Blue Owl Capital Inc at Citizens Financial Services Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : <_ALACRA_META_ABSTRACT>Kipp, maybe to start with you, I'd love to just hear about how the new role is going as Co-President, how your day-to-day has changed a little bit. I'm assuming you're doing a lot of this stuff, seeing investors, et cetera. And then the two Co-President announcements at the firm, how does that coincide with just the natural evolution of Ares?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : That's great. And then, Marc, looking at the early days of Blue Owl, Owl Rock, going back to 2016, really a direct lending business. Fast forward to today, it's not just direct lending, you have asset-based lending, you have digital infrastructure, GP stakes, et cetera. So talk about the evolution over the last decade. You've been acquisitive, and it would just be helpful to kind of, from your perspective, think through and walk through just kind of the natural evolution of your business as well. Marc Lipschultz - Blue Owl Capital Inc - Co-Chief Executive Officer, Co-Founder, Director Sure. Look, it's great to be here, Brian, your understanding of this industry is, I would dare say, unique and with the superstar of the industry is a privilege. So I -- look, we've come a long ways in 10 years, but I think some things have stayed the same. So maybe I'll start with what's the same, and then we can talk to the evolution. What's the same was we started the business with a couple of key principles in mind. One was that we wanted to be a capital solutions provider. That is to say the picks and shovels provider to the gold miners, whatever metaphorical example you like. Our job is to provide bespoke solutions to ultimately what's proven to be a wider range of users. But that was the principle first. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 5:00PM, OWL.N - Blue Owl Capital Inc at Citizens Financial Services Conference And the reason for that, very importantly, number two, was to architect a set of investment strategies for investors that are much more about downside protection, principal preservation, yield, and that's the common thread when you look across the things we do. And while it's many more than it was 10 years ago, they're actually still very much adjacent, and that's the common thread is they're very much about the -- how do I protect capital and make a nice return sort of in that order, if you will. And alts perhaps prior to that, and then I was in alts for 21 years before, mostly had the character of how do I get kind of maximum returns and manage the risk to go with it. So those two. And then third was the idea of serving the individual investor and the institutional investor as true peers and not as this. I'm an institutional business, and I can, [deign], to do business with these individuals. So those are the three premises, and those are consistent. And so I guess, today, I would characterize that as really the DNA of the firm. And then what we've done is where we see opportunities organically or through acquisition to deliver on those promises, that's how we've built the business. The bulk of our growth has been organic, the substantial bulk of our growth. It's true we've done a number of which we're very happy about, of acquisitions. In a way, the number of acquisitions probably -- I don't say it's misleading, but actually as a percentage of our enterprise, each one was quite small. And then we've taken them and done organic things with them. So if you take our real assets business at the time that we acquired what was then Oak Street at $12.5 billion of assets. And today, I think we're at $45 billion of assets, and that now last year was the largest real estate fund raise in the world, I think. Our continuously offered product in real estate is thriving. That now has over $7 billion of equity in it. So not to go down this rabbit hole, but the idea being that it's where can we find strategies that deliver on that promise from 10 years ago and are additive to what people want in their portfolios today.

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : That's great. And I guess sticking on the point of scale, I think a lot of folks that look into the industry from the outside, like they see firms getting bigger and bigger and bigger, and they think it's a bad thing. But to your -- both your points, like scale is critical. Scale creates the outperformance. So maybe just talk through this a little bit more, like from your seat, why is scale so important? And what are the competitive advantages? And really how does scale create differentiated returns for your investors? Marc Lipschultz - Blue Owl Capital Inc - Co-Chief Executive Officer, Co-Founder, Director Yes. I'm happy to start. So here's the thing, too, like scale is not a monolithic term. In some worlds and some strategies, scale is decidedly advantageous. In others, it's not. In credit or the -- I'll call it even generally, these capital solutions products more generally, scale is undoubtedly a uniformly advantageous fact. It's about more origination, more underwriting, and ability to participate with the largest companies with their solutions. You want to do a big financing and you're a big company and you're a big sponsor, there's only a few people you're going to call and a couple of us are here. I don't say that with any arrogance. I say that with the benefits of the scalable solutions. And so there's only an advantage to be able to see more credits and see bigger credits and see better ones and then be one of the few people that's positioned to take advantage of them. That's not true of every strategy, right? Like take the opposite version, which obviously has nothing to do with what we all do. Venture capital is not like, oh, is this uniformly better. If you just raise more and more and more capital and you're bigger and bigger, it's just not true. In fact, evidence would probably be the contrary. So I think it's important to know what fits your model here, take the other side of it, the contra. Like why would you want to be smaller so you can see fewer things so you can lend to smaller companies?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Anything to add, Kipp?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : And I guess just going back to the business models a little bit because I think this is important. 5, 10 years ago, the industry was primarily some private equity funds, some direct lending funds, some liquid credit. Fast forward to today, you have capital-light businesses, you have capital intense, you have on-balance sheet insurance liabilities, you have transaction fees, et cetera. So the models have evolved quite a bit. And I think all -- you and your peers, you're all kind of doing the same thing, but you're going at it at a little bit of a different angle. But I look at Ares and Blue Owl, both models are capital-light, they're fee-driven, they're FRE-centric. So just walk through -- I don't think it's a coincidence that both of those models are like that. So just walk through why capital-light and why you operate the business that you do. Maybe to start, Kipp.

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : And it kind of goes into my next question. I feel like every period of volatility we get -- I've covered the space, again, 12 years. So it's like every few quarters, you get these periods of volatility. People are very negative on the sector. When I take a step back, I look at my alts coverage collectively, there's $600 billion, $700 billion of dry powder. And so I think some folks forget volatility is actually a good thing for your businesses. And so spreads have been tight. You get some volatility, they gap out, you can deploy capital into higher quality companies, better spreads, et cetera. So just from your standpoint, like why is that so relevant? And I think, too, like you go back and look at where the outperformance comes from through the cycle, it's periods of volatility.

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : And so on the point of pretty healthy valuations, things have really recovered off of the April lows. I mean you still have capital to deploy, right? And there's a lot of perpetual strategies in the industry that are raising capital on a monthly basis. And so, I guess, where are you leaning in from a risk-reward perspective, right? You have capital coming in and it has to get deployed. And so where -- how do you make sure you're deploying into the right assets, the structure is right and you're getting paid for that risk?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Got it. And I guess on the flip side of that, kind of going back to periods of volatility because I guess the way the stocks are trading, it feels like we're going into this credit cycle, things are going to get really bad. And so I think -- and I believe I asked it on the ARCC call, but when you look back at periods of volatility, I mean, how much excess return has been generated across some of your strategies? And again, I think the beauty of the model is not a forced seller, you can lean in during periods of volatility. But like is there any way to quantify that? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 5:00PM, OWL.N - Blue Owl Capital Inc at Citizens Financial Services Conference Marc Lipschultz - Blue Owl Capital Inc - Co-Chief Executive Officer, Co-Founder, Director One thing that's important, I think, to probably start with is in our world -- and again, we'd be careful because our worlds have lots of different components to them. But for the moment, let's just -- let's talk direct lending, which I think is often where people's focus tends to be coming at the moment. The -- in a way, it ultimately is a relative product, right, at some level and at some level, an absolute product. The absolute part to your earlier question, we say where to lean in. Actually, even that sort of frame of reference doesn't tend to be what we all do in our core businesses because actually, it is to have a standard of credit that is incredibly high. And that's why we have such durable books, such low loan losses. And that's actually bedrock, right? So what's really happening is deal flow may move around that standard, but the key is to be large enough and disciplined enough to hold the standard. And that means, yes, you'll have some periods where we deploy more, some periods where we deploy less. So even like kind of the lean-in mindset doesn't exist within the confines of, if you will, maybe a narrow vertical other than to say that with regard to looking for opportunities, key is for us to make sure on the relative basis, we're always commanding a very attractive premium for our investors for being a part of our product relative -- we don't -- none of us live in a bubble would be silly to say it just doesn't matter what the market is. But if you look practically speaking, over any long period of time in the modern version where we're talking to these kinds of large cap solutions, spreads go up and spreads come down, but they live in a band. I mean there's a spread level where it just doesn't make sense for us to be active lenders. And there's a spread level, by the way, on the other side, where it doesn't make sense for people to be active borrowers. And so if you look, it's just this amplitude and this -- and remember, the portfolios have hundreds and hundreds of names in them. So the portfolios aren't like today's spread. The portfolios have some things from today. They have some things from last year. They'll have some things from next year. So I think people are getting way too micro focused about this moment in time and kind of missing the bigger picture, which is great, consistent premium with great credit protection that really works through it for investors through thick and thin. And if you're really worried, I'll just leave this, if you're actually worried about private credit performance, then as soon as we leave here, everyone want to like get out of their stocks and get out of their private equity. And I mean, remember, we're the top of the stack, senior secured, like by the time you get to that, if that's where your concern lies, I mean you're skipping a lot of step between here.

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Yes. And kind of transitioning a little bit, but covering the BDCs as well, I have a whole new appreciation for the portfolios, ARCC, OBDC, they're performing incredibly well. And I think people don't understand or fully appreciate the diversification that sits in both of those vehicles, right? The average position size at ARCC is sub-20 basis points. You look at OBDC, I think it's about 40. And then the non-traded, it's somewhere in between. So talk about the diversification of kind of the direct lending portfolios. You have a turn of leverage, LTVs are at 40%, 45%, to your point, the amount of equity cushion that sits in these deals. And because I feel like I have a lot of conversations where it's just educating on some of those dynamics. But when you kind of put all those things together, I mean, what -- how bad could things really get?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : So what do you think changes that perception, the misinformation that I see is incredible. And it's -- part of my job is getting the facts out into the market. I'm bullish on the sector. But it feels like every period of volatility, like there's a new cynical narrative that is coming into the market. 10 years ago, it was private equity marks are garbage, those portfolios are worthless. Then it was the energy, then it was picked and here we are, it's all private credit. And so I mean, is there -- like is it education? And maybe this is just how the markets will always be, but like does that ever change? And if it does --

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Got it. Another topic, I know you guys are getting a lot of questions about it, software lending. So in this new era of AI, I think there are concerns about the quality of that portfolio. Again, I'm quite familiar with OTF, Blue Owl's tech lending, BDC, ARCC gave some great color on the earnings call on the software portfolio. I mean you look at all direct lending, that sector, those portfolios are probably the highest performing highest quality parts of the portfolio. So why is that? You're getting paid additional incremental spread lending to those types of companies. So like let's just walk through why that portfolio is performing so well. Are there any -- like how do we, from the outside, think about the risks as AI continues to come into our lives more and more? And kind of just walk through that and what's driving?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : And then LTVs of the software portfolio, can you just remind us where those sit today? Because I think that's another important stat. Is it 30% -- Marc Lipschultz - Blue Owl Capital Inc - Co-Chief Executive Officer, Co-Founder, Director Yes, close to 30% in the loan to values in these loans at time -- back to the point, time you do a deal, typically, it's 30-something, 30-ish percent of a software deal, where it's 40-something of a non-software deal. Both are low. But again, if you want over the risk, the fluctuations on it, and it's true that software people got pretty hyped about it in 2021. And maybe this is the growth, maybe this isn't the growth. But if 70% of the capital structure is equity, all of shock absorber is just a question of the equity results and nothing to do with the debt results.

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Yes. And I guess thinking about like the adoption of private capital solutions, right, started as private equity and then direct lending and then here we are alternative credit, digital infrastructure, and you kind of keep going down the list. But when you look at the adoption of private capital today, I mean, like where are we across the spectrum? Direct lending is probably a little bit more mature, but you look at some like digital infrastructure and asset-based lending, I mean, like what's the opportunity? I mean, is there a way to think about the TAM there at $50 billion, I'm assuming that could be multiples and even Atalaya, now alternative credit, that could be $12 billion, $13 billion today in three to five years, like what is some of these end markets in terms of your business look like? Marc Lipschultz - Blue Owl Capital Inc - Co-Chief Executive Officer, Co-Founder, Director Well, a couple of comments just to build on what Kipp said, for sure, on the asset-based side, like let's just take it directionally, cut it how you want, it's a bigger addressable market than direct corporate credit. It doesn't matter if it's a lot bigger, not a lot bigger.

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Just a couple of final questions to wrap. I mean kind of going back to the macro, I mean, Again, another thing dynamic that's underappreciated is the amount of data that sits in both your firms, right, all the different data points. But from a macro perspective, and underlying growth perspective, I mean, what are your firms seeing in terms of revenue growth, EBITDA growth? Maybe some of that has to do with the sectors you're allocating to. But I mean, what is the house view on the macro over the next year -- one to two years?

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : Okay. And then maybe just the last question. Let's fast forward, call it, five years outside of maybe a robot asking you guys questions on stage about PIK income, like what -- Marc Lipschultz - Blue Owl Capital Inc - Co-Chief Executive Officer, Co-Founder, Director My robot will answer those questions. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. NOVEMBER 18, 2025 / 5:00PM, OWL.N - Blue Owl Capital Inc at Citizens Financial Services Conference

Question: Brian McKenna - Citizens JMP Securities LLC - Analyst : All right. Great. I think we're a few minutes over. So we'll leave it there. Thank you both for being here. Great perspective, as always, and good luck.