Blue Owl Capital (OBDC) 8 Aug 24 2024 Q2 Earnings call transcript

In the latest earnings call for Blue Owl Capital Corporation, the company announced another strong quarter of financial performance, while also unveiling a strategic merger agreement with Blue Owl Capital Corporation III (OBDE). The call, led by CEO Craig Packer, highlighted key themes of operational efficiency, strategic growth, and a positive outlook for the future.

Financial Performance and Merger Announcement

The earnings call began with a review of Blue Owl Capital Corporation's second quarter results, which included a net investment income of $0.48 per share, up from the previous quarter. The company's net asset value also saw a growth of 12.6%, reflecting a robust financial position. Craig Packer emphasized the importance of this strong performance, stating, "We are pleased to be sharing not just another quarter of strong results for OBDC, but also a milestone merger agreement between OBDC and OBDE that we believe will provide long-term strategic value to both sets of shareholders."

This strategic merger with OBDE is expected to add approximately $4.3 billion of investments to OBDC's portfolio, making it the second-largest publicly traded BDC by total assets. The deal, which is subject to shareholder approval, aims to streamline operations, enhance scale, and improve trading liquidity for investors. The company is confident that this merger will provide significant benefits, including increased access to lower-cost sources of debt and operational efficiencies.

Market Outlook and Strategic Initiatives

The call also provided insights into Blue Owl Capital Corporation's market outlook and strategic initiatives. Despite recent market volatility, the company remains optimistic about its portfolios and the value proposition of the merger. Craig Packer emphasized that the combination of OBDC and OBDE's portfolios, which have significant investment overlap, will create a high-quality, diversified portfolio that offers increased efficiency and scale.

Additionally, the company has been actively pursuing new investment opportunities, with a focus on high-quality companies in noncyclical sectors. Craig Packer highlighted the company's strong origination efforts, which have resulted in a healthy mix of new and existing company deals. The company also expects to skew more towards new names as M&A activity picks up, while maintaining a disciplined approach to risk management.

Investor Relations and Shareholder Value

The call also addressed investor relations and shareholder value. Michael Mosticchio, who recently joined the company as Head of BDC Investor Relations, outlined the company's commitment to transparency and investor communication. The company has posted a range of materials related to the merger on its website, emphasizing the importance of shareholder education and engagement. Craig Packer emphasized that the merger is expected to enhance shareholder value by improving operational efficiency and access to capital.

Conclusion

Blue Owl Capital Corporation's second quarter earnings call provided a comprehensive overview of the company's financial performance, strategic initiatives, and market outlook. The merger with OBDE represents a significant step forward in the company's growth strategy, while also underscoring its commitment to operational efficiency and shareholder value. With a strong financial position and a strategic outlook, Blue Owl Capital Corporation is well-positioned for the future.