Blue Owl Capital Significantly Expands Alternative Credit and Asset-Based Finance Capabilities with Acquisition of Atalaya Capital Management's Business

Rhea-AI Summary

Blue Owl Capital Inc. (NYSE: OWL) has announced a $450 million acquisition of Atalaya Capital Management LP, an alternative credit manager. The deal, expected to close in H2 2024, will add over $10 billion in assets under management to Blue Owl's portfolio. Atalaya, founded in 2006, specializes in asset-based credit investments across various sectors.

The acquisition price includes $350 million in Blue Owl equity and $100 million in cash, with a potential $350 million earnout based on future revenue targets. Ivan Zinn, Atalaya's founder, will join Blue Owl as Head of Alternative Credit. The move is expected to be modestly accretive to Blue Owl in 2025 and will significantly expand its alternative credit offerings.

Positive

• Acquisition adds over $10 billion in assets under management to Blue Owl
• Expands Blue Owl's alternative credit capabilities and offerings
• Expected to be modestly accretive to Blue Owl in 2025
• Atalaya has deployed over $17 billion of capital since inception
• 70% of Atalaya's deal flow sourced directly through asset owners, originators or joint venture partners

Negative

• Significant upfront cost of $450 million for the acquisition
• Potential for up to $350 million additional earnout, increasing total acquisition cost
• Integration challenges may arise from merging two distinct organizations

Insights

Financial Analyst

Blue Owl Capital's acquisition of Atalaya Capital Management signals a significant strategic move. Acquiring an established business within the alternative credit and asset-based finance sector expands Blue Owl's offerings. The $10 billion in assets under management (AUM) from Atalaya will bolster Blue Owl's financial base. Furthermore, the transaction structure—comprising $350 million in equity and $100 million in cash—reflects Blue Owl’s prudent capital allocation strategy, minimizing immediate cash outflow.

Importantly, the earnout consideration of up to $350 million indicates conditional performance payments, aligning incentives with long-term growth and performance metrics. Market-wise, this move could potentially enhance Blue Owl's competitive positioning within the alternative credit market. However, investors should monitor integration risks and potential dilution effects from the equity issuance. In the short-term, anticipated accretive benefits by 2025 are promising, but it's important to remain vigilant on execution risks.

From a valuation perspective, this acquisition adds value by expanding Blue Owl’s business lines, which could lead to a re-rating of its shares in the long term, especially if Atalaya's performance remains robust.

Market Research Analyst

This acquisition not only broadens Blue Owl’s product offerings in the alternative credit space but also integrates Atalaya’s strong market presence and expertise. Atalaya’s direct sourcing strategy has historically provided a significant competitive edge, directly sourcing nearly 70% of its deal flow. This expertise complements Blue Owl's existing direct lending capabilities, potentially leading to higher yields and diversified revenue streams.

From a market perspective, the move could be seen as a strategic diversification effort, mitigating risk by expanding into asset-based finance. Additionally, Atalaya’s reputable track record through different market cycles adds a layer of operational stability. Investors should consider the strategic value of this acquisition in reinforcing Blue Owl’s market position and enhancing its product suite. Short-term fluctuations aside, the potential for long-term revenue growth and market share expansion appears substantial.

• Established alternative credit management business with an 18-year track record will add over $10 billion in assets under management.

NEW YORK, July 16, 2024 /PRNewswire/ -- Blue Owl Capital Inc. ("Blue Owl") (NYSE: OWL), a leading alternative asset manager, announced today it has entered into a definitive agreement to acquire the business of alternative credit manager Atalaya Capital Management LP ("Atalaya") for $450 million. The acquisition is expected to close in the second half of 2024, subject to customary closing conditions, and is expected to be modestly accretive to Blue Owl in 2025.

Atalaya focuses primarily on asset-based credit investments across consumer and commercial finance, corporate and real estate assets, and managed over $10 billion of AUM as of June 30, 2024. Since inception, Atalaya has deployed over $17 billion of capital with nearly 70 percent of deal flow sourced directly through asset owners, originators or joint venture partners. Atalaya was founded in 2006 by Ivan Zinn, who serves as Founding Partner and Chief Investment Officer. Mr. Zinn will join Blue Owl as Head of Alternative Credit and will report to Craig Packer, Head of Credit and Co-President of Blue Owl. Atalaya is based in New York and has approximately 115 employees, including over 50 investment professionals. Upon closing of the acquisition, most of Atalaya's employees are expected to join Blue Owl and will continue to manage existing Atalaya funds.

The closing purchase price of $450 million is comprised of $350 million of Blue Owl equity and $100 million of cash. In addition, there is potential for up to $350 million of earnout consideration in the form of equity, subject to certain adjustments and achievement of future revenue targets.

Blue Owl's Co-CEOs Doug Ostrover and Marc Lipschultz said: "The acquisition of Atalaya adds adjacent and scaled alternative credit capabilities that complement Blue Owl's leading position in direct lending. Atalaya was an early pioneer in private asset-based finance. They have created a robust business with highly differentiated sourcing and underwriting expertise and have demonstrated a strong track record across market cycles. Atalaya significantly expands Blue Owl's alternative credit offerings and delivers a more robust suite of financing solutions to our stakeholders."

Ivan Zinn said, "We view Blue Owl as an ideal strategic partner to support the next stage of our growth. We are proud of the exceptional track record we built over nearly two decades and are incredibly grateful to our investors, team and partners who made this journey possible. We look forward to continuing to drive forward at the leading edge of alternative credit as part of Blue Owl."

Citigroup, MUFG Bank, Ltd., SMBC and Wells Fargo are acting as co-financial advisors to Blue Owl in connection with the acquisition. Kirkland & Ellis LLP is acting as legal advisor to Blue Owl.

Mizuho, RBC and Truist are acting as co-advisors to Atalaya. Cravath, Swaine & Moore LLP is acting as legal advisor to Atalaya.

A supplemental investor presentation with respect to the acquisition is available on the shareholders section of Blue Owl's website at www.blueowl.com.

About Blue Owl
Blue Owl (NYSE: OWL) is a leading asset manager that is redefining alternatives.

With over $174 billion in assets under management as of March 31, 2024, we invest across three multi-strategy platforms: Credit, GP Strategic Capital and Real Estate. Anchored by a strong permanent capital base, we provide businesses with private capital solutions to drive long-term growth and offer institutional investors, individual investors and insurance companies differentiated alternative investment opportunities that aim to deliver strong performance, risk-adjusted returns and capital preservation.

Together with over 725 experienced professionals globally, Blue Owl brings the vision and discipline to create the exceptional. To learn more, visit www.blueowl.com. 

About Atalaya Capital Management
Atalaya Capital Management is a privately held, SEC-registered, alternative asset manager who primarily focuses on making private credit and special situation investments in three principal asset classes – specialty finance, real estate and corporate. Founded in 2006, Atalaya is headquartered in New York City and has more than $10 billion in assets under management and has deployed over $17 billion across 600+ investments.

Forward Looking Statements
Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "would," "should," "future," "propose," "target," "goal," "objective," "outlook" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Any such forward-looking statements are made pursuant to the safe harbor provisions available under applicable securities laws and speak only as of the date made. Blue Owl assumes no obligation to update or revise any such forward-looking statements except as required by law.

These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Blue Owl's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

Important factors, among others, that may affect actual results or outcomes include the inability to recognize the anticipated benefits of strategic acquisitions; costs related to acquisitions; the inability to maintain the listing of Blue Owl's shares on the New York Stock Exchange; Blue Owl's ability to manage growth; Blue Owl's ability to execute its business plan and meet its projections; potential litigation involving Blue Owl; changes in applicable laws or regulations; and the possibility that Blue Owl may be adversely affected by other economic, business, geo-political and competitive factors.

Investor Contact
Ann Dai
Head of Investor Relations
blueowlir@blueowl.com

Media Contact
Nick Theccanat
Principal, Corporate Communications & Government Affairs
Nick.Theccanat@blueowl.com

 

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SOURCE Blue Owl Capital

FAQ

What is the value of Blue Owl's acquisition of Atalaya Capital Management?

Blue Owl Capital (NYSE: OWL) is acquiring Atalaya Capital Management for $450 million, consisting of $350 million in Blue Owl equity and $100 million in cash. There's also potential for up to $350 million in additional earnout consideration based on future revenue targets.

How much assets under management will Atalaya add to Blue Owl?

Atalaya Capital Management will add over $10 billion in assets under management to Blue Owl Capital (NYSE: OWL) upon completion of the acquisition.

When is the Blue Owl-Atalaya acquisition expected to close?

The acquisition of Atalaya Capital Management by Blue Owl Capital (NYSE: OWL) is expected to close in the second half of 2024, subject to customary closing conditions.

How will the Atalaya acquisition impact Blue Owl's financial performance?

The acquisition of Atalaya Capital Management is expected to be modestly accretive to Blue Owl Capital (NYSE: OWL) in 2025, according to the company's announcement.

What is Atalaya's focus in alternative credit investments?

Atalaya Capital Management, being acquired by Blue Owl (NYSE: OWL), focuses primarily on asset-based credit investments across consumer and commercial finance, corporate and real estate assets.