Gary Lin, Head of Global Strategy and Solutions for Blue Owl Capital, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the firm’s narrow and differentiated investment strategies.
Blue Owl Capital is a publicly-listed firm with $250 billion in AUM with investments across private credit, real estate, and private equity. While the alternative investment space is very broad, Blue Owl focuses on narrow sectors within it. In private credit, Blue Owl focuses on sponsor-backed direct lending and asset-backed finance. Their real estate focus is on net lease properties. In private equity, Blue Owl invests in minority stakes in privately owned alternative investment managers. Because the investment interests at Blue Owl are so narrow, the investment team has great expertise in these strategies.
Blue Owl is the largest player in privately owned alternative investment managers. Publicly listed asset management firms, such as Apollo and Blackstone, have had strong returns in recent years. Blue Owl’s GP stakes fund invests in the largest, most established privately held alternative investment firms. By providing growth capital to these firms, Blue Owl participates in the management fees, carried interest, and balance sheet investments in perpetuity. This fund is available to qualified purchasers.
The majority of assets invested in private markets today are owned by institutional investors, who are typically not concerned with taxes. However, Lin notes that taxes are the most significant pain point for individual investors. Rather than simply transferring investments from institutional to private wealth structures, innovative solutions to alleviating the tax burden will be necessary. Blue Owl collaborates with insurance-dedicated funds, enabling investors to defer taxes. The 1031 solution allows investors to exchange a highly appreciated real estate property for partnership units of a diversified passive REIT. This preserves the asset’s tax basis, diversifies the investor’s real estate exposure, and relieves the investor of actively managing their real estate portfolio.
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