Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: I'm standing by with Mark Libschaltz, who of course is
Speaker 2: the co CEO of Blue Owl. Focuses heavily on private markets,
Speaker 2: but of course you're a publicly traded firm and I've
Speaker 2: seen significant appreciation this year in the markets.
Speaker 3: When you think about the path.
Speaker 2: Forward, is it really going to be tried and true
Speaker 2: vanilla private credit that's driving the growth from blue Owl
Speaker 2: or is it going to be something else given that
Speaker 2: you've made so many acquisitions in spaces outside of traditional
Speaker 2: direct lending.
Speaker 1: So for blue Owl and always a treat to be
Speaker 1: here with you For blue Owl, I think three words
Speaker 1: would I would focus on. There is scaling, there is innovation,
Speaker 1: and there's diversification.
Speaker 3: And those three together.
Speaker 1: I think are the kind of words I'd keep in
Speaker 1: mind when I think about the future of blue Owl.
Speaker 1: Take direct lending. It is a fantastic business. We're one
Speaker 1: of the market leaders. We've been able to deliver outstanding
Speaker 1: results for our investors are LPs, which ultimately is the
Speaker 1: customer base, and as a result, that's going to continue
Speaker 1: to be a great business. But that's about incumbents and
Speaker 1: leading with scale and we're fortunately one of those people.
Speaker 3: That's a great business for us.
Speaker 1: But when you look forward backward, that was a great
Speaker 1: place ten years ago.
Speaker 3: We identified that opportunity.
Speaker 1: Ten years ago we identified private wealth as a channel
Speaker 1: that's become a huge opportunity. People almost looked at us
Speaker 1: cross eyed when we started that ten years ago. So
Speaker 1: thankfully we've established great positions there. That's about continuing to
Speaker 1: scale diversification. As you said, we've added products organically and
Speaker 1: inorganically by acquisition. And then innovation to me is really
Speaker 1: the tag where the matters most, which is it's about
Speaker 1: going where the markets are going next. Private credit, it's
Speaker 1: not that the story has been told, but we know
Speaker 1: what the story is. What's new and next and important
Speaker 1: for our shareholders and our investors is the alternative credit business.
Speaker 3: That is to say, asset back credit.
Speaker 1: It's data centers and the digital economy, digital infrastructure. That's
Speaker 1: where we're going next. That's where the innovation is really
Speaker 1: going to come from.
Speaker 3: And the next leg of really I think very attractive growth.
Speaker 2: You know, now that you are integrating these acquisitions, what
Speaker 2: are the numbers to support that growth? I know that
Speaker 2: you and I have talked about asset back to finance,
Speaker 2: for example, and that by definition the growth would be faster.
Speaker 3: So what do these growth rates look like?
Speaker 2: And these businesses outside of direct lending.
Speaker 3: So while use this.
Speaker 1: By kind of templar example, think about the real estate business.
Speaker 1: We acquired Oak Street market leader in triple net lease.
Speaker 1: Here's a business we're already we have since acquisition. Our
Speaker 1: latest fund doubled in scale from the prior one that's
Speaker 1: already largely committed. We'll be back in market next year
Speaker 1: with the next vintage of that product. Oaks Street has
Speaker 1: tripled as a part out just in the last few
Speaker 1: years and very importantly, through a tumultuous time in the
Speaker 1: generic word real estate has delivered outstanding results and it
Speaker 1: is perfectly positioned for and less soot forward looking on
Speaker 1: shoring digital infrastructure again in sort of the form we've
Speaker 1: done today with people like Oracle, where we've been able
Speaker 1: to build data centers at a complexes and own that
Speaker 1: buildings the physical buildings like we.
Speaker 3: Have done as market leader in Oak Street.
Speaker 1: That's a perfect template for where we're going with things
Speaker 1: like the acquisition of Atalaya.
Speaker 3: We've got it fully integrated.
Speaker 1: We have a great integrated operation between now our asset
Speaker 1: back credit and our direct lending credit. And what that
Speaker 1: means is we can originate share ideas, share opportunities and
Speaker 1: do in now direct lend, do in asset back credit
Speaker 1: what we did over the last ten years in direct lending,
Speaker 1: which is, we believe become one of the market leaders
Speaker 1: in that case and probably a seven trillion dollar addressent market.
Speaker 2: When you think about the private credit world right now,
Speaker 2: there's a new player in town in a much bigger
Speaker 2: way now with Blackrocks acquisition of HPS. What does that
Speaker 2: mean to you to have You know, HPS has been around,
Speaker 2: but Blackrock now also as a new competitor.
Speaker 1: So I'm big on actions speak louder than words, and
Speaker 1: I have a ton of respect for Blackrocks.
Speaker 3: So what do I take from it Blackrock has?
Speaker 1: Likewise, I think I come to acknowledge, grasp the enthusiastic
Speaker 1: about the fact that private markets are a critical part
Speaker 1: of the future.
Speaker 3: It's where the growth is going to be.
Speaker 1: And again I always give back to the why is
Speaker 1: because the private market solutions for the end investor.
Speaker 3: They work.
Speaker 1: It doesn't mean every solution by every manager at every moment,
Speaker 1: but it means the right solutions done by the right
Speaker 1: managers deliver great risk return for the investor, and so
Speaker 1: I think Blackrock is by its actions as the biggest
Speaker 1: in the world saying hey, listen. The public market great,
Speaker 1: it will always be part of an important capital market ecosystem,
Speaker 1: but the private markets, written large, are the future.
Speaker 2: Is there a point at which the space is too crowded?
Speaker 1: I imagine, well, one can imagine such a such a moment,
Speaker 1: and I think we're actually seeing it in parts of
Speaker 1: the overall ecosystem. I think it's safe to say that
Speaker 1: there will be fewer private equity firms five years.
Speaker 3: From now than there are today.
Speaker 1: There's an over proliferation, but that's been forty years, fifty
Speaker 1: years in the making. So you know, when I look
Speaker 1: at markets still like direct lending, they're still very young
Speaker 1: by the measure of evolution of the opportunity market share innovation,
Speaker 1: and certainly places like asset back Finance are nacent hyperscale
Speaker 1: data centers IPI the market leader without a question in
Speaker 1: helping investors access this very very interesting infrastructure like way
Speaker 1: to play the digital economy and AI. You know, those
Speaker 1: are new, so they're kind of the opposite of crowded,
Speaker 1: they're pioneering spaces and I get very excited about that.
Speaker 1: So I know, I actually don't think crowding is the
Speaker 1: is the concern of the time.
Speaker 2: So what about the competition? We always talk about this
Speaker 2: banks versus the non banks. Right, you have seen leverage
Speaker 2: finance markets way open.
Speaker 3: Now what does that.
Speaker 2: Mean in terms of the m and a comeback that
Speaker 2: investors are expected and the role that you and your
Speaker 2: rivals have in it.
Speaker 1: Yeah, the active role of the syndicated or liquid bank
Speaker 1: markets is a bit of a double edged sword, right,
Speaker 1: which is to say, look, in twenty twenty one, the
Speaker 1: markets were wide open and that was one of our
Speaker 1: busiest times. In twenty twenty two and twenty twenty three
Speaker 1: they were entirely closed, and that was a wonderful time
Speaker 1: for probably a different reason, right, which is there was
Speaker 1: kind of no alternative choice for someone to want to act.
Speaker 3: You'll probably a bit like you know, the three three
Speaker 3: bears somewhere in between. It's pretty good actually, right.
Speaker 1: We want there to be a vibrant market that catalyzes activity.
Speaker 1: The biggest negative if I think about what was a
Speaker 1: terrific here in twenty twenty four, but when I look
Speaker 1: at twenty twenty five and frankly I have even more optimism.
Speaker 1: The biggest missing piece was just volume of activity. People
Speaker 1: just weren't doing enough to many uncertainties on certainties around
Speaker 1: interest rates, on certainties around politics, a therefore or related.
Speaker 3: To an inactive syndicated market.
Speaker 1: We need those markets so people feel the confidence to
Speaker 1: go do them and eight or do the trans action.
Speaker 1: So I feel like the setup in twenty twenty five.
Speaker 1: We've always said this, We welcome a vibrant liquid market
Speaker 1: and in liquid market, and sure, when markets are fully closed,
Speaker 1: our spreads are a bit higher. When markets are fully open,
Speaker 1: our spreads are a bit lower. But our businesses deliver
Speaker 1: a meaningful premium and a great risk return in any
Speaker 1: of those markets, and that's working.
Speaker 2: You know, you mentioned interest rates is part of the
Speaker 2: consideration here as well, and there's a lot of question
Speaker 2: about what they might look like in twenty twenty five,
Speaker 2: particularly in light of the tariff policies put forward by
Speaker 2: the President elect. Do those policies concern you at all?
Speaker 2: Do you think that inflation could be stickier than a
Speaker 2: lot of people are accounting for right now?
Speaker 3: So you and I recall talked about this probably over
Speaker 3: the last year and a half.
Speaker 1: You know, we have had a view that remains our
Speaker 1: view today that higher for longer is the path forward.
Speaker 1: And I say that partly just anchored in this historical reality.
Speaker 1: The rates we're talking about today are not a typical
Speaker 1: zero is atypical. No, I'm not predicting species a great
Speaker 1: path and I imagine they'll moderate some over time, but
Speaker 1: we've already experienced something. This time last year people were
Speaker 1: talking about seven rate cuts and we said, we don't
Speaker 1: see it, we don't understand it. We don't see it
Speaker 1: because the inflationary pressures are still there, and frankly, in
Speaker 1: a strong economy, and I think we have the good
Speaker 1: prospects for a strong economy in twenty twenty five, and
Speaker 1: as you said, adding trade considerations and other geopolitical dynamics,
Speaker 1: there was a lot of reason to frankly think rates
Speaker 1: stay relatively speaking higher, candidly, no surprise, and a floating
Speaker 1: rate business.
Speaker 3: You know, we're okay with that resultant.
Speaker 2: And really quickly here we only have about like thirty
Speaker 2: seconds left. But if you had to call how many
Speaker 2: rate cuts? I never ask you this, but if you
Speaker 2: think rates are hired for longer. How many times do
Speaker 2: you think if I can cut through the end of
Speaker 2: next year.
Speaker 1: So I have to acknowledge the beauty of my business.
Speaker 1: And perhaps it's my own ignorance, but I don't know
Speaker 1: verat cuts I'm confident. I don't know if I knew
Speaker 1: there'd be a lunch easier way to execute this business.
Speaker 1: We have a thousand people, so we can deliver the
Speaker 1: results we do. I knew the path of rates side
Speaker 1: of a better way, but I can tell you this
Speaker 1: being in a senior secure floating rate business, which we are,
Speaker 1: I'm there because I don't have to make tent determination.
Speaker 2: Mark, we thank you so much for joining us here,
Speaker 2: of course, at the Gomezex Financial Services conference. That is
Speaker 2: Mark Glipschaltz. He's the co CEO of Blue Owl