YouSaid · the spoken record

Doug Ostrover

lines on the record: 69
first: 2025-05-15
most recent: 2025-05-15
sittings or episodes: 1
sources: podcast

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“And that would have really taken me down probably not a very good path. And by staying the course, learning, getting smarter, taking risk at the right time, we were able to create GSO, sell it to Blackstone, then leave and go do it again. So I feel really fortunate. I've been more successful in my 30s than my 20s. more in my 40s than my 30s and more in my 50s than my 40s and hopefully not 60 yet but hopefully i can keep it going through the 60s 70s and 80s that's the goal”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there are a lot of life lessons, but I think this really rings true for today. You know, with your career, you get out there, you're ambitious, and you really think it's a sprint. And the truth is it's not. You still have to be ambitious, work hard, try to get ahead. But it's really a marathon. Today it's technology. You see a lot of young people, early 20s, 30s, selling a software business or some app or something, and they make a lot, but that's rare. That's not going to happen for most people. When I got out of school, the big thing were leveraged buyouts. And they were being done for virtually no equity. And at a very young age, I became convinced that I was doing a leverage buyout. I have to tell you, every company that I tried to buy, if the deal had gone done within five years, it would have been bankrupt.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really, just watching. He really believed in that and was knowledgeable on everything. He was in the textile business, but he prided himself on no matter who he met, I could talk about history, sports, you name it. He studied it. So I got to see him in action and I didn't do quite as good a job, but did my best to try to emulate what he did.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think my father had a very simple thing that made a lot of sense. And I've tried to get my kids to buy into this as well. He had this saying where he wanted me to be able to walk into a bar and sit down at the bar and be able to strike up a conversation with the bartender. And then if a police officer came in and sat down next to me, he wanted me to be able to have a conversation with him. And then if athlete came in, same thing, a business person, politician, whoever sat down in that seat, he said, you've got to be able to find some common ground to have a conversation. Because in his view, business was so much about being able to get along with people. They have a choice who they can do business with. And if you can find some common ground, it will give you a leg up. And it's simple, easy to understand, but it's definitely something that served me pretty well.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“We thought it was just really cheap. 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 at times five, your equity is negative. And that's what we went through in 2008. And so I've been really reluctant to be a big user of leverage ever since.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably my biggest mistake was if I went back to 2008 and obviously the world was in turmoil. There was tens of billions of dollars of loans that were sitting on banks' balance sheets that were meant to be syndicated, but because of the crisis, they got stuck with it. They were called bridge loans. And we had the ability to come in and buy tens of billions of it where the banks would provide leverage. And I thought it was the greatest opportunity I had ever seen in my life. Senior secured loans, big companies. We could buy them at 80 cents on the dollar and the bank would basically finance it. Four to one leverage. So basically $10 billion purchase you only had to put up $2 billion, $8 billion of leverage. We didn't really think through that if prices went down, what that would mean.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“We looked at somebody who managed small convention spaces and small stadiums. And they were trying to get credit for a project that hadn't been built yet and wasn't going to come to fruition to 2025. We can't include that because if it gets in trouble in 2023 or 24 or even 25 and there was a delay, it will never come to fruition. So those are the kind of things we deal with.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“It really depends on the business, but because we do private style diligence, we have the luxury of sitting down with the accounting firms and really dissecting every single number that's put in there. So it's hard for me to generalize, but I would tell you there's always a meaningful amount that there's a real question whether or not it's recurring. And just remember, we're a creditor. And so let's say the company gets in trouble. 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. So we're constantly saying, okay, a year from now, what will show up in the financial statements? Some people want to get credit for something three years from now, five years from now. Great example is we...”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bet you, if you talk to a lot of PE firms, they'll say the same thing. It's what is called EBITDA addbacks. And so what that means is it's been a seller's market for a long period of time. Anyone who's selling a company will take this stated EBITDA cash flow and have sometimes as low as 20, sometimes as high as 40, 60, 70 percent increase for what are called pro forma cash flow adjustments. Every company is being sold off those adjustments. We're being asked to finance off of that. And a big part of our job every day is trying to figure out what's real and what's fiction. What are we really financing off of? So that's probably my single biggest thing.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I married my wife 30 odd years ago, and she's from South Carolina, went to the University of South Carolina. So I have become a diehard South Carolina, well, I should say a diehard suffering South Carolina Gamecock fan.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, this has nothing to do with investing. It's how wrong the preseason college football polls are. And when they talk about the strength of the ACC schedule.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“I probably have two. The first is taking my dog for a walk. My wife got a new dog. And of course, I've fallen in love with it. So I get out either every morning or every night with the dog, if I'm being honest. Definitely I can make some phone calls while I'm doing that. It's good time. And the other thing is I just try to get a little bit of exercise almost every single day.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's really a weekend pursuit, and that's part of the problem. I'm playing really just once a week. I'm hopeful to get out there and hit like Tiger. But the truth is it's just a great opportunity to reconnect with friends and spend a few hours decompressing and not thinking about what we do every single day.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have to say, unfortunately, it's golf right now. And I started late in life and I am mediocre, but determined to try to get better.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you have to go in and say to a seller, your deal is done. And so we think the PEVC space is going to be super active for the foreseeable future. And as I mentioned earlier, our goal is to come in and try to be that solutions provider. And if we're missing a tool in the tool shed, we're going to either build it organically or look to acquire it.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you take a step back and you think about where rates are today and where they'll probably be for the foreseeable future, there's really incredible tailwinds for the alternative space. And as you mentioned, our ecosystem that we service day in, day out, is the private marketplace. So we come in every day and we think about how can we get extra premium in everything that we do for our investors by servicing this group that's growing like crazy. And you'd be shocked how many PE firms, NVC firms have never talked to a direct lender, never even thought about it. They think that the bank is excited to work on their $300, $400 million deal. And they probably are in a good market. It's relatively easy. But when the markets get a little bit choppy, we provide...”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“The more you talk about creating this breadth of opportunities to provide solutions to sponsors, the sponsors, companies, everything in the ecosystem, the more it starts to sound like an old school investment bank. And I'm curious as you think about what you're building. What is it that's motivating where you want to get to in this competitive landscape?”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Culture is the key. Acquisitions are hard. And this wasn't really an acquisition. This was a merger. And so it's really a merger of equals. And so we had to make sure that the culture fit was really good. So we spent a lot of time getting to know each other, talking about our visions for the business. And while I thought it made tremendous economic sense, the culture fit was really good. We're looking at other things to continue to build out the product suite. And the hardest part is not finding a great business. It's finding that cultural fit. That's the hardest part. And it can be the greatest fit financially. But if the people aren't going to come in and buy into our basic values, we won't do it.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is really going to help us. On the other side, for dial, they live on planes and they are meeting with PE firms and VC firms and real estate firms literally every single day. And it's an incredible team. But we cover over 700 private equity firms. And so now our originators, when they're out talking to the firms, they're not just talking about deals for the direct lending side. They also now have a reason to call the founders and say, listen, you saw the news. If you're thinking about you want to get just sit down with Michael Reese and Drew Loreno and Sean Ward and the Andrew Polland and the team, we'll be out there tomorrow. We'll give you a sense of value. We can give you debt up at that level. We have a much broader suite. Final thing I'll mention is, and this goes back to where we started, culture.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Individuals, but even for the wealthiest, that is a lot of money. So I kept thinking that together, we might have a product suite that would be really unique. And so I went out, I started talking to a bunch of founders of PE firms, and I found they liked it and they thought it made a lot of sense. And our goal is obviously we want to see the most deal flow possible, but we also want to make sure that we win those deals where there's real alpha attached to it could mean that maybe it has some equity, maybe better call protection, maybe it's mispriced. And by being really relevant to these PE firms and VC firms and other private market firms, we're uniquely positioned. And I like our chances. And I think having Dial as part of the product suite.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Finance their buyouts or finance some of their holdings or even refinance some debt. And the more I started talking to Michael Reese and his team, I realized that maybe by joining together, we could have a product offering that would be really unique. Not only could we help finance deals, but now when we're sitting with that owner, we can say we can give you a loan up at the GP level. If you'd like, we could take a passive minority stake and we can give you capital to invest further in your funds. Some of them are looking at making acquisitions, maybe to buy out a partner or just general working capital purposes. And, you know, these, you go out and raise $20 billion fund and you want to put 5% in, and that's a billion dollar commitment. These are huge commitments. Many of these people are wealthy.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dial through a spec. So why don't you go through that and then we'll talk about what happens from here. Let me address how we came together with Dial. We can talk a little bit about the spec. Neither of these things I would have anticipated six years ago. The one thing we've looked at since day one is trying to figure out where is the world moving and how do we want to be positioned. And one of our big themes was, especially with private equity and venture capital firms, both who we work closely with, how can we become more and more relevant to them? How can we sit down with the founders of those firms and say, we can basically meet all of your needs? Not everything. We can't help you do a $10 billion IPO. We can help you with quite a bit. And we realized we were doing a really good job at providing solutions down at the fund level, helping PE and VC.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fund we've done, we try to be one of the significant investors. Well, you can imagine we've launched a series of products. If we're writing $100 million checks for each fund, we've quickly run out of liquidity. So we were looking at the new funds we were creating, and we started thinking about everybody likes it and expects us to be a very big investor. So we went to dial to give us some capital. 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 in our various strategies. It's something that's resonated. And that was really the rationale. So now we roll forward a couple years after that, and you are now joined at the hip.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“You're adding some volatility to it because it's tied to the public markets. So we have to do a better job of educating everyone when we traded a discount. Do you want to come in and buy it because we're not a stock? It's a senior secured loan portfolio. But early on it's behaved a little bit too much like just a regular common equity through education and time. I think people get a better understanding and hopefully we can dampen that volatility. So I want to turn to the last iteration and phase of where we're going with all this, which more relates to the ownership structure of LROC. So a couple years ago, you sold a stake to Dial. And I wonder if you could talk through the thinking at the time. You asked early on about our initial fundraise. And I think one of the things that got people's attention in that initial fundraise is I put a lot of my own money into the fund. And each”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is their last year to invest. They don't want to do something that might only have a six month horizon or a one-year horizon because they're not going to make a multiple on their money. They can't look at it. But sometimes we get these opportunities and someone says, listen, I want to make this acquisition. Then I'm going to take the company public. I want to take the debt out. We'll pay you way above market rate. We'll give you three or four points of fee. We'll let you make a $15, 16% for a year. And it should price at a six, but you're helping us get it done. And we don't want that debt outstanding when we list. Those are the kind of things we can do, and our peers can't. It's been a real advantage for us. So we're still in the early stages. If you were to ask me, what's the biggest negative to our permanent capital structure is that you're taking an illiquid asset class and”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pool of permanent capital. We'll get it 100% invested. We'll list it. And if you're an investor and you want to go and put 50, 75 million into direct lending, you could go give it to the newest fund that's being launched, but it's a blind pool. There's no assets. It'll take four years before it's all working. Or you could come to my office. You can sit down with my team. You can diligence every single loan in the portfolio. And just by basically going and buying 40 or 50 million of our stock, you have 100 cent dollars working and you have total liquidity. So we thought that was a real advantage for the investor, for us, we thought having permanent capital would allow us to do some things that our peers couldn't do. The best example I can give you is, let's say regular fund is in year four. And so”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Raising the capital such that today you're sitting on really permanent capital base. When we went out to raise permanent capital, it had only been raised retail. Nobody had really done it institutionally. It's important to understand how a traditional GPLP fund works for a credit fund. So usually you have four years to invest and you hit that four-year period. And then when the loans pay back, you get back your capital. 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 have adverse selection. Your best loans pay down very quickly. You don't really know how the fund does till the weaker loans pay off, which could be years eight or nine. So we came up with this idea of let's create this.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Option. So now on the private equity side, we hear a lot more about permanent capital vehicles. And so this concept of reducing the velocity that Wall Street had has to come with that side of the balance sheet. I wonder if you could talk a little bit about, even from the early days,”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“How can we create something that's unique for that issuer? And by doing that, get paid a premium. And then maybe 18 months, two years from now, maybe they wanted to make an acquisition. Maybe they needed more capital. We can structure around that. And then maybe then when they're bigger and now it's a billion and a half, two billion dollar deal, then maybe they go to the syndicated market. 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. And as I mentioned, especially coming out of COVID, you might pay more to us, but it's a very cheap option to make sure if things don't really work out, that you have a party who's rational and that you can work with to try to preserve your equity.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“10 or 20 times instead of 150. Let's make it a billion and a half or three billion. That's what Wall Street does. And so because of that, their focus is on bigger credits to do a $300 million deal and a $3 billion deal. It's the identical amount of work. But the truth is Fidelity and Pimco and BlackRock and all the big buyers. They want the bigger, more liquid deal because it's the same amount of work for them. And they can get a bigger allocation. So what does that mean? means the deals that are 100 to say six, seven hundred million, and that's a lot of the market. We're a pretty good solution. Remember, the big banks, they're trying to figure out what do the end buyers want? And they structure those deals to meet the needs of the marketplace. We don't think about the syndicated market. We don't even look at it. We're focused on what does the company need?”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a lot of money. It's really not when you think about it in the scheme of the marketplace. Here's the really interesting thing about Wall Street. When you hear Wall Street's making a loan to a below investment grade credit, say a single B, the type of company we would finance, they might make the commitment, but the commitment is very short-lived. They fund it and they lay it off the day it hits their balance sheet. There's this concept of velocity of capital. I'll just give you a quick example. So when I was a credit suppress, let's just say I had $5 billion of capital. If I made $5 billion of loans and I laid those off and I made three points, I made $150 million. It's pretty good. You quickly realize what you want to do is use that $5 billion and turn it over as quickly as possible, preferably”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“class. It's going to be a great asset class going forward, but we all 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 they go, the lower the returns are going to be. Things aren't going to go up forever. And so I think most of the big investors we talk to, they're of the mindset that let's invest with the best firms, but let's go in with eyes wide open and know that returns are probably going to come down over time. How does that impact your vision for what happens with the private credit markets over the next five or ten years? The credit markets are massive. These are trillions of dollars, these markets, and there's hundreds of billions issued every year. And so when somebody looks at our business and says, wow, $30 billion.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hey, what do you think of this firm? How should I think about making a decision between private equity firms? How have you found that the unique lens you have in working with them translates to how an investor in one of those private equity firms might think about their success? We do have some insight into the PE firms. We have a sense of the risk they're taking. And for our LPs, we try to be a really good partner and share with them who we think has a real competitive advantage and maybe a few who got lucky because maybe the pandemic bailed them out. So part of what we try to be is a great partner to our LPs. But in general, the firms we're working with, we think are really high quality. They've been great stewards of capital. They've generated really good returns. And I think PE is going to be a good asset.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Secondly, how it's capitalized. And there are certain P firms who want to put in as little equity as possible. That's just not going to be a good fit for us. 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. In a market like this where it's a little bit frothy, it's definitely starting to tick up a little bit. Maybe it's in the low 50s, but we try to remain pretty disciplined having a lot of equity underneath you can really get you through a lot of difficult times. I'm curious as you go out and talk to your investors, you see all these private equity firms from a perspective that they don't because you're working on deals with them. Inevitably, they have to ask.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Created every month, every year. And then because we play in bigger companies, there's also a lot of smaller firms that maybe were at a billion or two billion and the next fundraise is $5 billion. And so this is a good time to be a lender. There's a lot of demand for product, the animal spirits are alive and well. And so look, we're not going to be a fit for every P firm. And we're not looking for world domination. We're looking for 100, 200 firms that we can work closely with and really be a solutions provider for them. If you looked across your portfolio and did a composition by the couple of key factors that you look at in underwriting, what ends up being the biggest driver of the package? First and foremost, I would say it would be tied between the industry and what's our view of that industry.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Interest. And so to answer your question, if I think about the 700 firms we work with, probably about a third of them are showing us just commodity business. If we give them the best covenants, meaning no covenants and really low pricing, we win the deal. About a third are firms that were trying to find our rhythm with. And about a third are firms that we've either gotten a deal over the goal line or it's been close. What I'm trying to do every year is continue to migrate firms into that, let's call it that bucket on the right, where we think we can make it a win-win. And the nice thing is from that roughly 150, 200 firms, we're probably seeing 1500, 1600 deals a year. So we're seeing plenty of deal flow. And as you're probably aware, there are a lot of private equity firms that are”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're not looking for somebody when it gets tough. They're calling and saying paragraph C, line item two, we believe there's the ability for us to put more debt or to strip out assets. There's a lot of ways to parse through an indenture. I used to run a distress fund and I've looked at all of them. And you should know 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? What could somebody do if they came into this credit, wanted to move assets or debt somehow layer us? There's lots of nefarious things that happen. And it makes sense. Everybody's trying to protect their...”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we're a really good partner because you hit something like the pandemic. And if let's say you needed a covenant waiver, if you had a public bond outstanding, you had to go negotiate with 100 different parties, maybe 200. During the pandemic, if we were the lead on one of your deals, you just had to negotiate with us. So what we asked of a PE firm was shore up your balance sheet. Let's make sure you have liquidity if this crisis goes on longer than expected. And if you do that, we'll waive your covenant. Maybe we want a little more rate. Maybe we need a fee, but we'll make it reasonable and we'll give you the ability to extend that equity option. And so we have the luxury of cherry-picking because we cover a lot. And by the way, we cover 700 PE firms. We also call on a lot of large private companies. We're looking for people who want to make it a win.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is hitting or exceeding its underwriting case. And that's coming through the pandemic. Obviously, we have some stuff that might touch hospitality or aerospace, but our core sectors have really come through relatively unstayed. And so healthcare is another one. So we're looking at things like that that are more stable and the cash flows are a little more annuity-like. With having worked with called 500 sponsors, how do you think about the part of the underwriting that involves who that ultimate owner of the business is? The good news is we have a bunch of people at the firm who have really senior relationships at most of the firms we work with. And we've seen their behavior over a long period of time. We are not interested in taking over anyone's company.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think top two or three. And if you think about software, I think this will summarize what we look for. If you can find a piece of software that's mission critical. And so it's really involved in helping a company run. And there's very little churn. And we can look at cohorts over a long period of time that once it's installed, it doesn't churn off. What that means is you have a credit where the revenue base is very stable. Now, a private equity firm is buying it because they think they can really grow that revenue base. But we're looking at it and saying, if that revenue base does nothing but stays really stable, will we get our money back? And the way we do that is by loan to value. We make sure that we're coming in at a reasonable loan to value. And I don't know where we are in software today. I think around 10 billion of loans, every single software loan that we've made.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're just getting going. Every newspaper chain in America came through our office. It was a fresh pool of capital and they need capital. Now some of those newspaper chains are going to be fine. But the question which we couldn't answer, if I made a five-year loan, what is the value of that newspaper chain in five years if it defaults? We don't know. And so we've decided to focus on things that are more annuity-like. So we're big in insurance. Our single biggest sector is software. Software, 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 the single biggest player, but we're definitely.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Quality product. And I'm not saying the others aren't, but we just decided to do ours a little different. And so we find a loan. There's no cherry picking. We find a loan. It gets allocated to our institutional fund and our retail fund based on their assets. So the portfolio is not 100% identical because of timing when they both started, but pretty close. When the investment team goes and narrows that filter, are there either certain sectors or characteristics of companies that tend to make it through relative to others? Yeah, I mean, we decided early on since preservation of principle was the key to us. First, we start with industries. And so we decided we're not going to play in retail. We're going to avoid oil and gas. We're really going to avoid things that are going through major secular change. So you can imagine when we launched with $6 billion.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“People aren't aware of early on today, retail high net worth is really in vogue. So a lot of firms, KKR, Blackstone, a lot of firms are active in that. But when we launched a firm, we decided we were going to be very active in that space. So we started that strategy six years ago. And what we did, which is different, and I don't know how they're running it today, but I looked at a lot of firms with REITs. And I noticed most of the REITs were sold to retail. And then there was institutional capital. And the institutional capital and the REIT capital were playing in different investments. What we decided was we were going to create a retail sleeve that would play in the identical investments as our biggest investors. So let's really bring to the retail market a true institute.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, for example, if you only have four deals in-house and your best deal, maybe check six of the 10 boxes you want to track, you do that loan. So what I wanted to do was make sure we had a deal funnel that was as big as any of our competitors, but probably have a little less capital at the bottom of that funnel. So more deals per dollar of investable capital than any of our peers. That's what we set out to build. I can't prove it, but I can tell you I feel pretty confident that we've achieved that. We covered today over 700 private equity firms. We've worked with well over 500. We've done over $30 billion of financing. I don't know the exact number, but probably 200 line items. I think the other thing we've done that most”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Grateful to all those people who took that leap with us. Obviously, today, now we're blue out, it's much easier to attract great talent. But when you're just launching, that's away from raising the money. That's probably the hardest thing to do because you're trying to get someone who's at a point in their career where they're senior enough and you're asking them to take a lot of risk. Now hopefully offering them a good reward if it all works, but it's not for the faint of heart, that's for sure. So when you turn to this investment strategy predicated on protecting the downside, how do you go about filtering your investable universe to figure out where you want to make your bets on loans? The one thing I would say I was maniacally focused on is what's called our deal funnel. I thought the mistake a lot of direct lenders make is they don't put enough resources”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“In fact, before I got the conference room, I used to spend every day at the Putnam Diner in Greenwich in the back booth. I was the number one customer. That was my office to save rent. When you're starting something new, it's really scary. But we were fortunate. We got a great response from the market. We raised $6 billion. We use a turn of leverage. So we had $12 billion of firepower when we launched. Then we had our first close at the end of the first quarter in 2016. And we really haven't looked back since then. But you can imagine when you're starting and you're trying to attract people and you don't have an office. I don't even know if we had a name. We didn't have any capital. Now it come from GSO and Blackstone and we had had a lot of success there. But to get people to leave, Goldman and Morgan Stanley and other direct lenders had to take a lot of risk and believe. And I'm incredibly.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“Loans in that size and still have a diversified portfolio. Yeah, it's a really good question because going out with that, it'd be much easier to say we're going to do 10 or $20 million loans. You raise a half a billion dollars. You're in business. We had to go raise billions. I think we were fortunate. We put together a great team. I brought in Mark Lipschal, who is at KKR, Craig Packer, who is at Goldman, Alan Kerschenbaum, who is at TPG. And the whole idea was Let's give everyone our investors that big firm experience, but as a new boutique, but highly focused, focused on one thing, and let's be best in class at it. And it resonated. And there's an element of luck to this. And trust me, when I was sitting in my lawyer's office, we were working out of a conference room, interior conference room, no windows. There were like 12 of us. That's where we went every day for months.”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“The basic premise that we've created, and we've really executed on this, is protecting our investors' capital. Remember, we are a fixed income security. We're making senior secured floating rate loans. And our job is to earn a premium versus what they could get in the syndicated high yield market or the syndicated loan market. 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 better information and we've been able to do that. So I was excited when I saw less competition at the top of that pyramid and I could finance bigger companies. And that's where we focused. So how do you go from a ground start to amounting sufficient assets that you can make?”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“$20 million. Then you work your way up to $40 to $60 and then 60 to 80, then 80 to 100. 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. And so I noticed that and I was surprised because that's where I like to invest. Because think about it. If I'm lending to bigger companies, Most likely I can better protect the downside. They have more levers to pull to avoid bankruptcy. And what we have always tried to do is lend to a company that's number one, two, three, four, maybe five in their sector. So let's say a company does get in trouble. They're number three in the marketplace. You know companies one, two, four, five are going to have to look hard at that asset. And so”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source
“It gave me the ability to see quite a bit. I started becoming convinced that direct lending, which is what we specialize in, was going to become a really big asset class. Back in 14 and 15, most big institutions, they allocated to it, but in relatively small size, and it wasn't a separate asset class. And as I went out and started talking to folks, I realized that they were going to allocate a lot more money and at the same time more and more private equity firms were becoming intrigued with not going to one of the big banks, but going direct to somebody like us who could provide a bespoke solution. When I looked at the world, it was pretty interesting, the competitive landscape. If you were to draw a pyramid and you go to the bottom of the pyramid, the widest part, there were a lot of firms that could make loans of 10 to”
2025-05-15 · Capital Allocators · [REPLAY] Private Equity Masters 6 – Doug Ostrover – Blue Owl Capital (Capital Allocators, EP.205) · IDENTIFIED FROM THE TRANSCRIPT · source