Blue Owl Capital Strategy & Outlook: Fireside Chat at BofA 2026 Financial Services Conference.

Key Takeaways

TL;DR: OWL enters 2026 focused on execution, margin expansion, and FRE/sh growth post-acquisition/integration phase. Mgmt. is highly bullish on deployment—esp. in digital infra (data centers for GenAI/AI)—and sees strong credit quality in private credit. ABF is emerging as a major growth driver. Near-term wealth channel flows may be muted on mkt volatility, but mgmt. expects normalization and acceleration in H2. OWL’s differentiated approach in digital infra/ABF, plus disciplined credit process, positions it for continued secular growth, though some return compression is likely as mkts normalize.

1. Strategic Priorities & Fin. Outlook

• 2026 = execution year post-2024 M&A and 2025 integration. No major M&A planned for 2026.
• Margin expansion:
  • Margins to improve q/q, y/y.
  • 2025 YE margin: ~58%. Targeting gradual move to 60%.
• FRE/sh growth:
  • 2026E FRE/sh growth to be “modestly better” than 2025; “real acceleration” in 2027.
  • 2026E FRE/sh growth guide (early 2025): +20%/yr.
  • Share issuance: ~2% in 2026.
• Fundraising:
  • Record 2025 fundraising (wealth + institutional).
  • 2026E: Wealth fundraising “muted” in H1, accelerating in H2.
  • Institutional fundraising strong; focus on closing GP stakes & RE flagship funds ($4.5B raised, $7.5B tgt).
  • Digital infra & ABF funds in market H2 2026.

2. Deployment & Market Environment

• Deployment outlook strong, esp. if M&A picks up:
  • “If M&A increases, you’ll see elevated deployment.”
  • Private credit origination closely tied to M&A; PE prefers private debt for certainty/speed.
• Credit spreads tight, but OWL delivers 200–300bps over syndicated markets (currently low end).
• Alt credit & ABF deal flow robust; digital infra backlog at record levels.
• Macro:
  • “Agnostic to rates…deployment good, inflows strong.”
  • “Economy seems good…strategies look solid.”

3. Digital Infra / Data Centers (IPI Acq.)

• OWL “incredibly bullish” on digital infra, esp. data centers for AI/GenAI.
• Triple net lease model:
  • Market leader, “tens of bn” in AUM.
  • Typical: 7.5% cap rate, 3% escalator, 20-yr lease, mostly AA-rated tenants (MSFT, META, GOOG, AMZN).
  • “Generated >20% returns p.a. in that biz.”
• Risk/return:
  • “One of the best risk-adjusted returns I’ve seen.”
  • Zero residual after 20 yrs: base case IRR 10–12%; partial recovery: IRR 17%+.
  • “Bet is: will these firms honor a 20-yr lease? Bond market says very low risk.”
• CapEx demand surging:
  • “CapEx budgets now $650B.”
  • “Biggest deal just under $30B for META…working on $50B+ projects.”
  • Opportunity expected to “go on longer than I thought.”