Blue Owl Capital has sold a $1.4 billion portfolio of private loans to three major North American pension funds and its own insurance subsidiary to address investor redemptions. The buyers included the California Public Employees' Retirement System, Ontario Municipal Employees Retirement System, and British Columbia Investment Management Corporation, along with Chicago-based insurer Kuvare.

The loans were sold at 99.7% of par value, split evenly across three funds as part of Blue Owl's effort to return capital to investors in Blue Owl Capital Corp II. The fund faced elevated redemption requests last year, prompting the sale. An earlier proposal to merge the vehicle with one of Blue Owl's listed funds was abandoned following scrutiny over potential investor losses.

The transaction highlights the growing overlap between private credit managers and insurance platforms. Analysts at Barclays noted that repeated sales of this nature could shift assets from more transparent business development companies into more leveraged collateralized loan obligation structures. Unlike business development companies, which typically operate at around 1x leverage, CLOs often carry leverage of nine to ten times equity.