After the redemption restriction controversy, leading PE firm Blue Owl raised $1.7 billion for a data center-focused fund.

Alternative asset management giant Blue Owl is accelerating its expansion in the digital infrastructure sector, raising $1.7 billion for its latest data center-focused fund.

According to regulatory filings, on December 1, the non-traded real estate investment trust (REIT) Blue Owl Digital Infrastructure Trust completed its initial fundraising and began operations.

As part of its launch, the fund also acquired interests in 11 data centers from affiliated industry companies at a net value of approximately $1.5 billion (after deducting assumed debt). The documents show that these data centers are primarily leased to investment grade and hyperscale clients.

This fundraising is part of Blue Owl’s major expansion into the data center sector. This fall, the company has provided over $50 billion in financing for data centers for Meta and Oracle.

Previously, Blue Owl’s share price came under pressure after it suspended investor redemptions from another of its funds, sparking market concerns over liquidity in some of its businesses. By late Thursday on Wall Street, Blue Owl had risen 2.52%, up more than 20% from the “redemption restriction” wave’s low.

(As of publication, OWL stock has rebounded 21.3% from its low.)

Continued Investment in Digital Infrastructure

Documents show that the Blue Owl Digital Infrastructure Trust is designed as a private “evergreen” vehicle, meaning it can continuously raise capital from investors and has no fixed life span, providing flexibility for long-term asset ownership and management.

The fund’s investment objective is to purchase, hold, and operate infrastructure assets including data centers, fiber networks, communications towers, and other related assets.

According to another filing, from October 1 to December 1, Blue Owl raised a total of $4.3 billion across all of its evergreen non-traded funds, of which about $2.6 billion went to its physical asset platform and $1.7 billion to its credit platform, demonstrating sustained investor interest in the company’s alternative asset strategies.

The establishment of this new fund continues Blue Owl’s series of aggressive moves in digital infrastructure.

Last year, Blue Owl announced the $1 billion acquisition of IPI Partners, a specialty investment institution in the data center sector, which increased its assets under management by $10.5 billion.

Since that acquisition, Blue Owl has notably accelerated its expansion in the sector. In its latest earnings call, the company revealed that the pipeline of projects in its digital infrastructure segment now exceeds $100 billion, signaling more investments to come.

Redemption Restriction Incident

Previously reported by WallstreetCN, in November the company’s decision to suspend investor redemptions from an off-market fund sent its share price to a yearly low, the lowest since December 2023.

On November 5, Blue Owl announced plans to merge the $1.8 billion non-traded business development company (BDC) Blue Owl Capital Corp. II into the $17.6 billion listed entity OBDC, while also suspending requests to redeem shares from the BDC off-market fund.

Although Blue Owl stated that the company intends to restore the mechanism in the first quarter next year after the transaction ends, due to OBDC’s trading price being at a roughly 20% discount to the net asset value of the BDC off-market fund, investors in the acquired fund would face an immediate paper loss upon conversion.

Meanwhile, there were market worries that, if redemption pressure persisted, fund managers could trigger “gates” to further restrict outflows. As a result, the merger news prompted investor selling, which not only dragged down Blue Owl parent company’s stock price but also increased OBDC shares’ decline for the year to about 22%.

Facing market resistance, Blue Owl abruptly halted the merger in early trading on November 19. Blue Owl’s co-founder Craig Packer admitted in an interview that negative reports about private credit led to the decline in share price; although a $200 million stock buyback plan was announced at the same time, it failed to restore market confidence.

For Blue Owl, which had grown rapidly since the 2021 merger of Owl Rock and Dyal Capital, this marked a rare public setback.

Risk Warning and DisclaimerThe market involves risk, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their particular situation. If you invest based on this, you do so at your own risk.