Blue Owl Stock Falls on $48M Exposure to Failed U.K. Lender

Blue Owl Capital Inc. OWL shares declined more than 3% in the pre-market trading on Friday after a Bloomberg report highlighted the firm’s financial exposure to a failed U.K. property lender. The alternative asset manager reportedly has a £36-million ($48-million) exposure to London-based Century Capital Partners, which recently entered administration.

Century Capital, a bridging lender focused on high-end property in central London, collapsed with roughly £95 million in total debt. The firm relied on funding lines from private credit firms and banks to originate short-term property loans, typically extended to borrowers unable to secure traditional bank financing. These loans often carried higher interest rates due to their elevated risk profile.

According to people familiar with the matter, Blue Owl financed the riskiest tranche of loans issued by Century Capital.

While creditors have not accused Century Capital of fraud, its collapse came only days before another U.K. bridging lender, Market Financial Solutions, fell into a form of insolvency, intensifying concerns about the stability of the private property lending market.

Are Concerns Rising for Blue Owl?

This development has further fueled scrutiny of Blue Owl, which manages about $307 billion in assets and provides investors with exposure to private credit and direct lending strategies. The firm has already been facing questions from investors in 2026 amid liquidity pressures and operational changes.

Last month, OWL moved to restrict investor withdrawals from one of its retail-focused funds, an action that reverberated across alternative asset managers and reignited debate over liquidity, valuation transparency and systemic risks.

Blue Owl said that it stopped offering quarterly redemption opportunities for Blue Owl Capital Corp. II (OBDC II) and instead will return capital through periodic distributions funded by loan repayments, asset sales or other strategic transactions. Under the previous tender offer structure, investors could typically redeem up to 5% of their holdings each quarter. Blue Owl’s new plan does not offer that quarterly redemption window.

The company also disclosed a sale of $1.4 billion in direct lending assets across three funds, including about $600 million from OBDC II, with proceeds intended to fund investor payouts and help manage debt across the business.

What Drove This Decision of Blue Owl?

The decision follows rising redemption requests and mounting liquidity pressure within the private credit markets. OBDC II saw elevated redemption activity in 2025, with withdrawals rising roughly 20% year over year and running above historical norms. Sustained exit demand against a portfolio of illiquid, privately negotiated loans raised concerns that maintaining quarterly redemptions could eventually force payout limits if cash reserves proved insufficient.

Private credit funds like OBDC II lend to companies outside public bond and equity markets. These loans are less liquid and more difficult to sell quickly at transparent prices. If many investors seek to exit simultaneously, managers may need to sell assets at unfavorable terms or restructure liquidity provisions.

OWL’s Price Performance & Zacks Rank

In the past six months, OWL shares have lost 46.9% compared with the industry’s 19.6% decline.

Currently, Blue Owl carries a Zacks Rank #4 (Sell).

A couple of better-ranked stocks from the same space are Ameriprise Financial, Inc. AMP and Federated Hermes, Inc. FHI. Currently, AMP and FHI carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for AMP’s current-year earnings has been revised marginally upward over the past 30 days. Shares of Ameriprise have lost 3.2% in the past year.

The Zacks Consensus Estimate for FHI’s current-year earnings has been unchanged over the past 30 days. Shares of Federated Hermes have gained 44.2% in the past year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research