Insight
Direct Lenders Achieve Lower Losses Than Syndicated Loans Through Better Diligence
“The other thing we need to do is because we can do a lot more diligence than a syndicated participant is to make sure we better protect the downside. Whatever the loan losses are in the syndicated market, we need to do a much, much better job. Because we have …”
Prediction Not checkable as stated
Private Equity Returns Will Drop Meaningfully Due to High Multiples
“And I think PE is going to be a good asset class. It's going to be a great asset class going forward, but we have to realize returns are coming down, and they're coming down meaningfully. They have to. Purchase price multiples are exploding, and so the higher …”
Insight
Closed-End Credit Funds Suffer Adverse Selection From Early Refinancing
“The problem, if you think about it, think about the loans you make in years three and four. Usually they have a year or two years of call protection. A lot today have only a year. So what happens is if a company does well, they refinance you out. And so you ha…”
Assertion Not checkable as stated
Owl Rock Had Zero Voluntary Employee Departures in Its First Six Years
“We have today About 300 people, and we have not had one person in six years voluntarily leave, not one.”
Assertion Not checkable as stated
Every Owl Rock Software Loan Is Meeting or Beating Underwriting Targets
“Every single software loan that we've made is hitting or exceeding its underwriting case, and that's coming through the pandemic.”
Assertion Not checkable as stated
Sellers Inflate Stated EBITDA by 20% to 70% With Pro Forma Adjustments
“Anyone who's selling a company will take this stated EBITDA or cash flow and have sometimes as low as 20, sometimes as high as 40, 60, 70% increase for what are called pro forma cash flow adjustments. Every company is being sold off those adjustments.”
Insight
Distressed Companies Are Valued on GAAP Cash Flow, Not Adjusted EBITDA
“The way it's going to be valued if we go to sell it is not off of this pro forma adjusted EBITDA with these ad backs. People are going to look at its gap cash flow and value it off of that.”
Assertion Not checkable as stated
GSO Pioneered Combining Public Credit Expertise With Direct Lending
“We're going to do something that nobody really had ever done, and that was Marry both public market expertise with origination, and direct lending wasn't really a thing back then”
Assertion Not checkable as stated
Few Direct Lenders Could Hold $500M Loans When Owl Rock Launched
“When you got to the top of the pyramid, the number of firms that could actually make loans of two, three, four, five hundred million and hold it was relatively small.”
Opinion
Owl Rock Is a Top Software Lender Alongside SVB
“I think today we are probably, I don't know if we're the largest, but we are one of the largest dedicated lenders to the software space. We have 22 people focused on software, half in New York, half out in Menlo Park. So, I mean, clearly Silicon Valley Bank is…”
Opinion
Direct Lending Is in the Early Innings of Private Equity Adoption
“So I think we're in the really early innings. I think I've been pretty right on seeing this, and more and more PE firms are looking at not just what we do, but the direct lenders in general as a pretty good alternative to the syndicated market.”
Assertion Contradicted
Owl Rock Pioneered Institutional Permanent Capital for Direct Lending
“When we went out to raise permanent capital, it had only been raised retail. Nobody had really done it institutionally.”
Disclosure
Owl Rock Founders Reinvested 100% of Dyal Stake Proceeds Into Funds
“And by the way, we didn't take any money out. We could have. They offered that. But we said, listen, we're raising this money to put it all into our funds. And that's what we've done with it. And today, all of us have the bulk of our liquid net worth invested …”
Disclosure
A 2008 Bridge Loan Wipeout Made Ostrover Reluctant to Use Leverage
“Well, the crisis got worse after we bought it, and some of these loans fell 20, 30 points. Well, if you take 20 points times four, you've lost 80%. You take it times five, your equity is negative. And that's what we went through in 2008. And so I've been reall…”
Assertion Partly supported
Owl Rock Launched With $12 Billion of Total Investing Firepower
“We raised six billion dollars. We use a turn of leverage, so we had twelve billion A firepower when we launched.”
Assertion Not checkable as stated
Owl Rock Has Completed Over $30 Billion in Sponsor Financings
“We cover today over 700 private equity firms. We've worked with well over 500. We've done over thirty billion dollars of financings.”
Disclosure
Owl Rock Assigns Independent Covenant Specialists to Every Deal
“Every deal we do, we have someone who is focused exclusively on covenants. They don't talk to any PE firms. They are just trying to understand if things go wrong, what is the art of the possible?”
Assertion Not checkable as stated
Owl Rock Reviews Up to 1,600 Deals Annually From Top Sponsors
“From that roughly 152 hundred firms, we're probably seeing 15, 1600 deals a year.”
Disclosure
Blue Owl Targets Direct Loans at Approximately 50% Loan-to-Value
“In general, what we're striving for is to find a business in a sector we like, and we're trying to make loans at around 50% loan to value. Because at 50% loan to value, I feel pretty good that things have to go really wrong for us to lose dollar one.”
