --> 00:03:59,520 Speaker 2: but Blackrock now also as a new competitor. 82 00:04:00,240 --> 00:04:03,680 Speaker 1: So I'm big on actions speak louder than words, and 83 00:04:03,720 --> 00:04:05,560 Speaker 1: I have a ton of respect for Blackrocks. 84 00:04:05,560 --> 00:04:07,760 Speaker 3: So what do I take from it Blackrock has? 85 00:04:07,920 --> 00:04:13,000 Speaker 1: Likewise, I think I come to acknowledge, grasp the enthusiastic 86 00:04:13,080 --> 00:04:16,560 Speaker 1: about the fact that private markets are a critical part 87 00:04:16,600 --> 00:04:17,040 Speaker 1: of the future. 88 00:04:17,040 --> 00:04:18,320 Speaker 3: It's where the growth is going to be. 89 00:04:18,680 --> 00:04:20,920 Speaker 1: And again I always give back to the why is 90 00:04:21,000 --> 00:04:23,920 Speaker 1: because the private market solutions for the end investor. 91 00:04:24,600 --> 00:04:25,159 Speaker 3: They work. 92 00:04:25,520 --> 00:04:28,719 Speaker 1: It doesn't mean every solution by every manager at every moment, 93 00:04:29,000 --> 00:04:31,160 Speaker 1: but it means the right solutions done by the right 94 00:04:31,240 --> 00:04:35,280 Speaker 1: managers deliver great risk return for the investor, and so 95 00:04:35,320 --> 00:04:37,960 Speaker 1: I think Blackrock is by its actions as the biggest 96 00:04:37,960 --> 00:04:41,000 Speaker 1: in the world saying hey, listen. The public market great, 97 00:04:41,040 --> 00:04:43,680 Speaker 1: it will always be part of an important capital market ecosystem, 98 00:04:44,040 --> 00:04:47,320 Speaker 1: but the private markets, written large, are the future. 99 00:04:47,600 --> 00:04:50,080 Speaker 2: Is there a point at which the space is too crowded? 100 00:04:51,720 --> 00:04:54,799 Speaker 1: I imagine, well, one can imagine such a such a moment, 101 00:04:54,800 --> 00:04:56,680 Speaker 1: and I think we're actually seeing it in parts of 102 00:04:57,320 --> 00:05:00,000 Speaker 1: the overall ecosystem. I think it's safe to say that 103 00:05:00,000 --> 00:05:03,080 Speaker 1: there will be fewer private equity firms five years. 104 00:05:02,920 --> 00:05:04,320 Speaker 3: From now than there are today. 105 00:05:04,480 --> 00:05:08,040 Speaker 1: There's an over proliferation, but that's been forty years, fifty 106 00:05:08,120 --> 00:05:10,480 Speaker 1: years in the making. So you know, when I look 107 00:05:10,480 --> 00:05:13,520 Speaker 1: at markets still like direct lending, they're still very young 108 00:05:13,600 --> 00:05:18,080 Speaker 1: by the measure of evolution of the opportunity market share innovation, 109 00:05:18,680 --> 00:05:22,800 Speaker 1: and certainly places like asset back Finance are nacent hyperscale 110 00:05:23,040 --> 00:05:27,240 Speaker 1: data centers IPI the market leader without a question in 111 00:05:27,240 --> 00:05:32,200 Speaker 1: helping investors access this very very interesting infrastructure like way 112 00:05:32,240 --> 00:05:36,080 Speaker 1: to play the digital economy and AI. You know, those 113 00:05:36,120 --> 00:05:38,839 Speaker 1: are new, so they're kind of the opposite of crowded, 114 00:05:38,880 --> 00:05:42,160 Speaker 1: they're pioneering spaces and I get very excited about that. 115 00:05:42,200 --> 00:05:44,800 Speaker 1: So I know, I actually don't think crowding is the 116 00:05:45,960 --> 00:05:47,240 Speaker 1: is the concern of the time. 117 00:05:47,680 --> 00:05:50,960 Speaker 2: So what about the competition? We always talk about this 118 00:05:51,120 --> 00:05:54,279 Speaker 2: banks versus the non banks. Right, you have seen leverage 119 00:05:54,279 --> 00:05:56,000 Speaker 2: finance markets way open. 120 00:05:56,520 --> 00:05:57,600 Speaker 3: Now what does that. 121 00:05:57,600 --> 00:05:59,359 Speaker 2: Mean in terms of the m and a comeback that 122 00:05:59,440 --> 00:06:01,760 Speaker 2: investors are expected and the role that you and your 123 00:06:01,880 --> 00:06:02,800 Speaker 2: rivals have in it. 124 00:06:03,120 --> 00:06:06,320 Speaker 1: Yeah, the active role of the syndicated or liquid bank 125 00:06:06,440 --> 00:06:09,120 Speaker 1: markets is a bit of a double edged sword, right, 126 00:06:09,160 --> 00:06:11,479 Speaker 1: which is to say, look, in twenty twenty one, the 127 00:06:11,520 --> 00:06:13,920 Speaker 1: markets were wide open and that was one of our 128 00:06:13,920 --> 00:06:16,640 Speaker 1: busiest times. In twenty twenty two and twenty twenty three 129 00:06:16,839 --> 00:06:19,440 Speaker 1: they were entirely closed, and that was a wonderful time 130 00:06:19,640 --> 00:06:21,599 Speaker 1: for probably a different reason, right, which is there was 131 00:06:21,839 --> 00:06:24,760 Speaker 1: kind of no alternative choice for someone to want to act. 132 00:06:25,320 --> 00:06:27,880 Speaker 3: You'll probably a bit like you know, the three three 133 00:06:27,920 --> 00:06:30,320 Speaker 3: bears somewhere in between. It's pretty good actually, right. 134 00:06:30,360 --> 00:06:33,919 Speaker 1: We want there to be a vibrant market that catalyzes activity. 135 00:06:34,200 --> 00:06:36,240 Speaker 1: The biggest negative if I think about what was a 136 00:06:36,400 --> 00:06:38,800 Speaker 1: terrific here in twenty twenty four, but when I look 137 00:06:38,839 --> 00:06:41,440 Speaker 1: at twenty twenty five and frankly I have even more optimism. 138 00:06:41,640 --> 00:06:44,839 Speaker 1: The biggest missing piece was just volume of activity. People 139 00:06:44,920 --> 00:06:47,640 Speaker 1: just weren't doing enough to many uncertainties on certainties around 140 00:06:47,680 --> 00:06:53,000 Speaker 1: interest rates, on certainties around politics, a therefore or related. 141 00:06:52,560 --> 00:06:54,800 Speaker 3: To an inactive syndicated market. 142 00:06:55,160 --> 00:06:57,719 Speaker 1: We need those markets so people feel the confidence to 143 00:06:57,760 --> 00:07:00,279 Speaker 1: go do them and eight or do the trans action. 144 00:07:00,520 --> 00:07:03,159 Speaker 1: So I feel like the setup in twenty twenty five. 145 00:07:03,680 --> 00:07:06,760 Speaker 1: We've always said this, We welcome a vibrant liquid market 146 00:07:07,000 --> 00:07:10,480 Speaker 1: and in liquid market, and sure, when markets are fully closed, 147 00:07:10,560 --> 00:07:12,880 Speaker 1: our spreads are a bit higher. When markets are fully open, 148 00:07:12,920 --> 00:07:15,640 Speaker 1: our spreads are a bit lower. But our businesses deliver 149 00:07:15,760 --> 00:07:19,000 Speaker 1: a meaningful premium and a great risk return in any 150 00:07:19,040 --> 00:07:20,360 Speaker 1: of those markets, and that's working. 151 00:07:20,640 --> 00:07:23,360 Speaker 2: You know, you mentioned interest rates is part of the 152 00:07:23,520 --> 00:07:26,320 Speaker 2: consideration here as well, and there's a lot of question 153 00:07:26,400 --> 00:07:28,320 Speaker 2: about what they might look like in twenty twenty five, 154 00:07:28,600 --> 00:07:32,520 Speaker 2: particularly in light of the tariff policies put forward by 155 00:07:32,520 --> 00:07:35,920 Speaker 2: the President elect. Do those policies concern you at all? 156 00:07:35,960 --> 00:07:38,320 Speaker 2: Do you think that inflation could be stickier than a 157 00:07:38,320 --> 00:07:40,000 Speaker 2: lot of people are accounting for right now? 158 00:07:40,320 --> 00:07:42,720 Speaker 3: So you and I recall talked about this probably over 159 00:07:42,720 --> 00:07:44,480 Speaker 3: the last year and a half. 160 00:07:44,840 --> 00:07:46,440 Speaker 1: You know, we have had a view that remains our 161 00:07:46,520 --> 00:07:50,640 Speaker 1: view today that higher for longer is the path forward. 162 00:07:50,680 --> 00:07:53,760 Speaker 1: And I say that partly just anchored in this historical reality. 163 00:07:54,000 --> 00:07:56,360 Speaker 1: The rates we're talking about today are not a typical 164 00:07:56,760 --> 00:08:00,520 Speaker 1: zero is atypical. No, I'm not predicting species a great 165 00:08:00,680 --> 00:08:04,040 Speaker 1: path and I imagine they'll moderate some over time, but 166 00:08:04,040 --> 00:08:07,920 Speaker 1: we've already experienced something. This time last year people were 167 00:08:07,920 --> 00:08:11,320 Speaker 1: talking about seven rate cuts and we said, we don't 168 00:08:11,360 --> 00:08:13,360 Speaker 1: see it, we don't understand it. We don't see it 169 00:08:13,520 --> 00:08:16,280 Speaker 1: because the inflationary pressures are still there, and frankly, in 170 00:08:16,320 --> 00:08:18,400 Speaker 1: a strong economy, and I think we have the good 171 00:08:18,440 --> 00:08:21,240 Speaker 1: prospects for a strong economy in twenty twenty five, and 172 00:08:21,320 --> 00:08:25,080 Speaker 1: as you said, adding trade considerations and other geopolitical dynamics, 173 00:08:25,560 --> 00:08:27,400 Speaker 1: there was a lot of reason to frankly think rates 174 00:08:27,440 --> 00:08:32,120 Speaker 1: stay relatively speaking higher, candidly, no surprise, and a floating 175 00:08:32,200 --> 00:08:32,760 Speaker 1: rate business. 176 00:08:32,920 --> 00:08:35,120 Speaker 3: You know, we're okay with that resultant. 177 00:08:34,760 --> 00:08:36,800 Speaker 2: And really quickly here we only have about like thirty 178 00:08:36,840 --> 00:08:39,160 Speaker 2: seconds left. But if you had to call how many 179 00:08:39,200 --> 00:08:40,679 Speaker 2: rate cuts? I never ask you this, but if you 180 00:08:40,720 --> 00:08:42,480 Speaker 2: think rates are hired for longer. How many times do 181 00:08:42,480 --> 00:08:43,840 Speaker 2: you think if I can cut through the end of 182 00:08:43,880 --> 00:08:44,280 Speaker 2: next year. 183 00:08:45,000 --> 00:08:47,760 Speaker 1: So I have to acknowledge the beauty of my business. 184 00:08:47,840 --> 00:08:51,720 Speaker 1: And perhaps it's my own ignorance, but I don't know 185 00:08:52,240 --> 00:08:54,240 Speaker 1: verat cuts I'm confident. I don't know if I knew 186 00:08:54,400 --> 00:08:56,840 Speaker 1: there'd be a lunch easier way to execute this business. 187 00:08:57,080 --> 00:08:58,760 Speaker 1: We have a thousand people, so we can deliver the 188 00:08:58,800 --> 00:09:01,040 Speaker 1: results we do. I knew the path of rates side 189 00:09:01,080 --> 00:09:02,480 Speaker 1: of a better way, but I can tell you this 190 00:09:03,160 --> 00:09:06,000 Speaker 1: being in a senior secure floating rate business, which we are, 191 00:09:06,760 --> 00:09:09,199 Speaker 1: I'm there because I don't have to make tent determination. 192 00:09:09,600 --> 00:09:11,480 Speaker 2: Mark, we thank you so much for joining us here, 193 00:09:11,480 --> 00:09:14,040 Speaker 2: of course, at the Gomezex Financial Services conference. That is 194 00:09:14,080 --> 00:09:16,800 Speaker 2: Mark Glipschaltz. He's the co CEO of Blue Owl