Blue Owl Capital Inc.

The company's Credit platform is approximately 55% of AUM, with GP Strategic Capital and Real Estate platforms contributing the remaining 26% and 19%, respectively.. The negative outlook reflects the company's elevated S&P Global Ratings-adjusted debt to EBITDA--which is above 3.0x--due to the large, recently announced acquisitions. We could lower the ratings if leverage stays above 3.0x because of additional debt-financed acquisitions, and if both AUM and earnings growth stagnate. We could revise our outlook to stable if Blue Owl keeps S&P Global Ratings-adjusted debt to EBITDA below 3.0x while increasing AUM and earnings. S&P Global economists expect U.S. GDP growth of 2.7% in 2024, 2.0% in 2025, and 2.0% in 2026. We assume management fees remain very strong but growth

...Recently announced mergers and acquisitions have led to elevated leverage as well as increased potential integration risk. Pro forma for these transactions, Blue Owl Capital Inc.'s weighted average leverage is above the 3x downside trigger. The tax receivable agreement (TRA) balance increased to $1.2 billion by Sept. 30, 2024, from $879 million at year-end 2023, potentially straining leverage further. Without the TRA, leverage would be around 2.2x. While we do consider the TRA to be a "softer" form of leverage, we also expect its balance to grow as the company's earnings increase. Blue Owl has meaningfully grown its assets under management (AUM) over the last three years. Over the past year, the company has grown its AUM base through a combination of organic and inorganic growth. AUM reached $235 billion in the first nine months of this year, compared with $157 billion a year before. Fee-paying AUM (FPAUM) increased to $154 billion from $97 billion over the same period. The company's Credit...

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