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Macroeconomic Factors
−Removed: • Difficult market and political conditions may reduce the value or hamper the performance of the investments made by our products or impair the ability of our products to raise or deploy capital.
−Removed: • Rapidly rising interest rates and inflation could have a material adverse effect on our business and that of our products’ portfolio companies and investments.
−Removed: • The COVID-19 pandemic has caused severe disruptions in the US and global economy, has disrupted, and may continue to disrupt, industries in which we, our investment vehicles and our products’ portfolio companies and investments operate.
+Added: • Difficult market and geopolitical conditions may reduce the value or hamper the performance of the investments made by our products or impair the ability of our products to raise or deploy capital.
+Added: • Elevated interest rates and persistent inflation could have a material adverse effect on our business and that of our products’ portfolio companies and investments.
Investment Management
• Management fees and other fees comprise the majority of our revenues and a reduction in such fees could have an adverse effect on our results of operations and the level of cash available for distributions to our stockholders.
−Removed: • Our growth depends in large part on our ability to raise new and successor funds.
−Removed: If we were unable to raise such funds, the growth of our FPAUM and management fees, and ability to deploy capital into investments, earning the potential for performance income, would slow or decrease.
−Removed: • Our GP Capital Solutions products may suffer losses if our Partner Managers are unable to raise new funds or grow their AUM.
+Added: • Our growth depends in large part on our ability to raise new and successor products.
+Added: If we were unable to raise such products, the growth of our FPAUM and management fees, and ability to deploy capital into investments, earning the potential for performance income, would slow or decrease.
• Intense competition among alternative asset managers may make fundraising and the deployment of capital more difficult, thereby limiting our ability to grow or maintain our FPAUM.
Such competition may be amplified by changes in fund investor allocations away from alternative asset managers.
+Added: • The historical returns attributable to our products should not be considered as indicative of the future results of our products or of our future results or of any returns expected on an investment in our Class A Shares.
• Valuation methodologies for certain assets of our products can be open to subjectivity, which may affect the management fees or performance income that our business receives.
−Removed: • The use of leverage by our products may materially increase the returns of such funds but may also result in significant losses or a total loss of capital.
+Added: • The use of leverage by our products may materially increase the returns of such products but may also result in significant losses or a total loss of capital.
• We are vulnerable to an increased number of investors seeking to participate in share redemption programs or tender offers of our non-traded products.
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Conflicts of Interest
−Removed: • Conflicts of interest may arise in our allocation of capital and co-investment opportunities amongst products or in circumstances where our products hold investments at different levels of the capital structure.
−Removed: • Our entitlement and that of certain Principals and employees to receive realized performance income from certain of our funds may create an incentive for us to make more speculative investments and determinations on behalf of our funds than would be the case in the absence of such performance income.
+Added: • Conflicts of interest may arise in our allocation of capital and co-investment opportunities, fees and expenses amongst products or in circumstances where our products hold investments at different levels of the capital structure.
+Added: • Our entitlement and that of certain Principals and employees to receive performance revenues from certain of our products may create an incentive for us to make decisions, including more speculative investments and determinations on behalf of our products, than would be the case in the absence of such performance income.
+Added: • Conflicts of interest may arise when one or more products make an investment in a company with which other products or platforms have a business relationship.
• Fulfilling our obligations incident to being a public company, including compliance with the Exchange Act and the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Act, are expensive and time-consuming, and there can be no assurance that we will satisfy these obligations.
• The anticipated benefits of acquisitions that we may pursue may not be realized or may take longer than expected to realize.
+Added: • Rapid growth of our business may be difficult to sustain and may place significant demands on our administrative, operational and financial resources.
• Our use of leverage to finance our business or that of our products may expose us to substantial risks.
Any security interests or negative covenants required by a credit facility we enter into may limit our ability to create liens on assets to secure additional debt.
+Added: • Cybersecurity risks and data security incidents could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and confidential information in our possession and damage to our business relationships.
• We depend on our senior management team, senior investment professionals and other key personnel to provide their services to us, our investment advisers and our products.
−Removed: • Employee misconduct could harm us by impairing our ability to attract and retain fund investors and subjecting us to significant legal liability, regulatory scrutiny and reputational harm.
+Added: • Employee misconduct could harm us by impairing our ability to attract and retain fund investors and subjecting us to significant legal liability, regulatory scrutiny and reputation harm.
+Added: • Our future growth depends on our ability to attract, retain and develop human capital in a highly competitive talent market.
Legal and Regulatory Environment
• Our business is subject to extensive domestic and foreign regulations that may subject us to significant costs and compliance requirements, and there can be no assurance that we will satisfactorily comply with such regulations.
−Removed: • We are subject to risks increasing scrutiny from certain investors, third party assessors, our stockholders and regulators with respect to ESG matters and the regulatory disclosure landscape surrounding ESG matters continues to evolve.
+Added: • We and our products are subject to increasing scrutiny from certain investors, third party assessors, our stockholders and other stakeholders with respect to ESG-related matters.
• Increased data protection regulation may result in increased complexities and risk in connection with the operation of our business and our products.
Structure and Governance
+Added: • Blue Owl has elected to be treated as, a “controlled company” within the meaning of the NYSE listing standards and, as a result, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies.
• The multi-class structure of our common stock has the effect of concentrating voting power with the Principals, which limits an investor’s ability to influence the outcome of important transactions, including a change in control.
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Risks Related to Macroeconomic Factors
−Removed: Difficult market and political conditions may reduce the value or hamper the performance of the investments made by our products or impair the ability of our products to raise or deploy capital.
−Removed: Our business is affected by conditions and trends in the global financial markets and the global economic and political climate relating to, among other things, current high and rising interest rates, the availability and cost of credit, rising inflation rates, economic uncertainty, changes in laws (including laws relating to our taxation, taxation of our clients and the possibility of changes to regulations applicable to alternative asset managers), trade policies, commodity prices, tariffs, currency exchange rates and controls, political elections and administration transitions, and national and international political events (including hostilities between Russia and Ukraine, other forms of conflict, terrorist acts, and security operations) and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health pandemics.
+Added: Difficult market and geopolitical conditions may reduce the value or hamper the performance of the investments made by our products or impair the ability of our products to raise or deploy capital.
+Added: Our business is affected by conditions and trends in the global financial markets and the global economic and political climate relating to, among other things, elevated and rising interest rates, the availability and cost of credit, persistent inflation, economic uncertainty, changes in laws (including laws and regulations relating to our taxation, taxation of our clients and applicable to alternative asset managers), trade policies, commodity prices, tariffs, currency exchange rates and controls, political elections and administration transitions, and national and international political events (including wars and other forms of conflict, terrorist acts, and security operations), work stoppages, labor shortages and labor disputes, supply chain disruptions and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health pandemics.
These factors are outside of our control and may affect the level and volatility of credit and securities prices and the liquidity and value of fund investments, and we and our products may not be able to or may choose not to manage our exposure to these conditions.
−Removed: The extent and impact of sanctions imposed in connection with the war between Russia and Ukraine has caused and may continue to cause additional financial market volatility and impact the global economy as the situation continues to evolve.
+Added: Global financial markets have experienced heightened volatility in recent periods, including as a result of economic and political events in or affecting the world’s major economies, such as the conflict between Russia and Ukraine and more recently between Israel and Hamas.
+Added: Concerns over increasing inflation, economic recession, as well as interest rate volatility and fluctuations in oil and gas prices resulting from global production and demand levels, as well as geopolitical tension, have exacerbated market volatility.
During periods of difficult market conditions or slowdowns, which may be across one or more industries, sectors or geographies, our products’ portfolio companies may experience decreased revenues, financial losses, credit rating downgrades, difficulty in obtaining access to financing and increased funding costs.
−Removed: During such periods, those companies may also have difficulty in pursuing growth strategies, expanding their businesses and operations (including to the extent that they are Partner Managers, raising additional capital) and be unable to meet their debt service obligations or other expenses as they become due, including obligations and expenses payable to our funds.
+Added: During such periods, those companies may also have difficulty in pursuing growth strategies, expanding their businesses and operations (including to the extent that they are Partner Managers, raising additional capital) and be unable to meet their debt service obligations or other expenses as they become due, including obligations and expenses payable to our products.
Negative financial results in our products’ portfolio companies may reduce the net asset value of our products, result in the impairment of assets and reduce the investment returns for our products, which could have a material adverse effect on our operating results and cash flow or ability to raise additional capital through new or successor products.
In addition, such conditions would increase the risk of default with respect to credit-oriented or debt investments by our products.
−Removed: Our products may be adversely affected by reduced opportunities to exit and realize value from their investments, by lower than expected returns on investments made prior to the deterioration of the credit markets and by our inability to find suitable investments for our products to effectively deploy capital, which could adversely affect our ability to raise new funds and thus adversely impact our prospects for future growth.
+Added: Our products may be adversely affected by reduced opportunities to exit and realize value from their investments, by lower than expected returns on investments made prior to the deterioration of the credit markets and by our inability to find suitable investments for our products to effectively deploy capital, which could adversely affect our ability to raise new products and thus adversely impact our prospects for future growth.
Inflation may adversely affect the business, results of operations and financial condition of our products and their portfolio companies.
Certain of our products and their portfolio companies operate in industries that have been impacted by inflation.
−Removed: Recent inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and our products’ portfolio companies’ operations.
+Added: Although the U.S.
+Added: inflation rate has decreased in the fourth quarter, it remains well above the historic levels over the past several decades.
+Added: Such inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and our products’ portfolio companies’ operations.
If such portfolio companies are unable to pass any increases in the costs of their operations along to their customers, it could adversely affect their operating results.
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Any decreases in the fair value of our products’ investments could result in future realized or unrealized losses.
−Removed: Rapidly rising interest rates could have a material adverse effect on our business and that of our products’ portfolio companies.
−Removed: Rapidly rising interest rates could have a dampening effect on overall economic activity, the financial condition of our customers and the financial condition of the end customers who ultimately create demand for the capital we supply, all of which could negatively affect demand for our products’ capital.
−Removed: The Federal Reserve increased the federal funds rate in 2022 and is widely expected to continue to increase the federal funds rate in 2023, though the rate and timing of such increases remains unknown.
−Removed: Such increases and uncertainty surrounding interest rates may have a material effect on our business making it particularly difficult for us to obtain financing at attractive rates, impacting our ability to execute on our growth strategies or future acquisitions.
−Removed: The COVID-19 pandemic continues to cause disruptions in the U.S.
−Removed: and global economy, has disrupted, and may continue to disrupt, industries in which we, our products and our products’ investments operate.
−Removed: The COVID-19 pandemic continues to adversely impact global commercial and economic activity and has contributed to significant volatility in certain equity and debt markets.
−Removed: Many countries, including the United States, and states and municipalities in which we and our products’ investments operate, issued (and continue to re-issue) orders requiring the closure of, or certain restrictions on the operations of, certain businesses.
−Removed: The COVID-19 pandemic and preventive measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shut-down or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain disruptions and overall economic and financial market instability both globally and in the United States.
−Removed: Such measures, as well as the general uncertainty surrounding the dangers and effects of COVID-19, have created significant disruption in supply chains and economic activity and are having a particularly adverse impact on transportation, hospitality, tourism, commercial real estate, entertainment and other industries, including industries in which certain of our products, borrowers, Partner Managers and their respective investments operate and invest.
−Removed: While many of the initial restrictions have been listed, the risk of future COVID-19 outbreaks remains and restrictions have been and may continue to be reimposed to mitigate risks to public health, both in the United States and globally.
−Removed: Moreover, even where restrictions are lifted, certain groups of people may continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time, potentially further delaying global economic recovery.
−Removed: As a result, even as the COVID-19 pandemic subsides, the U.S.
−Removed: economy and most other major global economies may experience or may continue to experience a recession, and we anticipate our products’ investments could be materially and adversely affected by a prolonged recession in the U.S.
−Removed: and other major markets.
−Removed: Significant volatility and declines in valuations in the global markets as well as liquidity concerns may impair our ability to raise funds or deter fund investors from investing in new or successor funds that we are marketing.
−Removed: Actions taken in response to the COVID-19 pandemic (whether imposed by governments or adopted by businesses or individuals) may give rise to difficulty marketing and raising new or successor funds due to shelter-in-place orders, travel restrictions and social distancing requirements implemented or undertaken in response to the COVID-19 pandemic, which may lower or delay anticipated fee revenues.
−Removed: For existing funds, those actions may slow the pace of investment activity, by, for example, hindering the diligence process.
−Removed: This, in turn, could adversely affect the timing of raising capital for new or successor funds, the terms that might be offered and the management fees we earn on our products that generate fees based on invested (and not committed) capital.
−Removed: In addition, cash flows from management fees may be impacted by, among other things, a failure of our clients to meet capital calls.
−Removed: Borrowers of loans and other credit instruments made by our products may be unable to make their loan payments on a timely basis and meet their loan covenants, resulting in a decrease in value of our products’ credit investments and lower than expected returns.
−Removed: We are continuing to monitor the impact of COVID-19 and related risks, including risks related to the ongoing spread of COVID-19 (including new variants) and efforts to mitigate the spread and deployment of vaccines.
−Removed: However, the ongoing development and fluidity of the situation precludes any prediction as to its ultimate impact on us.
−Removed: If the spread and related mitigation efforts continue, our business, financial condition, results of operations and cash flows could be materially adversely affected.
−Removed: The impact of COVID-19 could continue to heighten many of the other risk factors described herein.
+Added: Elevated and rising interest rates could have a material adverse effect on our business and that of our products’ portfolio companies.
+Added: Elevated and rising interest rates could have a dampening effect on overall economic activity, the financial condition of our customers and the financial condition of the end customers who ultimately create demand for the capital we supply, all of which could negatively affect demand for our products’ capital.
+Added: The Federal Reserve increased the federal funds rate four times in 2023, increasing the federal funds rate by 1% since the start of 2023 and 5.25% since the start of 2022.
+Added: Although the Federal Reserve has signaled the potential for federal funds rate cuts in 2024, the rate and timing of such decreases remains unknown.
+Added: Persistently high interest rates and uncertainty surrounding future Federal Reserve actions may have a material effect on our business making it particularly difficult for us to obtain financing at attractive rates, impacting our ability to execute on our growth strategies or future acquisitions.
+Added: Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash
+Added: equivalents fail.
+Added: We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limits.
+Added: If a depository institution fails to return these deposits or is otherwise subject to adverse conditions in the financial or credit markets, our access to invested cash or cash equivalents could be limited which adversely impact our results of operations or financial condition.
Risks Related to Investment Management
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Our investment advisory and management agreements typically provide that the rates at which we earn advisory fees from certain of our BDCs increase after our BDCs are publicly listed (where before the listing the advisory fees typically are a reduced base management fee with a reduced or no Part I or II Fees).
−Removed: If our BDCs do not become
−Removed: publicly listed on anticipated timeframes or at all for any reason, including the NAV performance of our BDCs, Blue Owl will not benefit from this increase, and those BDCs may need to return their capital to investors, further reducing our management fees.
+Added: If our BDCs do not become publicly listed on anticipated timeframes or at all for any reason, including the NAV performance of our BDCs, Blue Owl will not benefit from this increase, and those BDCs may need to return their capital to investors, further reducing our management fees.
We may also, from time to time, (a) waive or voluntarily defer any fees payable to us by our BDCs or any BDCs that we may manage after the date hereof and (b) restructure any existing fee waivers in place with our BDCs so that such of our BDCs will be obligated to pay fee amounts that are less than the full fee amounts owed to us pursuant to the terms of the applicable investment advisory and management agreements between us and such BDC, and the duration and extent of such waivers and deferrals in each of (a) and (b) may need to be significant to support continued fundraising.
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Private Funds
−Removed: For our other non-BDC Direct Lending products, as well as GP Capital Solutions and certain Real Estate products, which we refer to as our private funds, we enter into investment advisory and management agreements whereby we generally receive base management fees from the inception of such fund through the liquidation of such fund or for most of our GP Capital Solutions products for a set period.
−Removed: Non-BDC Direct Lending products have a base management fee that is typically based on a percentage of gross asset value (which includes the portion of such investments purchased with leverage), whereas our GP Capital Solutions products have a management fee that is initially a set percentage of capital committed by investors, and then, following a step down event (generally either the end of the investment period or, for certain funds, when the fund’s commitments become substantially invested or drawn), is adjusted to a lower percentage of the fund’s cost of unrealized investments, subject to impairment losses for certain funds.
−Removed: With respect to our Real Estate products, our Permanent Capital vehicles have a management fee that is typically based on a percentage of net asset value, and our closed-end vehicles have a management fee that is initially a set percentage of capital committed by investors, and then, following a step down event (generally the end of the investment period or commencement of a successor fund), is adjusted to the same or in some cases a lower percentage of the fund’s cost of unrealized investments.
−Removed: Following a management fee step down event, the management fee we receive will be reduced when a fund realizes investments or in certain cases when there are permanent changes to the cost basis of unrealized investments.
+Added: For our other non-BDC Credit products, as well as GP Strategic Capital and certain Real Estate products, which we refer to as our private funds, we enter into investment advisory and management agreements whereby we generally receive base management fees from the inception of such fund through the liquidation of such fund or for most of our GP Strategic Capital products for a set period.
+Added: Non-BDC Credit products generally have a base management fee that is typically based on a percentage of gross asset value (which, if applicable, includes the portion of such investments purchased with leverage), whereas our GP Strategic Capital products generally have a management fee that is initially a set percentage of capital committed by investors, and then, following a step down event (generally either the end of the investment period or, for certain funds, when the fund’s commitments become substantially invested or drawn), is adjusted to a lower percentage of the fund’s cost of unrealized investments, subject to impairment losses for certain funds.
+Added: With respect to our Real Estate products, our Permanent Capital vehicles have a management fee that is typically based on a percentage of net asset value, and our closed-end vehicles generally have a management fee that is initially a set percentage of capital committed by investors, and then, following a step down event (generally the end of the investment period or commencement of a successor fund), is adjusted to the same or in some cases a lower percentage of the fund’s cost of unrealized investments.
+Added: Following a management fee step down event, the management fee we receive will be reduced when a fund realizes investments or in certain cases when there are
+Added: permanent changes to the cost basis of unrealized investments.
While those funds are not required to realize assets as of any date, there is an obligation to explore liquidity strategies with respect to a fund, and should a liquidity strategy event occur prior to the management fee end date, it could cause a reduction in the amount of management fees we are otherwise entitled to receive.
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(1) the right to terminate such fund on both a cause basis and a no fault basis;
−Removed: (2) the right to remove us as manager of a fund for cause;
+Added: (2) the right to remove us as manager of a fund for cause or on a no-fault basis;
and (3) the right to create an early step down event with respect to a fund on a cause basis.
If the investors exercised their right to vote for an early termination, we would typically continue to receive management fee through the liquidation of such fund, but we could face pressure to liquidate investments earlier than we otherwise believe is appropriate to maximize the value of such investment.
−Removed: Certain funds also provide investors with the right to remove the general partner of such fund on a cause basis.
−Removed: Upon the removal of the general partner of a fund becoming effective,
−Removed: the investment advisory and management agreement in respect of such fund will cease to exist and our rights to payment of management fee will terminate.
+Added: Certain funds also provide investors with the right to remove the general partner of such fund for cause or on a no-fault basis.
+Added: Upon the removal of the general partner of a fund becoming effective, the investment advisory and management agreement in respect of such fund will cease to exist and our rights to payment of management fee will terminate.
In some cases, investors may also have the right to redeem after certain periods of time or following regulatory or key person concerns, which would also reduce the base on which fees are charged.
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as such interests are redeemed, the fees will decrease unless we are able to find new investors to replace those redeeming.
−Removed: Notwithstanding the formulas for calculating management fees provided in the governing documents for our products, Blue Owl has provided (and expects to provide in the future) discounts to investors on such fees based on the size of their commitments to the fund (or Blue Owl funds generally), the timing of their commitments to the fund or other factors that Blue Owl deems relevant.
+Added: Notwithstanding the formulas for calculating management fees provided in the governing documents for our products, Blue Owl has provided (and expects to provide in the future) discounts to investors on such fees based on the size of their commitments to the fund (or Blue Owl products generally), the timing of their commitments to the fund or other factors that Blue Owl deems relevant.
Certain investors are effectively given management fee discounts through specified interests and discounts with respect to carried interest or performance income through the grant of participation rights, fee rebates or revenue shares.
Although such discounts will typically be awarded in circumstances where Blue Owl management believes there will ultimately be long-term benefits to Blue Owl, there can be no assurance that the ultimate benefit attained will be commensurate with the discount awarded, or as to how long it may take to recoup such value.
−Removed: Additionally, Blue Owl may not be able to maintain its current fee structure as a result of industry pressure from fund investors to reduce fees.
−Removed: More recently, institutional investors have been increasing pressure to reduce management and investment fees charged by external managers, whether through direct fee discounts as described in this paragraph, deferrals, rebates or by other means.
+Added: Additionally, Blue Owl may not be able to maintain its current fee structure as a result of increased transparency required by SEC rules or industry pressure from fund investors to reduce fees.
+Added: More recently, institutional investors have been increasing pressure to reduce management and incentive fees charged by external managers, whether through direct fee discounts as described in this paragraph, deferrals, rebates or by other means.
As a result, Blue Owl may need to provide discounts more broadly to investors or reduce fees to meet such industry pressures, which reduction in fees may be further exacerbated by discount expectations of existing investors.
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Such services include arrangement, syndication, origination, structuring analysis, capital structure and business plan advice and other services.
−Removed: Certain types of transaction-related fees are required to be distributed to the Blue Owl funds and other products under the terms of our Co-investment Exemptive Order, as discussed in “—Conflicts of interest may arise in our allocation of capital and co-investment opportunities .
+Added: Certain types of transaction-related fees are required to be distributed to Blue Owl products and other products under the terms of our Co-investment Exemptive Order, as discussed in “—Risks Related to Our Products—Conflicts of Interest—Conflicts of interest may arise in our allocation of capital and co-investment opportunities .
” below, or are required to be distributed to investors in our products or offset against management fees that would otherwise be payable pursuant to the terms of the governing agreements of the relevant vehicles, while other types of related fees may be retained by us with no offset against management fees and contribute to our revenues and, ultimately, to our net income.
We may decide not to seek those fees for any reason, including market conditions and expectations.
−Removed: Our ability to receive and retain those fees, and to continue to receive and retain those fees in the future, is dependent on the terms we negotiate with investors in our products, our ability to successfully negotiate for those fees with underlying portfolio companies, the permissibility of receiving and retaining those fees under the relevant legal and regulatory frameworks, and our business determination to negotiate for those fees.
+Added: Our ability to receive and retain those fees, and to continue to receive and retain those fees in the future, is dependent on the terms we negotiate with investors in our products, our ability to successfully negotiate for those fees with underlying portfolio companies, the permissibility of receiving and retaining those fees under the
+Added: relevant legal and regulatory frameworks, and our business determination to negotiate for those fees.
As a result, any change to the willingness of portfolio companies to bear those fees, the terms of our products that permit us to receive and retain those fees, the legal and regulatory framework in which we operate or our willingness to negotiate for those fees with portfolio companies of our products, could result in a decrease to our revenues and net income, and ultimately decrease the value of our common stock and our dividends to our stockholders.
In addition, the fees generated are typically dependent on transaction frequency and volume, and a slowdown in the pace or size of investments by our products could adversely affect the amount of fees generated.
−Removed: Our growth depends in large part on our ability to raise new and successor funds.
−Removed: If we were unable to raise such funds, the growth of our FPAUM and management fees, and ability to deploy capital into investments, would slow or decrease.
+Added: Our growth depends in large part on our ability to raise new and successor products.
+Added: If we were unable to raise such products, the growth of our FPAUM and management fees, and ability to deploy capital into investments, would slow or decrease.
A significant portion of our revenue from our products in any given period is dependent on the size of our FPAUM in such period and fee rates charged on the FPAUM.
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A decline in the size or pace of growth of FPAUM or applicable fee rates may result from a range of factors, including:
−Removed: • Volatile economic and market conditions, which could cause fund investors to delay making new commitments to alternative investment funds or limit the ability of our existing funds to deploy capital;
+Added: • Volatile economic and market conditions, which could cause fund investors to delay making new commitments to alternative investment funds or limit the ability of our existing products to deploy capital;
• Intense competition among alternative asset managers may make fundraising and the deployment of capital more difficult, thereby limiting our ability to grow or maintain our FPAUM.
Competition may be amplified by changes in fund investors allocating increased amounts of capital away from alternative asset managers;
−Removed: • Poor performance of one or more of our products, either relative to market benchmarks or in absolute terms (e.g., based on market value or net asset value of our BDCs’ shares), or compared to our competitors may cause fund
−Removed: investors to regard our funds less favorably than those of our competitors, thereby adversely affecting our ability to raise new or successor funds.
−Removed: Our GP Capital Solutions products may suffer losses if our Partner Managers are unable to raise new funds or grow their AUM.
−Removed: As our GP Capital Solutions products’ investments in Partner Managers are intended to be held for an indefinite duration, we are dependent upon the ability of our Partner Managers to execute successfully their investment program and grow their assets under management.
−Removed: In the event that a Partner Manager is unable to grow their assets under management or such Partner Manager’s investment returns fail to meet expectations, the returns attributable to such investment may be reduced or our products may suffer a loss on such investment.
−Removed: A Partner Manager’s failure to grow assets under management may result from a range of factors common to asset managers, including factors to which we are subject ourselves, or specific factors attributable to its business including the departure of key persons, the inability of such Partner Manager to diversify into new investment strategies, investment performance and regulatory enforcement actions.
+Added: • Poor performance of one or more of our products, either relative to market benchmarks or in absolute terms (e.g., based on market value or net asset value of our BDCs’ shares), or compared to our competitors may cause fund investors to regard our products less favorably than those of our competitors, thereby adversely affecting our ability to raise new or successor products.
The investment management business is intensely competitive.
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• Some of our competitors offer greater liquidity to investors in their products;
−Removed: • Some of our competitors may have more flexibility than us in raising and deploying certain types of funds under the investment management contracts they have negotiated with their fund investors;
−Removed: • Some of our competitors may offer a broader investment platform and more partnership opportunities to portfolio companies than we are able to offer.
−Removed: Certain of our strategic relationship investors (including early-stage investors in new products) may be granted the right to participate in the net profits or revenues of certain funds.
−Removed: Certain investors in our products have been granted, and may in the future receive various forms of, participation rights with respect to certain products or strategies, including, but not limited to, the right to the net profits or gross revenues of certain funds.
+Added: • Some of our competitors may have more flexibility than us in raising and deploying certain types of products under the investment management contracts they have negotiated with their fund investors;
+Added: • Some of our competitors may offer broader investment offerings and more partnership opportunities to portfolio companies than we are able to offer;
+Added: • Some of our competitors have instituted or may institute low cost high speed financial applications and services based on artificial intelligence and new competitors may enter the asset management space using new investment platforms based on artificial intelligence.
+Added: Certain of our strategic relationship investors (including early-stage investors in new products) may be granted the right to participate in the net profits or revenues of certain products.
+Added: Certain investors in our products have been granted, and may in the future receive various forms of, participation rights with respect to certain products or strategies, including, but not limited to, the right to the net profits or gross revenues of certain products.
To the extent gross revenue participations or similar arrangements are offered, they will reduce the revenue earned by us, but we will continue to bear all applicable expenses, even if the product is not generating positive cash flow.
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There is generally no limitation on the size or the duration of future economic sharing arrangements.
−Removed: In addition, in the ordinary course we may offer fee discounts to investors in existing and future funds and we expect to continue to waive fees for many or all of our co-investments.
+Added: In addition, in the ordinary course we may offer fee discounts to investors in existing and future products and we expect to continue to waive fees for many or all of our co-investments.
We currently expect, at least in certain instances, to continue to offer these economic sharing arrangements to our strategic relationship investors (which may include certain of our stockholders) in the future, which may reduce the revenues ultimately earned by us in respect of these products.
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The historical returns attributable to our products should not be considered as indicative of the future results of our products or of our future results or of any returns expected on an investment in our Class A Shares.
−Removed: The historical performance of our products is relevant to us primarily insofar as it is indicative of our reputation and ability to raise new funds.
−Removed: The historical and potential returns of the funds we advise are not, however, directly linked to returns on shares of our Class A Shares.
−Removed: Therefore, holders of our Class A Shares should not conclude that positive performance of the funds we advise will necessarily result in positive returns on a return on investment in our Class A Shares.
−Removed: However, poor performance of our products we advise would likely cause a decline in our revenues and would therefore likely have a negative effect on our operating results, returns on our Class A Shares and a negative impact on our ability to raise new funds.
+Added: The historical performance of our products is relevant to us primarily insofar as it is indicative of our reputation and ability to raise new products.
+Added: The historical and potential returns of the products we advise are not, however, directly linked to returns on shares of our Class A Shares.
+Added: Therefore, holders of our Class A Shares should not conclude that positive performance of the products we advise will necessarily result in positive returns on a return on investment in our Class A Shares.
+Added: However, poor performance of our products we advise would likely cause a decline in our revenues and would therefore likely have a negative effect on our operating results, returns on our Class A Shares and a negative impact on our ability to raise new products.
Also, there is no assurance that projections in respect of our products or unrealized valuations will be realized.
−Removed: Moreover, the historical returns of our products should not be considered indicative of the future returns of these or from any future funds we may raise, in part because:
+Added: Moreover, the historical returns of our products should not be considered indicative of the future returns of these or from any future products we may raise, in part because:
• market conditions during previous periods may have been significantly more favorable for generating positive performance than the market conditions we may experience in the future;
−Removed: • our products’ rates of returns, which are calculated on the basis of net asset value of the funds’ investments, reflect unrealized gains, which may never be realized;
+Added: • our products’ rates of returns, which are calculated on the basis of net asset value of the products’ investments, reflect unrealized gains, which may never be realized;
• our products’ returns have previously benefited from investment opportunities and general market conditions that may not recur, including the availability of debt capital on attractive terms and the availability of distressed debt opportunities, and we may not be able to achieve the same returns or profitable investment opportunities or deploy capital as quickly;
−Removed: • the historical returns that we present in this report derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed, which may have little or no realized investment track record;
−Removed: • our products’ historical investments were made over a long period of time and over the course of various market and macroeconomic cycles, and the circumstances under which our current or future funds may make future investments may differ significantly from those conditions prevailing in the past;
+Added: • the historical returns that we present in this report derive largely from the performance of our earlier products, whereas future product returns will depend increasingly on the performance of our newer products or products not yet formed, which may have little or no realized investment track record;
+Added: • our products’ historical investments were made over a long period of time and over the course of various market and macroeconomic cycles, and the circumstances under which our current or future products may make future investments may differ significantly from those conditions prevailing in the past;
• the attractive returns of certain of our products have been driven by the rapid return on invested capital, which has not occurred with respect to all of our products and we believe is less likely to occur in the future;
• in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in alternative funds and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future;
−Removed: • our newly established funds may generate lower returns during the period that they take to deploy their capital.
−Removed: The future return for any current or future fund may vary considerably from the historical return generated by any particular fund, or for our products as a whole.
−Removed: Future returns will also be affected by the risks described elsewhere in this report, including risks of the industries and businesses in which a particular fund invests.
+Added: • our newly established products may generate lower returns during the period that they take to deploy their capital.
+Added: The future return for any current or future product may vary considerably from the historical return generated by any particular product, or for our products as a whole.
+Added: Future returns will also be affected by the risks described elsewhere in this report, including risks of the industries and businesses in which a particular product invests.
Valuation methodologies for certain assets of our products can be open to subjectivity.
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These valuations could, in turn, affect the management fees or performance income that our business receives.
−Removed: The use of leverage by our funds may materially increase the returns of such funds but may also result in significant losses or a total loss of capital.
−Removed: Our funds, particularly our Direct Lending and Real Estate funds, use leverage as part of their respective investment programs and in certain products regularly borrow a substantial amount of their capital.
+Added: The use of leverage by our products may materially increase the returns of such products but may also result in significant losses or a total loss of capital.
+Added: Our products, particularly our Credit and Real Estate products, use leverage as part of their respective investment programs and in certain products regularly borrow a substantial amount of their capital.
The use of leverage poses a significant degree of risk and enhances the possibility of a significant loss in the value of the investment portfolio.
A fund may borrow money from time to time to purchase or carry securities or may enter into derivative transactions with counterparties that have embedded leverage.
−Removed: The use of leverage by our products increases the volatility of investments by magnifying the potential for gain or loss on invested equity capital.
+Added: The use of leverage by our products increases the volatility of investments by magnifying the potential for gain or loss
+Added: on invested equity capital.
If the value of a fund’s assets were to decrease, leverage would cause net asset value to decline more sharply than it otherwise would if the fund had not employed leverage.
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Non-traded products often conduct share redemption programs or tender offers to provide liquidity to investors in such vehicles.
−Removed: While such share redemption programs and tender offers may contain restrictions that limit the amount of shares that may be redeemed or
−Removed: purchased in particular periods, an increased number of investors requesting redemptions or participating in tender offers of our non-traded products could lead to a decline in the management fees and incentive fees we receive.
+Added: While such share redemption programs and tender offers may contain restrictions that limit the amount of shares that may be redeemed or purchased in particular periods, an increased number of investors requesting redemptions or participating in tender offers of our non-traded products could lead to a decline in the management fees and incentive fees we receive.
Economic events affecting the U.S.
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Any redemptions or purchases of less than amounts requested could undermine investor confidence in our non-traded products and harm our reputation.
−Removed: Our Real Estate funds are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estate.
−Removed: Investments in our Real Estate funds will be subject to the risks inherent in the ownership and operation of real estate and real estate-related businesses and assets.
+Added: The products and investment strategies we currently pursue may expose us to specific market, tax, regulatory and other risks.
+Added: We currently pursue, through our products, multiple investment strategies.
+Added: While we believe that there may be certain synergies amongst the various strategies, there can be no assurance that the benefits will manifest or that there will not be unanticipated consequences resulting therefrom.
+Added: Although we are seeking additional investment strategies, relative to more diversified asset managers, our products’ limited and specialized focus also leaves us more exposed to risks affecting the sectors in which our products invest.
+Added: As our investment management program is not broadly diversified, we may be uniquely exposed to market, tax, regulatory and other risks affecting the sectors in which we invest.
+Added: There can be no assurance that we will be able to take actions necessary to mitigate the effect of such risks or otherwise diversify our investment program to minimize such exposure.
+Added: Our GP Strategic Capital products may suffer losses if our Partner Managers are unable to raise new products or grow their AUM.
+Added: As our GP Strategic Capital products’ investments in Partner Managers are intended to be held for an indefinite duration, we are dependent upon the ability of our Partner Managers to execute successfully their investment program and grow their assets under management.
+Added: In the event that a Partner Manager is unable to grow their assets under management or such Partner Manager’s investment returns fail to meet expectations, the returns attributable to such investment may be reduced or our products may suffer a loss on such investment.
+Added: A Partner Manager’s failure to grow assets under management may result from a range of factors common to asset managers, including factors to which we are subject ourselves, or specific factors attributable to its business including the departure of key persons, the inability of such Partner Manager to diversify into new investment strategies, investment performance and regulatory enforcement actions.
+Added: Our Real Estate products are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estate.
+Added: Investments in our Real Estate products will be subject to the risks inherent in the ownership and operation of real estate and real estate-related businesses and assets.
These risks include the following:
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• unexpected cost overruns in connection with development projects;
−Removed: • terrorist attacks, war (including between Russia and Ukraine) and other factors that are beyond our control.
−Removed: Additionally, our funds’ properties are generally self-managed by the tenant or managed by a third party, which makes us dependent upon such third parties and subjects us to risks associated with the actions of such third parties.
−Removed: Any of these factors may cause the value of the investments in our Real Estate funds to decline, which may have a material impact on our results of operations.
−Removed: The products and investment strategies we currently pursue may expose us to specific market, tax, regulatory and other risks.
−Removed: We currently pursue, through our products, multiple investment strategies.
−Removed: While we believe that there may be certain synergies amongst the various strategies, there can be no assurance that the benefits will manifest or that there will not be unanticipated consequences resulting therefrom.
−Removed: Although we are seeking additional investment strategies, relative to more diversified asset managers, our products’ limited and specialized focus also leaves us more exposed to risks affecting the sectors in which our products invest.
−Removed: As our investment management program is not broadly diversified, we may be uniquely exposed to market, tax, regulatory and other risks affecting the sectors in which we invest.
−Removed: There can be no assurance that we will be able to take actions necessary to mitigate the effect of such risks or otherwise diversify our investment program to minimize such exposure.
−Removed: Our professional sports minority investments strategy is small and may be difficult to grow.
−Removed: Our professional sports minority investments strategy is small and may be difficult to grow.
−Removed: Our Dyal HomeCourt Fund makes minority investments in NBA franchises.
−Removed: The NBA provides certain services with respect to the Dyal HomeCourt Fund and receives a share of management fees and incentive allocations attributable to the fund.
+Added: • terrorist attacks and similar conflicts (including in the Middle East), war (including between Russia and Ukraine) and other factors that are beyond our control.
+Added: Additionally, our products’ properties are generally self-managed by the tenant or managed by a third party, which makes us dependent upon such third parties and subjects us to risks associated with the actions of such third parties.
+Added: Any of these factors may cause the value of the investments in our Real Estate products to decline, which may have a material impact on our results of operations.
+Added: Our professional sports minority stakes strategy is small and may be difficult to grow.
+Added: Our professional sports minority stakes strategy is small and may be difficult to grow.
+Added: Our Blue Owl HomeCourt Fund makes minority investments in NBA franchises.
+Added: The NBA provides certain services with respect to the Blue Owl HomeCourt Fund and receives a share of management fees and incentive allocations attributable to the fund.
There is no assurance that we will be able to raise sufficient funds to continue to execute this strategy in the future.
−Removed: As adviser to the Dyal HomeCourt Fund, we may be exposed to liability to the NBA or one or more NBA teams in which we invest in a range of circumstances, including as a result of a violation of rules applicable to NBA franchise owners by us or investors in our Dyal HomeCourt Fund or, in certain circumstances, by our co-owners of a team (regardless of whether such persons were acting under our direction or control).
−Removed: In addition, the NBA may terminate its relationship with the adviser for a variety of reasons, including the departure of certain key persons or the occurrence of certain events constituting cause.The Dyal HomeCourt Fund may also assume a high profile relative to its economic significance to our business.
−Removed: Therefore, any failure in the growth or performance of the professional sports minority investments strategy could not only result in a decrease in our FPAUM growth potential but could also have a disproportionately adverse effect on our reputation.
+Added: As adviser to the Blue Owl HomeCourt Fund, we may be exposed to liability to the NBA or one or more NBA teams in which we invest in a range of circumstances, including as a result of a violation of rules applicable to NBA franchise owners by us or investors in our Blue Owl HomeCourt Fund or, in certain circumstances, by our co-owners of a team (regardless of whether such persons were acting under our direction or control).
+Added: In addition, the NBA may terminate its relationship with the adviser for a variety of reasons, including the departure of certain key persons or the occurrence of certain events constituting cause.The Blue Owl HomeCourt Fund may also evoke a high profile in the marketplace relative to its economic significance to our business.
+Added: Therefore, any failure in the growth or performance of the professional sports minority stakes strategy could not only result in a decrease in our FPAUM growth potential but could also have a disproportionately adverse effect on our reputation.
Conflicts of Interest
Conflicts of interest may arise in our allocation of capital and co-investment opportunities.
−Removed: As an asset manager with multiple clients, including our various product lines, we confront conflicts of interests relating to our investment activities and operations.
+Added: As an asset manager with multiple clients, including our various and expanding strategies and products, we increasingly confront conflicts of interests relating to our investment activities and operations.
In particular, our allocation of capital and co-investment opportunities across our products are subject to numerous actual or potential conflicts of interest.
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It could also result in regulatory lapses that could lead to applicable penalties, as well as increased regulatory oversight of our business.
−Removed: Potential conflicts of interest in allocation among funds
−Removed: Certain of our products may have overlapping investment objectives, including funds that have different fee structures, and potential conflicts may arise with respect to our decisions regarding how to allocate investment opportunities among those funds.
−Removed: We may allocate an investment opportunity that is appropriate for two or more investment funds in a manner that excludes one or more funds or results in a disproportionate allocation based on factors or criteria that we determine, including but not limited to differences with respect to available capital, the current or anticipated size of a fund, minimum investment amounts, the remaining life of a fund, differences in investment objectives, guidelines or strategies, diversification, portfolio construction considerations and other considerations deemed relevant to us and in accordance with our policy.
+Added: Identifying potential conflicts of interest is complex and fact-intensive, and it is not possible to foresee every conflict of interest that could or will arise.
+Added: Potential conflicts of interest in allocation among our products.
+Added: Certain of our products may have overlapping investment objectives, including products that have different fee structures, and conflicts may arise with respect to our allocation of investment opportunities among those products as well as other co-investors.
+Added: We may allocate an investment opportunity that is appropriate for two or more investment products in a manner that excludes one or more products or results in a disproportionate allocation based on factors or criteria that we determine, including but not limited to differences with respect to available capital, the current or anticipated size of a product, minimum investment amounts, the remaining life of a product, differences in investment objectives, guidelines or strategies, diversification, portfolio construction considerations, liquidity needs, legal, tax and regulatory requirements and other considerations deemed relevant to us and in accordance with our policy.
Although we have adopted investment allocation policies and procedures that are designed to ensure fair and equitable treatment over time, and expect these policies and procedures to continue to evolve, those policies and procedures will not eliminate all potential conflicts.
−Removed: Certain investment opportunities may be allocated to certain funds that have lower fees or to our co-investment funds that pay no fees.
−Removed: To the extent that those investments could otherwise have been allocated to funds generating FPAUM, our revenues will be less than what would otherwise have been generated were those investments made through fee paying structures.
+Added: Certain investment opportunities may be allocated to certain products that have lower fees or to our co-investment products that pay no fees.
+Added: To the extent that those investments could otherwise have been allocated to products generating FPAUM, our revenues will be less than what would otherwise have been generated were those investments made through fee paying structures.
Potential conflicts of interest in connection with co-investments between our private funds and our BDCs.
Our BDCs are permitted to co-invest in portfolio companies with each other and with affiliated investment funds in negotiated transactions pursuant to an SEC order (the “Co-investment Exemptive Order”).
−Removed: Pursuant to that exemptive relief, our BDCs and other affiliated investment funds generally are permitted to make such co-investments if a “required majority” (as defined in Section 57(o) of the Investment Company Act) of such BDC’s directors (including the independent directors) makes certain
−Removed: conclusions in connection with the co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to such BDC and its stockholders and do not involve overreaching in respect of such BDC or its stockholders on the part of any person concerned, (2) the transaction is consistent with the interests of such BDC’s stockholders and with its investment objective and strategies, and (3) the investment by one of our BDCs and other affiliated investment funds would not disadvantage any other of our BDCs, and such BDC’s participation would not be on a basis different from or less advantageous than that on which the other BDCs or other affiliated investment funds are investing.
+Added: Pursuant to that exemptive relief, our BDCs and other affiliated investment funds generally are permitted to make such co-investments if a “required majority” (as defined in Section 57(o) of the Investment Company Act) of such BDC’s directors (including the independent directors) makes certain conclusions in connection with the co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to such BDC and its shareholders and do not involve overreaching in respect of such BDC or its shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of such BDC’s shareholders and with its investment objective and strategies, and (3) the investment by one of our BDCs and other affiliated investment funds would not disadvantage any other of our BDCs, and such BDC’s participation would not be on a basis different from or less advantageous than that on which the other BDCs or other affiliated investment funds are investing.
The different investment objectives or terms of the BDCs and affiliated investment funds may result in a potential conflict of interest, including in connection with the allocation of investments among our BDCs and/or our affiliated investment funds pursuant to the Co-investment Exemptive Order or otherwise.
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Conflicts related to investments by several of our products at different levels of the capital structure of a single portfolio company or Partner Manager.
−Removed: Different funds that we advise may invest in a single portfolio company, including at different levels of the capital structure of the portfolio company.
+Added: Different products that we advise may invest in a single portfolio company, including at different levels of the capital structure of the same portfolio company.
For example, in the normal course of business, one of our products may acquire debt positions in, or lend to, companies in which another of our products owns common equity securities or a subordinated debt position.
−Removed: This could occur at the time of, or subsequent to, the initial investment in the portfolio company.
−Removed: A direct conflict of interest could arise among the various debt holders and equity holders if the company were to experience financial distress.
−Removed: In addition, if one of our BDCs is an investor in a portfolio company alongside other of our funds that have invested in a different part of the portfolio company’s capital structure, the Investment Company Act may prohibit us from negotiating on behalf of any such fund in connection with a reorganization or restructuring of the portfolio company.
−Removed: While we have developed general guidelines regarding when two or more funds can invest in different parts of the same company’s capital structure and created a process that we employ to handle those conflicts when they arise, our decision to permit the investments to occur in the first instance or our judgment on how to minimize the conflict could be challenged.
−Removed: If we fail to appropriately address those conflicts, it could negatively impact our reputation and ability to raise additional funds and the willingness of counterparties to do business with us or result in potential litigation against us.
+Added: Such investments or commitments may be made at different times, at different prices and on different terms.
+Added: The interests of these
+Added: different products invested in different levels of the capital structure of a portfolio company may not always be aligned and actions taken for one product may be adverse to one or more other products, which may give rise to conflicts of interest.
+Added: The interests of these different products may diverge significantly particularly in the case of financial distress of the portfolio company.
+Added: For example, in a bankruptcy proceeding or out-of-court restructuring, the interests of a product owning equity or subordinated debt securities may be subordinated or otherwise adversely affected by virtue of a different product’s actions in respect of its own interests as a senior debt holder.
+Added: Alternatively, we may be incentivized to cause a product invested in a senior debt position to be more passive or refrain from taking actions adverse to other products invested in equity or subordinated debt given the possibility for losses for these products.
+Added: In addition, if one of our BDCs is an investor in a portfolio company alongside other of our products that have invested in a different part of the portfolio company’s capital structure, the Investment Company Act may prohibit us from negotiating on behalf of any such product in connection with a reorganization or restructuring of the portfolio company.
+Added: While we have developed general guidelines regarding when two or more products can invest in different parts of the same company’s capital structure and created a process that we employ to handle those conflicts when they arise, our decision to permit the investments to occur in the first instance or our judgment on how to minimize the conflict could be challenged.
+Added: If we fail to appropriately address those conflicts, it could negatively impact our reputation and ability to raise additional products and the willingness of counterparties to do business with us or result in potential litigation against us.
Conflicts of interest may arise in our allocation of costs and expenses, and we are subject to increased regulatory scrutiny and uncertainty with regard to those allocations.
−Removed: As an asset manager with multiple funds, we regularly make determinations to allocate costs and expenses both among our funds and between our funds and us.
+Added: As an asset manager with multiple products, we regularly allocate costs and expenses among our products and between our products and us.
Certain of those allocation determinations are inherently subjective and virtually all of them are subject to regulatory oversight.
−Removed: Any allocation or allegation of, or investigation into, a potential violation could cause reputational harm and a loss of investor confidence in our business.
−Removed: It could also result in regulatory lapses and any applicable penalties, as well as increased regulatory oversight of our business.
+Added: Allegations of, or investigation into, a potential improper expense allocation could cause reputational harm and a loss of investor confidence in our business.
+Added: It could also result in regulatory lapses or penalties, as well as increased regulatory oversight of our business.
In addition, any determination to allocate costs and expenses to us could negatively affect our net income, and ultimately decrease the value of our common stock and our dividends to our stockholders.
Similar considerations arise when allocating expenses to, or away from vehicles to which specified interests apply.
−Removed: We have a conflict of interest in determining whether certain costs and expenses are incurred in the course of operating our funds, including the extent to which services provided by certain employees and associated costs, including compensation, are allocable to certain funds.
−Removed: Our funds generally pay or otherwise bear all legal, accounting, filing, and other expenses incurred in connection with organizing and establishing the funds and the offering of interests in the funds, including certain employee compensation.
−Removed: Such determinations often require subjective judgment and may result in us, rather than our funds, being allocated certain fees and expenses.
−Removed: In addition, our funds generally pay all expenses related to the operation of the funds and their investment activities, in certain cases subject to caps.
−Removed: We also determine, in our sole discretion, the appropriate allocation of investment-related expenses, including broken deal expenses, incurred in respect of unconsummated investments and expenses more generally relating to a particular investment strategy, among our products, vehicles and accounts participating or that would have participated in such investments or that otherwise participate in the relevant investment strategy, as applicable.
−Removed: That often requires judgment and could result in one or more of our funds bearing more or less of these expenses than other investors or potential investors in the relevant investments or a fund paying a disproportionate share, including some or all, of
−Removed: the broken deal expenses or other expenses incurred by potential investors.
−Removed: Any dispute regarding such allocations could lead to our funds or us, as further described below, having to bear some portion of these costs as well as reputational risk.
−Removed: In addition, for funds that do not pay or otherwise bear the costs and expenses described above because of the application of caps or otherwise, such amounts may be borne by us, which will reduce the amount of net fee income we receive for providing advisory services to the funds.
−Removed: For example, we have a Business Services Platform in our GP Capital Solutions products that provides strategic services to Partner Managers.
−Removed: Certain expenses associated with the Business Services Platform (“BSP Expenses”) are allocated among, and payable by, each of the GP minority equity investment funds.
−Removed: Those GP Capital Solutions funds are generally allocated an amount equal to their pro rata allocation of BSP Expenses based on the relative number of Partner Managers in which investments are held from time to time by each of those funds;
−Removed: provided that the amount of BSP Expenses borne by a particular fund is subject to certain caps specified in its respective governing documents.
−Removed: In addition, Dyal Fund V provides for a minimum payment for BSP Expenses, which to the extent such minimum exceeds Dyal Fund V’s otherwise allocable share of such expenses, reduces the amount of BSP Expenses borne by the other GP Capital Solutions funds.
−Removed: It is expected that any successor fund to Dyal Fund V would similarly share in BSP Expenses.
−Removed: We are required to bear any BSP Expenses allocated to a fund that exceeds the fund’s cap on those expenses.
−Removed: In addition, in certain instances, we expect to determine not to allocate or charge certain BSP Expenses to any fund, in response to regulatory, fund investor relations, governance or other applicable considerations and determine instead for those BSP Expenses to be borne by us.
+Added: We have a conflict of interest in determining whether certain costs and expenses are incurred in the course of operating our products, including the extent to which services provided by certain employees and associated costs, including compensation, are allocable to certain products.
+Added: Our products generally pay or otherwise bear all legal, accounting, filing, and other expenses incurred in connection with organizing and establishing the products and the offering of interests in the products, including certain employee compensation.
+Added: Such determinations often require subjective judgment and may result in us, rather than our products, bearing certain fees and expenses.
+Added: In addition, our products generally pay all expenses related to the operation of the products and their investment activities, in certain cases subject to caps.
+Added: We also determine, in our sole discretion, the appropriate allocation of investment-related expenses, including broken deal expenses and expenses more generally relating to a particular investment strategy, among our products, vehicles and accounts participating or that would have participated in such investments or that otherwise participate in the relevant investment strategy, as applicable.
+Added: That often requires judgment and could result in one or more of our products bearing more or less of these expenses than other investors or potential investors in the relevant investments or a fund paying a disproportionate share, including some or all, of the broken deal expenses or other expenses incurred by potential investors.
+Added: Any dispute regarding such allocations could lead to our products or us, as further described below, having to bear some portion of these costs as well as reputational risk.
+Added: In addition, for products that do not pay or otherwise bear the costs and expenses described above because of the application of caps or otherwise, such amounts may be borne by us, which will reduce the amount of net fee income we receive for providing advisory services to the products.
+Added: For example, our Business Services Platform provides strategic services to Partner Managers.
+Added: Certain expenses associated with the Business Services Platform (“BSP Expenses”) are allocated among, and payable by, each of the GP minority equity investment products.
+Added: Those GP Strategic Capital products are generally allocated an amount equal to their pro rata allocation of BSP Expenses based on the relative number of Partner Managers in which investments are held from time to time by each of those products;
+Added: provided that the amount of BSP Expenses borne by a particular fund is subject to certain floors and/or caps specified in its respective governing documents.
+Added: We are required to bear any BSP Expenses allocated to a product that exceeds the product’s cap on those expenses.
+Added: In addition, in certain instances, we expect to determine not to allocate or charge certain BSP Expenses to any product, in response to regulatory, products investor relations, governance or other applicable considerations and determine instead for those BSP Expenses to be borne by us.
Any such determination could have the effect of materially reducing the reimbursement payments received by us with respect to the Business Services Platform or result in losses attributable to certain activities thereof.
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These and other expense allocation practices could in the future be subject to regulatory scrutiny.
+Added: Potential conflicts of interest in allocation among Blue Owl, our products and our investment professionals.
+Added: Certain of our products may have overlapping investment objectives with Blue Owl, and conflicts may arise with respect to our decisions regarding how to allocate investment opportunities amongst our products or between Blue Owl and our products.
+Added: We have provided and expect to continue to provide funds to support new product and strategy launches to enable our products to achieve a level of scale and profitability.
+Added: We have used, and expect to continue to use, our balance sheet capital to warehouse seed investments in our products pending the contribution of committed capital by the investors in such products and/or to extend bridge loans to our products, which may decrease the liquidity available for other parts of our business.
+Added: If new strategies or products do not develop as anticipated or our balance sheet assets cease to provide adequate liquidity, we may be forced to realize losses or become limited in our ability to seed new products or strategies or support existing ones as currently contemplated.
+Added: Furthermore, our investment professionals or entities controlled by them may make similar investments or loans to new products or third party investment opportunities, including in connection with their personal or family office investment activities.
+Added: These activities may result in actual or perceived conflicts of interest.
+Added: Although we have adopted personal trading policies and procedures that are designed to ensure that, in such circumstances, Blue Owl or our products, as the case may be, has first priority in investment opportunities that align with its investment objectives, and expect these policies and procedures to continue to evolve as Blue Owl’s business evolves, those policies and procedures may not eliminate all potential conflicts.
Existing and future relationships between or among our Partner Managers, our products and their investors could give rise to actual or perceived conflicts of interest.
−Removed: Certain of our GP Capital Solutions products’ Partner Managers directly or through their investment funds, own securities in Blue Owl or its subsidiaries.
−Removed: Additionally, Dyal Fund IV has a passive minority equity interest in Owl Rock Feeder and is an indirect equityholder in Blue Owl.
−Removed: As a result, Dyal Fund IV is entitled to vote on matters submitted to stockholders of Blue Owl generally, including with respect to the election of directors.
−Removed: In addition, Dyal IV Advisors LLC, a controlled affiliate of Blue Owl serves as investment manager to Dyal Fund IV.
−Removed: Dyal Fund IV may have different interests, including different investment horizons, than Blue Owl.
−Removed: However, any decision made with respect to holding or disposing of Dyal Fund IV’s interest in Blue Owl will be determined by Dyal IV Advisors LLC in a manner consistent with its duties to Dyal Fund IV.
+Added: Certain of our GP Strategic Capital products’ Partner Managers directly or through their investment funds, own securities in Blue Owl or its subsidiaries.
+Added: In addition, Blue Owl GPSC IV Advisors LLC, a controlled affiliate of Blue Owl, serves as investment manager to Blue Owl GP Stakes IV.
+Added: Blue Owl GP Stakes IV may have different interests, including different investment horizons, than Blue Owl.
+Added: However, any decision made with respect to holding or disposing of Blue Owl GP Stakes IV’s interest in Blue Owl will be determined by Blue Owl GPSC IV Advisors LLC in a manner consistent with its duties to Blue Owl GP Stakes IV.
Because those decisions will be made independent from consideration of Blue Owl’s interests, they may, due to a range of factors, conflict with Blue Owl’s or its stockholders’ own interests at such time.
−Removed: GP Capital Solutions products hold minority, noncontrolling interests in a broad range of Partner Managers.
−Removed: Those Partner Managers may, from time to time, directly or through their funds, enter into transactions or other contractual arrangements with us or our products outside of the GP minority equity investments strategy, including our private funds, BDCs and Real Estate products, or between or among one another in the ordinary course of business, which may result in additional conflicts of interest.
+Added: GP Strategic Capital products hold minority, noncontrolling interests in a broad range of Partner Managers.
+Added: Those Partner Managers may, from time to time, directly or through their funds, enter into transactions or other contractual arrangements with us or our products outside of the GP minority stakes strategy, including our private funds, BDCs and Real Estate products, or between or among one another in the ordinary course of business, which may result in additional conflicts of interest.
None of those transactions or other contractual arrangements are believed to be currently material to our operations or performance but there may be material transactions entered into in the future.
−Removed: Portfolio companies of funds managed by our Partner Managers may also be borrowers under debt facilities or instruments owned, arranged or managed by our funds.
+Added: Portfolio companies of products managed by our Partner Managers may also be borrowers under debt facilities or instruments owned, arranged or managed by our products.
In its capacity as agent or lender under such facilities or instruments, a fund is required to act in the best interests of its stockholders or investors.
−Removed: In certain circumstances, a fund may be required to take actions that may be adverse to the investments owned by funds managed by Partner Managers, which could adversely affect our relationships with the Partner Managers, or potentially impact the value of a GP Capital Solutions product’s investment in such Partner Manager.
−Removed: From time to time, companies in which our funds or funds managed by our Partner Managers have invested or may invest may enter into sale-leaseback transactions with our Real Estate products.
−Removed: These arrangements could result in our funds or funds managed by our Partner Managers, being creditors to, or equity owners of, such companies at the same time as those companies are tenants of our Real Estate products.
−Removed: If such a company were to encounter financial difficulty or default on its obligations as a borrower, our fund or a fund managed by a Partner Manager, could be required to take actions that may be adverse to those of our Real Estate products in enforcing its rights under the relevant facilities or agreements, or vice versa.
+Added: In certain circumstances, one of our products may be required to take actions that may be adverse to the investments owned by funds managed by Partner Managers, which could adversely affect our relationships with the Partner Managers, or potentially impact the value of a GP Strategic Capital product’s investment in such Partner Manager.
+Added: From time to time, companies in which our products or products managed by our Partner Managers have invested or may invest may enter into sale-leaseback transactions with, or otherwise become tenants of, our Real Estate products.
+Added: These arrangements could result in our products or products managed by our Partner Managers, being creditors to, or equity owners of, such companies at the same time as those companies are tenants of our Real Estate products.
+Added: If such a company were to encounter financial difficulty or default on its obligations as a borrower, our product or a product managed by a Partner Manager, could be required to take actions that may be adverse to those of our Real Estate products in enforcing its rights under the relevant facilities or agreements, or vice versa.
+Added: Investments in portfolio companies connected to other business relationships may cause us to take different actions with respect to such investment than would have otherwise occurred had the portfolio company had no other business relationship with us or our products.
Even if those relationships do not create actual conflicts, the perception of conflicts in the press or the financial community generally could create negative publicity with respect to Blue Owl, which could adversely affect the relationships of with our product investors.
+Added: Conflicts related to our lack of information barriers.
+Added: Our products, investment platforms and investment professionals regularly obtain non-public information regarding target companies and other investment opportunities.
+Added: Since we do not currently maintain permanent information barriers among our businesses, we generally impute non-public information received by one investment team to all other investment professionals, including all of the personnel who make investment decisions for our products.
+Added: In the event that any of our products or people obtain confidential or material non-public information, we and our products may be restricted in acquiring or disposing of investments.
+Added: Notwithstanding the maintenance of restricted securities lists and other internal controls, the internal controls relating to the management of material non-public information could fail and result in us, or one of our people, buying or selling a security while deemed to be in possession of material non-public information.
+Added: Inadvertent trading on material non-public information could negatively impact our reputation, result in the imposition of regulatory or financial sanctions and, consequently, negatively impact our ability to provide investment management services to our products and clients.
+Added: These risks are heightened by the existence of our public equity products, which may limit the products’ investment opportunities or ability to dispose of investments.
+Added: In limited circumstances, we may put in place temporary information barriers to restrict the transfer of non-public information, which limit our products’ abilities to benefit from Blue Owl expertise and such temporary information barriers could be breached, resulting in the same restrictions on such products’ investment activities.
+Added: Further, in the future, we could be required by certain regulations, or decide that it is advisable, to establish permanent information barriers, which would impair our ability to operate as an integrated platform, limit management’s ability to manage our investments and reduce potential synergies across our businesses.
+Added: The establishment of information barriers may also lead to operational disruptions and result in restructuring costs, including costs related to hiring additional personnel as existing investment professionals are allocated to either side of a barrier.
Additional and unpredictable conflicts of interests may rise in the future.
−Removed: In addition to the conflicts outlined above, we may experience conflicts of interest in connection with the management of our business affairs relating to and arising from a number of matters, including the amounts paid to us by our investment funds;
−Removed: services that may be provided by us and our affiliates to investments in which our investment funds invest (including the determination of whether or not to charge fees to our investments for our provision of such services);
−Removed: investments by our investment funds and our other clients, subject to the limitations of the Investment Company Act;
−Removed: our formation of additional investment funds;
+Added: In addition to the conflicts outlined above, we may experience conflicts of interest in connection with the management of our business affairs relating to and arising from a number of matters, including the amounts paid to us by our products;
+Added: services that may be provided by us and our affiliates to investments in which our products invest (including the determination of whether or not to charge fees to our investments for our provision of such services);
+Added: investments by our products and our other clients, subject to the limitations of the Investment Company Act;
+Added: our formation of additional products;
differing recommendations given by us to different clients;
−Removed: and our use of information gained from an investment funds’ investments used to inform investments by other clients, subject to applicable law.
−Removed: Our products hold and make investments in Partner Managers and there may be provisions within our arrangements with Partner Managers that could affect our right to receive or share information or cause us to sell our interests in the Partner Manager.
−Removed: The terms of our GP Capital Solutions products’ investments in Partner Managers generally include provisions relating to competitors of the Partner Managers, access to information about the Partner Managers and their business, and affirmative and negative confidentiality obligations regarding the Partner Managers.
−Removed: While we have an information control policy with restrictions regarding the sharing of a Partner Manager’s confidential information, such policy and related procedures may not reduce a Partner Manager’s concern over the sharing of confidential and competitively sensitive information.
+Added: and our use of information gained from a products’ investments used to inform investments by other clients, subject to applicable law.
+Added: In resolving these conflicts of interest, we may favor our products’ interests or investors’ interests over the interests of our stockholders.
+Added: Our GP Strategic Capital products hold and make investments in Partner Managers and there may be provisions within our arrangements with Partner Managers that could affect our right to receive or share information or cause us to sell our interests in the Partner Manager.
+Added: The terms of our GP Strategic Capital products’ investments in Partner Managers generally include provisions relating to competitors of the Partner Managers, access to information about the Partner Managers and their business, and affirmative and negative confidentiality obligations regarding the Partner Managers.
+Added: While we have implemented information control procedures with restrictions regarding the sharing of a Partner Manager’s confidential information, such procedures may not reduce a Partner Manager’s concern over the sharing of confidential and competitively sensitive information.
Certain Partner Managers that are engaged in managing funds focused on similar businesses as our other product lines may consider Blue Owl to be a competitor with respect to their business and may seek to invoke remedies available to them under the investment agreements or pursue other remedies.
Potential remedies available to them under the investment agreements, as applicable, include limiting the rights of our products to receive confidential information from the Partner Manager regarding its business, requiring us to sequester confidential information received from the Partner Manager, or requiring us to sell our interests in the Partner Manager for fair value as determined under the relevant investment agreement.
−Removed: A forced sale of a Partner Manager interest may reduce the amount of fees we receive with respect to the applicable GP Capital Solutions product, and any reduction in information may impede our ability to supervise our funds’ investments.
−Removed: Further, the affiliation may hinder the GP Capital Solutions products’ ability to make future investments in Partner Managers who are in the same space and who may consider Blue Owl a competitor, including follow-on investments in existing Partner Managers and investments with new Partner Managers.
+Added: A forced sale of a Partner Manager interest may reduce the amount of fees we receive with respect to the applicable GP Strategic Capital product, and any reduction in information may impede our ability to supervise our products’ investments.
+Added: Further, the affiliation may hinder the GP Strategic Capital products’ ability to make future investments in Partner Managers who are in the same space and who may
+Added: consider Blue Owl a competitor, including follow-on investments in existing Partner Managers and investments with new Partner Managers.
The operations of our business and related transactions may affect our reputation and relationship with our Partner Managers.
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Due to the number of Partner Managers with which we have relationships, we may compete with existing or prospective Partner Managers, which could negatively impact our ability to attract new Partner Managers to our products who may seek relationships with non-competitors over concerns of sharing information with competitors or other potential conflicts, including the ability to exercise our fiduciary duties.
−Removed: Additionally, our investments in Partner Managers may affect our relationships with other sponsors that are key relationships for our Direct Lending products, because of similar concerns around information sharing or other reasons.
−Removed: While we intend to implement robust procedures to address any such conflict, such procedures may not reduce the perception that such conflicts exist and may make us a less attractive partner/investor.
−Removed: Our entitlement and that of certain Principals and employees to receive performance income from certain of our products may create an incentive for us to make more speculative investments and determinations on behalf of our products than would be the case in the absence of such performance income.
+Added: Additionally, our investments in Partner Managers may affect our relationships with other sponsors that are key relationships for our Credit products, because of similar concerns around information sharing or other reasons.
+Added: While we have implemented procedures to address any such conflict, such procedures may not reduce the perception that such conflicts exist and may make us a less attractive partner/investor.
+Added: Our entitlement and that of certain Principals and employees to receive performance income from certain of our products may create an incentive for us to make more decisions, including speculative investments and determinations on behalf of our products, than would be the case in the absence of such performance income.
Some of our products generate performance-based fees, including carried interest.
−Removed: With respect to Dyal Funds I - V and their related co-investment vehicles, none of the carried interest will be allocated to us.
−Removed: We will be allocated 15% of the carried interest attributable to future GP Capital Solutions and Direct Lending products as well as 15% of the carried interest in existing and future Real Estate products.
−Removed: If a new GP Capital Solutions product is formed to facilitate a secondary transaction with respect to any of Dyal Funds I - V (which would include, without limitation, any continuation fund or other new fund whose primary purpose is to acquire directly or indirectly all or a portion of the assets of or interests in the existing GP Capital Solutions funds), any carried interest generated by such fund will not be allocated to us, notwithstanding that such secondary
−Removed: vehicle is formed in the future.
−Removed: Realized performance income not allocated to us is allocated to certain Principals and employees in vehicles not controlled by us.
+Added: With respect to Blue Owl GP Stakes I - V and their related co-investment vehicles, none of the carried interest will be allocated to us.
+Added: We will generally be allocated 15% of the carried interest attributable to Blue Owl GP Stakes V and future GP Strategic Capital products as well as 15% of the carried interest in existing and future Real Estate and Credit products.
+Added: If a new GP Strategic Capital product is formed to facilitate a secondary transaction with respect to any of Blue Owl GP Stakes I - V (which would include, without limitation, any continuation fund or other new product whose primary purpose is to acquire directly or indirectly all or a portion of the assets of or interests in Blue Owl GP Stakes I - V), any carried interest generated by such product will not be allocated to us, notwithstanding that such secondary vehicle is formed in the future.
+Added: Performance revenues not allocated to us is allocated to certain Principals and employees in vehicles not controlled by us.
Carried interest and performance based fees or allocations may create an incentive for us or our investment professionals to make more speculative or riskier investments and determinations, directly or indirectly on behalf of our products, or otherwise take or refrain from taking certain actions than it would otherwise make in the absence of such carried interest or performance-based fees or allocations.
−Removed: It may also create incentives to influence how we establish economic terms for future funds.
+Added: It may also create incentives to influence how we establish economic terms for future products.
In addition, we may have an incentive to make exit determinations based on factors that maximize economics in favor of the Principals and employees relative to us and our non-participating stockholders.
−Removed: Our failure to appropriately address any actual, potential or perceived conflicts of interest resulting from our entitlement to receive performance income from many of our products could have a material adverse effect on our reputation, which could materially and adversely affect our business in a number of ways, including limiting our ability to raise additional funds, attract new clients or retain existing clients.
+Added: Our failure to appropriately address any actual, potential or perceived conflicts of interest resulting from our entitlement to receive performance income from many of our products could have a material adverse effect on our reputation, which could materially and adversely affect our business in a number of ways, including limiting our ability to raise additional products, attract new clients or retain existing clients.
Risks Related to Our Operations
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In addition, our internal resources and personnel may in the future be insufficient to avoid accounting errors, and our auditors may identify deficiencies, significant deficiencies or material weaknesses in our internal control environment in the future.
−Removed: Any failure to develop or maintain effective controls or any difficulties encountered implementing required new or improved controls could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
+Added: failure to develop or maintain effective controls or any difficulties encountered implementing required new or improved controls could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
Any failure to maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting.
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• consolidating corporate and administrative infrastructures and eliminating duplicative operations;
+Added: • difficulty replicating or replacing functions, systems and infrastructure provided by prior owners of interests in one or more business divisions or the loss of benefits from such prior owners’ global contracts;
• managing expense loads and maintaining currently anticipated operating margins given that products may be different in nature and therefore may require additional personnel and compensation expenses, which expenses may be borne by us, rather than our products;
• unanticipated issues in integrating information technology, communications and other systems.
−Removed: Some of those factors are outside of our control, and any one of them could result in delays, increased costs, decreases in the amount of potential revenues or synergies, potential cost savings, and diversion of management’s time and energy, which could materially affect our financial position, results of operations, and cash flows.
+Added: Some of those factors are outside of our control, and any one of them could result in delays, increased costs, performance shortfalls, decreases in the amount of potential revenues or synergies, potential cost savings, and diversion of management’s time and energy, which could materially and potentially adversely affect our financial position, results of operations, and cash flows.
We are subject to risks in using custodians, counterparties, administrators and other agents.
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markets) and products.
−Removed: For example, in December 2021 we completed the Oak Street Acquisition, which focuses on structuring sale-leasebacks, including triple net leases, and in April 2022 we completed the Wellfleet Acquisition, which focuses on the management of CLO portfolios of broadly syndicated leveraged loans.
+Added: For example, in December 2023, we completed the CHI Acquisition, which expanded our offerings to include life sciences-focused products.
We may pursue growth through acquisitions of other investment management companies, expansion into new markets, acquisitions of critical business partners or other strategic initiatives, in each case, which may include entering into new lines of business.
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• increasing demands on our operational and management systems and controls;
−Removed: • compliance with or applicability to our business or our funds’ portfolio companies of regulations and laws, including, in particular, local regulations and laws (for example, consumer protection related laws) and the impact that noncompliance or even perceived noncompliance could have on us and our funds’ portfolio companies;
+Added: • compliance with or applicability to our business or our products’ portfolio companies of regulations and laws, including, in particular, local regulations and laws (for example, consumer protection related laws) and the impact that noncompliance or even perceived noncompliance could have on us and our products’ portfolio companies;
• conflicts between business lines in deal flow or objectives;
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legal, accounting, regulatory and tax developments and continually evolving cybersecurity risks.
−Removed: Our future growth will depend in part on our ability to maintain an operating platform and management system sufficient to address our growth and may require us to incur significant additional expenses and to commit additional senior management and operational resources.
+Added: Our future growth will depend in part on our ability to maintain an operating infrastructure and management system sufficient to address our growth and may require us to incur significant additional expenses and to commit additional senior management and operational resources.
As a result, we may face significant challenges in:
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Non-compliance with any of the covenants without cure or waiver would constitute an event of default, and an event of default resulting from a breach of certain covenants could result, at the option of the lenders, in an acceleration of the principal and interest outstanding.
−Removed: Additionally, for many Direct Lending funds, the gross asset value used as the base for the management fee includes investments purchased with leverage.
+Added: Additionally, for many Credit products, the gross asset value used as the base for the management fee
+Added: includes investments purchased with leverage.
If we are unable to obtain leverage at the expected level, or at all, this will have a negative impact on our ability to realize the full fee potential of any particular fund.
−Removed: Blue Owl may provide financial guarantees of performance in connection with certain investments, particularly in our Real Estate product-line, to certain lenders to its products and investments.
+Added: Blue Owl may provide financial guarantees of performance in connection with certain investments, particularly in our Real Estate products, to certain lenders to its products and investments.
Lenders in commercial real estate financing customarily will require such guarantees, which typically provides that the lender can recover losses from the guarantors for certain bad acts, such as fraud or intentional misrepresentation, intentional waste, willful misconduct, criminal acts, misappropriation of funds, voluntary incurrence of prohibited debt and environmental losses sustained by lender.
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As a result, an increase in SOFR will increase our interest costs if such borrowings are not been hedged into fixed rates in the future.
−Removed: Cybersecurity risks and cyber incidents could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and confidential information in our possession and damage to our business relationships.
−Removed: There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because, as an
−Removed: alternative asset management firm, we hold confidential and other price sensitive information about existing and potential investments.
+Added: Risk management activities may adversely affect the return on our and our products’ investments.
+Added: When managing our exposure to market risks, we may (on our own behalf or on behalf of our products) from time to time use forward contracts, options, swaps, caps, collars and floors or pursue other strategies or use other forms of derivative instruments to limit our exposure to changes in the relative values of investments that may result from market developments, including changes in prevailing interest rates, currency exchange rates and commodity prices.
+Added: The scope of risk management activities undertaken by us varies based on the level and volatility of interest rates, prevailing foreign currency exchange rates, the types of investments that are made and other changing market conditions.
+Added: The use of hedging transactions and other derivative instruments to reduce the effects of a decline in the value of a position does not eliminate the possibility of fluctuations in the value of the position or prevent losses if the value of the position declines.
+Added: Such transactions may also limit the opportunity for gain if the value of a position increases.
+Added: Moreover, it may not be possible to limit the exposure to a market development that is so generally anticipated that a hedging or other derivative transaction cannot be entered into at an acceptable price.
+Added: Currency fluctuations, in particular, can have a substantial effect on our cash flow and financial condition.
+Added: The success of any hedging or other derivative transaction generally will depend on our ability to correctly predict market changes, the degree of correlation between price movements of a derivative instrument and the position being hedged, the creditworthiness of the counterparty and other factors.
+Added: As a result, while we may enter into such a transaction in order to reduce our exposure to market risks, the transaction may result in poorer overall firm or investment performance than if it had not been executed.
+Added: Such transactions may also limit the opportunity for gain if the value of a hedged position increases.
+Added: While such hedging arrangements may reduce certain risks, such arrangements themselves may entail certain other risks.
+Added: These arrangements may require the posting of cash collateral at a time when a fund has insufficient cash or illiquid assets such that the posting of the cash is either impossible or requires the sale of assets at prices that do not reflect their underlying value.
+Added: Moreover, these hedging arrangements may generate significant transaction costs, including potential tax costs, which may reduce the returns generated by Blue Owl or a product.
+Added: Cybersecurity risks and cyber data security incidents could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and confidential information in our possession and damage to our business relationships.
+Added: There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because, as an alternative asset management firm, we hold confidential and other price sensitive information about existing and potential investments.
Cyber-attacks and other security threats could originate from a wide variety of sources, including cyber criminals, nation state hackers, hacktivists and other outside parties.
As a result, we may face a heightened risk of a security breach or disruption with respect to sensitive information resulting from an attack by computer hackers, foreign governments or cyber terrorists.
−Removed: The efficient operation of our business is dependent on computer hardware and software systems, as well as data processing systems and the secure processing, storage and transmission of information, which are vulnerable to security breaches and cyber incidents.
−Removed: A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources.
+Added: The efficient operation of our business is dependent on computer hardware and software systems, as well as data processing systems and the secure processing, storage and transmission of information, which are vulnerable to security breaches and
+Added: cyber-attacks.
+Added: A cyber-attack is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources.
These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption.
In addition, we and our employees may be the target of fraudulent emails or other targeted attempts to gain unauthorized access to proprietary or sensitive information.
−Removed: The result of these incidents may include disrupted operations, misstated or unreliable financial data, fraudulent transfers or requests for transfers of money, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, causing our business and results of operations to suffer.
+Added: The result of any cyber-attack may include disrupted operations, misstated or unreliable financial data, fraudulent transfers or requests for transfers of money, liability for stolen assets or information (including personal information), increased cybersecurity protection and insurance costs, litigation or damage to our business relationships and reputation, in each case causing our business and results of operations to suffer.
+Added: The rapid evolution and increasing prevalence of artificial intelligence technologies may also intensify our cybersecurity risks.
+Added: Although we are not currently aware of any cyber-attacks or other incidents that, individually or in the aggregate, have materially affected, or would reasonably be expected to materially affect, our operations or financial condition, there has been an increase in the frequency and sophistication of the cyber and security threats that we face, with attacks ranging from those common to businesses generally to more advanced and persistent attacks.
As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by third-party service providers.
−Removed: We have implemented processes, procedures and internal controls designed to mitigate cybersecurity risks and cyber intrusions and rely on industry accepted securities measures and technology to securely maintain confidential and proprietary information maintained on our information systems;
−Removed: however, these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our financial results, operations or confidential information will not be negatively impacted by such an incident, especially because the cyber-incident techniques change frequently or are not recognized until launched and because cyber-incidents can originate from a wide variety of sources.
−Removed: Those risks are exacerbated by the rapidly increasing volume of highly sensitive data, including our proprietary business information and intellectual property, and personally identifiable information of our employees, our clients and others, that we collect and store in our data centers and on our networks.
+Added: We have implemented processes, procedures and internal controls designed to mitigate cybersecurity risks and cyber intrusions and rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems.
+Added: However, these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident, especially because the cyber-incident techniques change frequently or are not recognized until launched and because cyber-incidents can originate from a wide variety of sources.
+Added: Cybersecurity risks are exacerbated by the rapidly increasing volume of highly sensitive data, including our proprietary business information and intellectual property, personally identifiable information of our employees, our clients and others and other sensitive information that we collect and store in our data centers and on our networks.
Our products may also invest in strategic assets having a national or regional profile or in infrastructure assets, the nature of which could expose them to a greater risk of being subject to a terrorist attack or security breach than other assets or businesses.
The secure processing, maintenance and transmission of this information are critical to our operations.
−Removed: A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of fund investor, employee or other personally identifiable or proprietary business data, whether by third parties or as a result of employee malfeasance (or the negligence or malfeasance of third party service providers that have access to such confidential information) or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation or regulatory actions against us and significant reputational harm.
+Added: A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of fund investor, employee or other personally identifiable, proprietary business data or other sensitive information, whether by third parties or as a result of employee malfeasance (or the negligence or malfeasance of third party service providers that have access to such confidential information) or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation or regulatory actions against us and significant reputational harm, any of which could harm our business and results of operations.
Risks Related to Personnel
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The loss of the services of our senior management team, senior investment professionals or other key personnel could have a material adverse effect on us and our products, and on the performance of our products, including on our ability to retain and attract fund investors and raise capital.
−Removed: The departure of some or all of those individuals could also trigger certain provisions tied to the departure of, or cessation of committed time, by those persons (known as “key person” provisions) in the documentation governing certain of our products, which could permit the investors in those funds to suspend or terminate those funds’ investment periods.
+Added: The departure of some or all of those individuals could also trigger certain provisions tied to the departure of, or cessation of committed time, by those persons (known as “key person” provisions) in the documentation governing certain of our products, which could permit the investors in those products to suspend or terminate those products’ investment periods.
We do not carry any “key person” insurance that would provide us with proceeds in the event of the death or disability of any of our senior professionals, and we do not have a policy that prohibits our senior professionals from traveling together.
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We are subject to a number of obligations and standards arising from our investment management business and our authority and statutory fiduciary status over the assets managed by our investment management business.
−Removed: Further, our employees are subject to various internal policies including a Code of Ethics and policies covering conflicts of interest, information systems, business continuity and information security.
+Added: Further, our employees are subject to various internal policies including a Code of Business Conduct and policies covering conflicts of interest, information systems, business continuity and information security.
The violation of those obligations, standards and policies by any of our employees or misconduct by one of our third-party service providers could adversely affect investors in our products and us.
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It is not always possible to detect or deter misconduct by employees or third-party service providers, and the extensive precautions we take to detect and prevent this activity may not be effective in all cases.
−Removed: If one or more of our employees, former employees or third-party service providers were to engage in misconduct or were to be accused of such misconduct, our business and our reputation could be adversely affected and a loss of fund investor confidence could result, which would adversely impact our ability to raise future funds.
+Added: If one or more of our employees, former employees or third-party service providers were to engage in misconduct or were to be accused of such misconduct, our business and our reputation could be adversely affected and a loss of fund investor confidence could result, which would adversely impact our ability to raise future products.
Our current and former employees and those of our products’ investments as well as our third-party service providers may also become subject to allegations of sexual harassment, racial and gender discrimination or other similar misconduct, which, regardless of the ultimate outcome, may result in adverse publicity that could harm our and such portfolio company’s brand and reputation.
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However, our efforts may not be sufficient to enable us to attract, retain and motivate qualified individuals to support our growth.
−Removed: Moreover, if our personnel join competitors or form businesses that compete with ours, that could adversely affect our ability to raise new or successor funds.
+Added: Moreover, if our personnel join competitors or form businesses that compete with ours, that could adversely affect our ability to raise new or successor products.
Risks Related to Our Legal and Regulatory Environment
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The financial services industry may continue to face a difficult regulatory environment under the current presidential administration.
−Removed: In particular, the SEC has signaled an increased emphasis on investment adviser and private fund regulation and has proposed a number of new rules that, if adopted as proposed, would impose significant changes on investment advisers and their management of private funds (including with respect to fund audits, adviser-led secondary transactions, fee and expense allocation and reporting, indemnification, and side letters), and the SEC is expected to propose additional changes in the future.
−Removed: If these, or other similar, proposals become policy, such developments, including investors’ perceptions of and responses to
−Removed: such proposals, could potentially have a material adverse effect on our business, our products and the businesses of the companies in which our products invest.
−Removed: We have expanded our business to Canada, the U.K., Hong Kong and Singapore.
−Removed: Differences between the laws and rules governing our business in these jurisdictions compared to the United States result in inconsistent regulatory requirements that it may not be possible to fully reconcile in a cost-efficient manner across our business.
+Added: In particular, the SEC has signaled an increased emphasis on investment adviser and private fund regulation and has proposed and enacted a number of new rules that would impose significant changes on investment advisers and their management of private funds (including with respect to fund audits, adviser-led secondary transactions, fee and expense allocation and reporting, and preferential rights), and the SEC is expected to propose additional changes in the future.
+Added: Any of the foregoing could lead to further regulatory uncertainty, particularly regarding those rules that are currently (or in the future may become)
+Added: subject to legal challenge from private fund industry groups and others, result in changes to our operations and could materially impact our products and/or their investments, including by causing us to incur additional expenses.
+Added: We have expanded our business globally.
+Added: Differences between the laws and rules governing our business in foreign jurisdictions compared to the United States result in inconsistent regulatory requirements that it may not be possible to fully reconcile in a cost-efficient manner across our business.
The SEC oversees the activities of certain of our subsidiaries that are registered investment advisers under the Advisers Act and the activities of our BDCs that are regulated under the Investment Company Act.
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Our BDCs are also prohibited from knowingly participating in certain transactions with their affiliates, except as permitted by the Investment Company Act and the Co-investment Exemptive Order.
−Removed: For additional details, see “—Conflicts of interest may arise in our allocation of capital and co-investment opportunities.”
+Added: For additional details, see “ — Risks Related to Our Products—Conflicts of Interest—Conflicts of interest may arise in our allocation of capital and co-investment opportunities.”
The Dodd-Frank Act
6 unchanged sentences
Other Securities Laws
−Removed: In addition, we regularly rely on exemptions from various requirements of the Securities Act, the Exchange Act, and the Commodity Exchange Act.
+Added: In addition, we regularly rely on exemptions from various requirements of the Securities Act, the Exchange Act, the Commodity Exchange Act, state securities (blue sky) laws and foreign securities laws.
Those exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties whom we do not control.
9 unchanged sentences
Even if a sanction is imposed against us, one of our subsidiaries or our affiliates or our personnel by a regulator for a small monetary amount, the costs incurred in responding to such matters could be material.
−Removed: The adverse publicity related to the sanction could harm our reputation, which in turn could have a material adverse effect on our business, making it harder for us to raise new and successor funds and discouraging others from doing business with us or accepting investments from our products.
+Added: The adverse publicity related to the sanction could harm our reputation, which in turn could have a material adverse effect on our business, making it harder for us to raise new and successor products and discouraging others from doing business with us or accepting investments from our products.
+Added: United Kingdom Exit from the European Union
+Added: On 31 January 2020, the UK formally withdrew from the European Union (“Brexit”).
+Added: After this, the UK entered into a transition period during which the majority of the existing EU rules continued to apply in the UK.
+Added: Following the end of the transition period on 31 December 2020, EU rules ceased to apply in the UK.
+Added: Although the terms of the UK’s future relationship with the EU were agreed in a trade and cooperation agreement signed on 30 December 2020, this did not include an agreement on financial services.
+Added: In the absence of a formal agreement on this issue, UK firms in the financial sector have more limited access to the EU market than prior to Brexit and EU firms similarly have more limited access to the UK, owing to the loss of passporting rights under applicable EU and UK legislation.
+Added: Alternative arrangements and structures may allow for the provision of cross-border marketing and services between the EU and UK, but these are subject to legal uncertainty and the risk that further legislative and regulatory restrictions could be imposed in the future.
+Added: As a result of the onshoring of EU legislation in the UK, UK firms are currently subject to substantially many of the same rules and regulations as prior to Brexit.
+Added: However, the UK Government has begun the process of revising certain areas of onshored EU legislation as part of UK financial services legislation and regulation, which could result in substantive changes to regulatory requirements in the UK.
+Added: It remains to be seen to what extent the UK may elect to diverge from the current EU-influenced regime over time, either through actively legislating to replace onshored EU rules or by passively not implementing or mirroring EU legislative changes.
+Added: It is possible that the EU may respond to UK initiatives by restricting third country access
+Added: to EU markets.
+Added: If the regulatory regimes for EU and UK financial services change or diverge further, this could have an adverse impact on certain of our products and their investments, including the ability of those products to achieve their investment objectives in whole or in part (for example, owing to increased costs and complexity and/or new restrictions in relation to cross-border access between the EU and non-EU jurisdictions).
+Added: The legal, political and economic uncertainty and disruption generally resulting from Brexit may adversely affect both EU- and UK-based businesses.
+Added: Brexit has already led to disruptions in trade as businesses attempt to adapt cross-border procedures and rules applicable in the UK and in the EU to their activities, products, customers, and suppliers.
+Added: Continuing uncertainty and the prospect of further disruption may result in an economic slowdown and/or a deteriorating business environment in the UK and in one or more EU Member States.
+Added: Alternative Investment Fund Managers Directive (“AIFMD”)
+Added: The AIFMD regulates the activities of certain private fund managers undertaking fund management activities or marketing fund interests to investors in the EEA and the UK respectively.
+Added: To the extent our products are actively marketed to investors domiciled or having their registered office in the EEA or the UK:
+Added: (i) those products and certain Blue Owl entities will be subject to certain reporting, disclosure and other compliance obligations under the AIFMD, which will result in those products incurring additional costs and expenses;
+Added: (ii) those products and certain Blue Owl entities may become subject to additional regulatory or compliance obligations arising under national law in certain EEA jurisdictions or the UK, which would result in those products incurring additional costs and expenses or may otherwise affect the management and operation of those products;
+Added: (iii) certain Blue Owl entities will be required to make detailed information relating to certain products and their investments available to regulators and third parties;
+Added: and (iv) the AIFMD will also restrict certain activities of those products in relation to EEA or UK portfolio companies, including, in some circumstances, a products’s ability to recapitalise, refinance or potentially restructure a portfolio company within the first two years of ownership, which may in turn affect operations of said products generally.
+Added: In addition, it is possible that some jurisdictions will elect to restrict or prohibit the marketing of non-EEA products to investors based in EEA jurisdictions, which may make it more difficult for certain products to raise its targeted amount of Commitments.
+Added: In relation to certain products, we have engaged or plan to engage a third party to provide alternative investment fund manager (an “AIFM”) services to said products(s).
+Added: This third party AIFM provides similar services to other sponsors and products.
+Added: As a result, the successful operation of the relevant products will depend in part on the third party’s ability to provide these services.
+Added: The loss or reduction of the services provided by the third party could adversely affect the ongoing operation of the relevant products.
+Added: The third party is appointed as the AIFM for other products, and may need to devote substantial amounts of its time and attention to the activities of such other products, which may cause conflicts of interest to arise.
+Added: In addition, certain changes in the regulatory status of the third party or circumstances relating to such other entities which have engaged the services of the third party may have an adverse effect on the relevant product.
+Added: Although we will have the ability to replace the third party, the third party’s breach of the applicable agreements or the failure of the third party to make decisions, perform its services, discharge its obligations, deal with regulatory authorities or comply with laws, rules and regulations affecting the relevant product, in a proper manner, or to act in ways that are in the relevant product’s best interest could result in material adverse consequences for the relevant product.
+Added: Should the third party fail to perform its obligations under any applicable agreements between it and the Blue Owl entity it is engaged by, a replacement AIFM may be required, and such replacement AIFM may be subject to approval by the relevant regulatory authority.
+Added: We may not be able to replace the AIFM, or do so on a timely basis.
+Added: Alternatively, if we are able to find a replacement service provider to act as AIFM, the replacement service provider may demand terms that are unfavorable to the relevant product.
+Added: The European Commission published proposals for a Directive to amend AIFMD (“AIFMD II”) in November 2021.
+Added: Technical negotiations have completed and the final text is expected to be published in 2024, with AIFMD II due to be implemented by EU Member States in 2026.
+Added: AIFMD II will impose obligations including:
+Added: (i) minimum substance considerations that EU regulators will need to take into account during the AIFM authorisation process;
+Added: (ii) enhanced requirements around delegation, including additional reporting requirements in relation to delegation arrangements;
+Added: (iii) new requirements applying to AIFMs managing products that originate loans;
+Added: (iv) increased investor pre-contractual disclosure requirements, notably around fees and charges;
+Added: and (v) a prohibition on non-EU AIFMs and AIFs established in jurisdictions identified as “high risk” countries under the European Anti-Money Laundering Directive (as amended) or the revised EU list of non-cooperative tax jurisdictions.
+Added: It is possible that AIFMD II may require additional costs, expenses and/or resources, as well as restricting or prohibiting certain activities, including in
+Added: relation to loan-originating products and managers or products established in jurisdictions outside the EU identified as having anti-money laundering and/or tax failings.
Heightened scrutiny of the financial services industry by regulators may materially and adversely affect our business.
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This increased enforcement activity has caused, and could further cause us to reevaluate certain practices and adjust our compliance control function as necessary and appropriate.
−Removed: While the SEC’s recent lists of examination priorities include such items as cybersecurity compliance and controls and conducting risk-based examinations of investment advisory firms, it is generally expected that the SEC’s oversight of alternative asset managers will continue to focus on concerns related to fiduciary duty transparency and investor disclosure practices (see “ —Conflicts of interest may arise in our allocation of capital and co-investment opportunities ”).
−Removed: Although the SEC has cited improvements in disclosures and industry practices in this area, it has also indicated that there is room for improvement in particular areas, including fees and expenses (and the allocation of such fees and expenses) and co-investment practices.
−Removed: To this end, many firms have received inquiries during examinations or directly from the SEC’s Division of Enforcement regarding various transparency-related topics, including the acceleration of monitoring fees, the allocation of broken-deal expenses, outside business activities of firm principals and employees, group purchasing arrangements, climate-related disclosures and general conflicts of interest disclosures.
+Added: Regulators are also increasing scrutiny and considering regulation of the use of technologies.
+Added: We cannot predict what, if any, actions may be taken, but such regulation could have a material adverse effect on our business and results of operations.
+Added: The SEC’s recent list of examination priorities includes such items as cybersecurity compliance controls and conducting risk-based examinations of investment advisory firms, as well specific priority areas for advisers to private funds, including calculation and allocation of fees and expenses and consistency with disclosures to investors (see “— Risks Related to Our Products—Conflicts of Interest—Conflicts of interest may arise in our allocation of capital and co-investment opportunities ”).
+Added: Many firms have received inquiries during examinations or directly from the SEC’s Division of Enforcement regarding various transparency-related topics, including the acceleration of monitoring fees, the allocation of broken-deal expenses, outside business activities of firm principals and employees, group purchasing arrangements, climate-related disclosures and general conflicts of interest disclosures.
While we believe we have made appropriate and timely disclosures regarding the foregoing, the SEC staff may disagree.
1 unchanged sentence
If the SEC were to investigate and find errors in a BDC board’s methodologies or procedures, we and/or members of any such BDC’s board and management could be subject to penalties and fines, which could harm our reputation and our business, financial condition and results of operations could be materially and adversely affected.
−Removed: Regulations governing the operations of certain of our fund vehicles affect their ability to raise, and the way in which the applicable funds raise, additional capital.
+Added: Regulations governing the operations of certain of our products affect their ability to raise, and the way in which the applicable products raise, additional capital.
Our BDCs have elected to be regulated as business development companies under the Investment Company Act.
8 unchanged sentences
Any of the foregoing circumstances could have a material adverse effect on our BDCs, and as a result, on us.
−Removed: federal income tax purposes, our BDCs have elected to be treated as RICs under Subchapter M of the Code and one or more funds that we manage includes in its structure a real estate investment trust (“REIT”).
+Added: federal income tax purposes, our BDCs have elected to be treated as RICs under Subchapter M of the Code and one or more products that we manage includes in its structure a real estate investment trust (“REIT”).
To maintain their status as RICs or REITs, each such vehicle must meet, among other things, certain source of income, asset and annual distribution requirements.
3 unchanged sentences
federal income tax at regular corporate rates, and applicable state and local taxes, which would reduce the amount of cash available for distribution to its investors.
−Removed: If any of our BDCs fail to maintain RIC tax treatment for any reason and are subject to U.S.
−Removed: federal income tax at corporate rates, the resulting taxes could substantially reduce their net assets, which could have a material adverse effect on our BDCs, and as a result, on the management fees we may earn from our BDCs.
−Removed: We and our products are subject to increasing scrutiny from certain investors, third party assessors and our stockholders with respect to ESG matters.
−Removed: We and our products face increasing scrutiny from certain investors, third party assessors that measure companies’ ESG performance and our stockholders related to ESG matters, including in relation to diversity and inclusion, human rights, environmental stewardship, support for local communities, corporate governance and transparency.
−Removed: For example, we, our products and our products’ portfolio companies risk damage to our brands and reputations if we or they do not (or are perceived to not act) responsibly either with respect to ESG matters or in considering ESG factors in our investment processes.
−Removed: Adverse incidents related to ESG could impact the value of our brand, the brand of our products or our products’ portfolio companies, or the cost of our or their operations and relationships with investors, all of which could adversely affect our business and results of operations.
−Removed: Further, there can be no assurance that investors and other stakeholders will determine that any of our ESG initiatives, goals or commitments are sufficiently robust.
−Removed: There can be no assurance that we will be able to accomplish any announced goals related to our ESG program, as statements regarding our ESG goals reflect our current plans and aspirations and are not guarantees that we will be able to achieve them within the timelines we announce or at all.
−Removed: In recent years, certain institutional investors, including public pension funds, have placed increasing importance on the ESG policies and practices of the products to which they commit capital and investors may decide not to commit capital to future fundraises based on their assessment of our approach to and consideration of ESG.
+Added: If any of our BDCs or REITs fail to maintain RIC or REIT, as applicable, tax treatment for any reason and are subject to U.S.
+Added: federal income tax at corporate rates, the resulting taxes could substantially reduce their net assets, which could have a material adverse effect on our BDCs, and as a result, on the management fees we may earn from our BDCs and REITs.
+Added: We and our products are subject to increasing scrutiny from certain investors, third party assessors, our stockholders and other stakeholders with respect to ESG-related topics.
+Added: We and our products face increasing scrutiny from certain investors, third party assessors that measure companies’ ESG performance, our stockholders and other stakeholders related to ESG-related topics, including in relation to diversity and inclusion, human rights, environmental stewardship, support for local communities, corporate governance and transparency.
+Added: For example, we, our products and our products’ portfolio companies risk damage to our brands and reputations if we or they do not act (or are perceived to not act) responsibly either with respect to responsible investing processes or ESG-related practices.
+Added: Adverse incidents related to ESG practices could impact the value of our brand, the brand of our products or our products’ portfolio companies, or the cost of our or their operations and relationships with investors, all of which could adversely affect our business and results of operations.
+Added: Further, there can be no assurance that investors and other stakeholders will determine that any of our ESG initiatives or commitments are sufficiently robust.
+Added: There can be no assurance that we will be able to accomplish our goals related to responsible investing or ESG practices, as statements regarding our ESG and responsible investing commitments and priorities reflect our current estimates, plans and/or aspirations and are not guarantees that we will be able to achieve them within the timelines we announce or at all.
+Added: Additionally, we are permitted to determine that it is not feasible or practical to implement or complete certain aspects of our responsible investing program or ESG initiatives based on cost, timing or other considerations.
+Added: In recent years, certain investors have placed increasing importance on policies and practices related to responsible investing and ESG for the products to which they commit capital and investors may decide not to commit capital to future fundraises based on their assessment of our approach to and consideration of ESG-related issues or risks.
Similarly, a variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized.
−Removed: If our ESG practices or ratings do not meet the standards set by such investors or organizations, or if we fail, or are perceived to fail, to demonstrate progress toward our ESG goals and initiatives, they may choose not to invest in our products or common stock, and we may face reputational damage.
−Removed: At the same time, various stakeholders may have differing approaches to ESG activities or divergent views on ESG matters.
−Removed: Similarly, it is expected that investor and/or stockholder demands will require us to spend additional resources and place increasing importance on ESG matters in our review of prospective investments and management of existing ones.
−Removed: Devoting additional resources to ESG matters could increase the amount of expenses we or our investments are required to bear.
+Added: If our responsible investing or ESG-related practices or ratings do not meet the standards set by such investors or organizations, or if we receive a negative rating or assessment from any such organization, or if we fail, or are perceived to fail, to demonstrate progress toward our ESG priorities and initiatives, they may choose not to invest in our products or common stock, and we may face reputational damage.
+Added: Similarly, it is expected that investor and/or stockholder demands will require us to spend additional resources and place increasing importance on business relevant ESG factors in our review of prospective investments and management of existing ones.
+Added: Devoting additional resources to our responsible investing or ESG-related practices could increase the amount of expenses we or our investments are required to bear.
For example, collecting, measuring, and reporting ESG information and metrics can be costly, difficult and time consuming, is subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal and other risks.
−Removed: If we do not successfully manage expectations across these varied stakeholder interests, it could erode stakeholder trust, impact our reputation, and constrain our investment opportunities.
−Removed: To the extent our access to capital from investors focused on ESG ratings or matters is impaired, we may not be able to maintain or increase the size of our existing products or raise sufficient capital for new products, which may adversely affect our revenues.
−Removed: We are subject to increasing scrutiny from regulators with respect to ESG matters and the regulatory disclosure landscape surrounding ESG matters continues to evolve.
−Removed: ESG matters have been the subject of increased focus by certain regulators, and new regulatory initiatives related to ESG that are applicable to us, our products and our products’ portfolio companies could adversely affect our business.
+Added: To the extent our access to capital from investors focused on ESG ratings or ESG-related matters is impaired, we may not be able to maintain or increase the size of our existing products or raise sufficient capital for new products, which may adversely affect our revenues.
+Added: Further, growing interest on the part of investors and regulators in ESG-related topics and themes and increased demand for, and scrutiny of, ESG-related disclosure by asset managers, have also increased the risk that asset managers could be perceived as, or accused of, making inaccurate or misleading statements regarding the ESG-related investment strategies or their and their funds’ responsible investing or ESG-related efforts or initiatives, or “greenwashing.” Such perception or accusation could damage our reputation, result in litigation or regulatory actions and adversely impact our ability to raise capital.
+Added: At the same time, various stakeholders may have differing approaches to responsible investing activities or divergent views on the consideration of ESG topics, including in the countries in which Blue Owl operates and invests, as well as in the states and localities where Blue Owl serves public sector clients.
+Added: These differing views increase the risk that any action or lack thereof with respect to our consideration of responsible investing or ESG-related practices will be perceived negatively.
+Added: “Anti-ESG” sentiment has gained momentum across the U.S., with several states having enacted or proposed “anti-ESG” policies, legislation or issued related legal opinions.
+Added: (i) boycott bills target financial institutions that “boycott” or
+Added: “discriminate against” companies in certain industries (e.g., energy and mining) and prohibit state entities from doing business with such institutions and/or investing the state’s assets (including pension plan assets) through such institutions and (ii) ESG investment prohibitions require that state entities or managers/administrators of state investments make investments based solely on pecuniary factors without consideration of ESG factors.
+Added: If investors subject to such legislation view our products’ responsible investing or ESG practices as being in contradiction of such “anti-ESG” policies, legislation or legal opinions, such investors may not invest in our products, our ability to maintain the size of our products could be impaired, and/or it could negatively affect the price of our common stock.
+Added: Further, asset managers have been subject to recent scrutiny related to ESG-focused industry working groups, initiatives and associations, including organizations advancing action to address climate change or climate-related risk.
+Added: Such scrutiny could expose us to the risk of antitrust investigations or challenges by federal authorities, result in reputational harm and/or discourage certain investors from investing in our products.
+Added: In addition, state attorneys general, among others, have asserted that the Supreme Court’s decision striking down race-based affirmative action in higher education in June 2023 should be analogized to private employment matters and private contract matters.
+Added: Several new cases alleging discrimination based on similar arguments have been filed since that decision, with scrutiny of certain corporate DEI practices increasing.
+Added: If we do not successfully manage expectations across these varied stakeholder interests, it could erode stakeholder trust, impact our reputation, and/or constrain our investment and fundraising opportunities.
+Added: We are subject to increasing scrutiny from regulators with respect to ESG-related issues and the regulatory disclosure landscape surrounding related topics continues to evolve.
+Added: Responsible investing, ESG practices and ESG-related disclosures have been the subject of increased focus by certain regulators, and new regulatory initiatives related to ESG-specific topics that are applicable to us, our products and our products’ portfolio companies could adversely affect our business.
There is a growing regulatory interest across jurisdictions in improving transparency regarding the definition, measurement and disclosure of ESG factors in order to allow investors to validate and better understand sustainability claims, including in the United States, the European Union and the United Kingdom.
2 unchanged sentences
Although the ultimate date of effectiveness and the final form and substance of the requirements for this proposed rule is not yet known and the ultimate scope and impact on our business is uncertain, compliance with this proposed rule, if finalized, may result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.
−Removed: Further, on May 25, 2022, the SEC proposed amendments to rules and reporting forms concerning, among other things, enhanced disclosure requirements for investment managers regarding the ability to market funds as green, sustainable or ESG-focused and the incorporation of ESG factors by registered investment companies and advisers.
−Removed: These proposed rules are not in final form and therefore we cannot determine how they may affect our products.
−Removed: In addition, in 2021 the SEC established an enforcement task force to look into ESG practices and disclosures by public companies and investment managers and has begun to bring enforcement actions based on ESG disclosures not matching actual investment processes.
+Added: Further, on May 25, 2022, the SEC proposed amendments to rules and reporting forms concerning, among other things, enhanced disclosure requirements for investment managers regarding the ability to market products as green, sustainable or ESG-focused and the incorporation of ESG factors by registered investment companies and advisers.
+Added: On August 23, 2023, the SEC adopted its final rule enhancing the regulation of private fund advisers, which includes requirements with respect to the disclosure of certain information to investors that could affect the way certain ESG-related information is shared.
+Added: In addition, in 2021 the SEC established an enforcement task force to look into ESG practices and disclosures by public companies and investment managers and has begun to bring enforcement actions based on ESG disclosures not aligning with actual investment processes.
+Added: Further, in October 2023, California enacted legislation that will ultimately require certain companies that (i) do business in California to publicly disclose their Scopes 1, 2 and 3 greenhouse gas emissions, with third party assurance of such data, and issue public reports on their climate-related financial risk and related mitigation measures and (ii) operate in California and make certain climate-related claims to provide enhanced disclosures around the achievement of climate-related claims, including the use of voluntary carbon credits to achieve such claims.
From a European perspective, the European Union has adopted legislative reforms which include, without limitation:
−Removed: (a) Regulation 2019/2088 regarding the introduction of transparency and disclosure obligations for fund investors, funds and asset managers in relation to ESG factors (the “SFDR”), for which most rules took effect beginning on March 10, 2021;
−Removed: (b) Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (the “Taxonomy”);
−Removed: (c) amendments to existing regulations including MiFID II and the EU Alternative Investment Fund Managers Directive (the “AIFMD”);
−Removed: and (d) Directive (EU) 2022/2464 as regards corporate sustainability reporting (the “CSRD”).
−Removed: There are still uncertainties regarding the operation of these requirements, and a lack of established market practice, which can lead to data gaps or methodological challenges which may affect our ability to collect relevant data.
−Removed: There is a risk that a reorientation in the regulatory requirements or market practice in this respect could be adverse to our investments if they are perceived to be less valuable as a consequence of, among other things, their carbon footprint or perceived “greenwashing.” Compliance with requirements of this nature also increase risks relating to financial supervision and enforcement action.
−Removed: There is the additional risk that market expectations in relation to the SFDR categorization of financial products could adversely affect our ability to raise capital from EEA investors.
+Added: (a) Regulation 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”), for which most rules to effect beginning on March 10, 2021 and (b) Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (the “Taxonomy”).
+Added: Further, there are ongoing consultations that may result in further changes or amendments to the SFDR.
+Added: There is an increasing focus on anti-greenwashing and transparency initiatives affecting investment managers.
+Added: The EU’s European Securities and Markets Authority announced in its 2024 Work Program a series of initiatives aimed at enhancing transparency around sustainability risks and disclosures, including a stocktaking report on the supervision of sustainability information and greenwashing and remediation actions, the introduction of guidelines on funds’ names with ESG or sustainability-related terms, common supervisory actions on the integration of sustainability risks and disclosures in the investment management sector.
+Added: There are still some uncertainties regarding the operation of these requirements, and an established market practice is still being developed in certain cases, which can lead to diverging implementation and/or operationalization, data gaps or methodological challenges which may affect our ability to collect relevant data.
+Added: These regimes continue to evolve and there is still a lack of clarity and established practice around the approach to their supervision and enforcement, which may vary across national
+Added: competent authorities.
+Added: There is a risk that a development or reorientation in the regulatory requirements or market practice in this respect could be adverse to our investments if they are perceived to be less valuable as a consequence of, among other things, their carbon footprint or perceived “greenwashing.” Compliance with requirements of this nature may also increase risks relating to financial supervision and enforcement action.
+Added: There is the additional risk that market expectations in relation to certain commitments under the SFDR, such as categorization of financial products, could adversely affect our ability to raise capital, especially from EEA investors.
Outside of the EU, the U.K.
Government’s stated policy goal is to introduce economy-wide mandatory Task Force on Climate-related Financial Disclosures (“TCFD”) reporting by 2025.
−Removed: is in the process of introducing mandatory TCFD-aligned disclosure requirements for U.K.
−Removed: regulated firm.
−Removed: The regime captures (amongst others) any firm providing portfolio
−Removed: management (which includes managing investments or private equity or other private market activities consisting of either advising on investments or managing investments on a recurring or ongoing basis in connection with an arrangement which aims to invest in unlisted securities) where the assets under management exceed £5.0 billion calculated as a 3-year rolling average.
−Removed: In addition, the U.K.
−Removed: FCA is consulting on additional sustainability disclosure requirements and sustainability labels for investment products.
−Removed: The FCA published a consultation paper in late October 2022, proposing a three-tiered system with different levels of disclosures targeted at different types of investors and different classifications for products according to their sustainability activities and objectives.
−Removed: The proposed scope of application includes asset managers and FCA-regulated asset owners.
−Removed: The FCA is also considering how (if at all) the regime should apply to funds that are being marketed into the U.K.
−Removed: As a result of these legislative and regulatory initiatives, we may, for the first time, be required to provide additional disclosure to investors in our products with respect to ESG matters.
+Added: has introduced mandatory TCFD-aligned disclosure requirements for certain U.K.
+Added: regulated firms.
+Added: The regime captures (amongst others) any firm providing portfolio management (which includes managing investments or private equity or other private market activities consisting of either advising on investments or managing investments on a recurring or ongoing basis in connection with an arrangement which aims to invest in unlisted securities) where the assets under management exceed £5.0 billion calculated as a 3-year rolling average.
+Added: In November 2023, the Sustainability Labelling and Disclosure of Sustainability-Related Financial Information Instrument 2023 (“SDR”) introduced sustainability disclosure requirements, investment product labels and an ‘anti-greenwashing’ rule.
+Added: The anti-greenwashing rule applies to all UK-authorised firms in relation to ESG-related claims made in their financial promotions and communications with clients in the UK.
+Added: The balance of the new regime is directed at UK investment funds and UK-regulated asset management firms as well as distributors of such funds.
+Added: The FCA has indicated it will continue to work with His Majesty’s Treasury on their approach to overseas funds and consult on an alternative approach to applying the regime to all types of portfolio managers.
+Added: In Asia, regulators in Singapore and Hong Kong have introduced requirements for asset managers to integrate climate risk considerations in investment and risk management processes, together with enhanced disclosure and reporting and have also issued enhanced rules for certain ESG funds on general ESG risk management and disclosure.
+Added: As a result of these legislative and regulatory initiatives, we may be required to provide additional disclosure to investors in our products with respect to ESG matters.
This exposes us to increased disclosure risks, for example due to a lack of available or credible data, and the potential for conflicting disclosures may also expose us to an increased risk of misstatement litigation or miss-selling allegations.
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In addition, where there are uncertainties regarding the operation of the framework, a lack of official, conflicting or inconsistent regulatory guidance, a lack of established market practice and/or data gaps or methodological challenges affecting the ability to collect relevant data, funds and/or fund managers may be required to engage third party advisers and/or service providers to fulfil the requirements, thereby exacerbating any increase in compliance burden and costs.
−Removed: To the extent that any applicable jurisdictions enact similar laws and/or frameworks, there is a risk that our products may not be able to maintain alignment of a particular investment with such frameworks, and/or may be subject to additional compliance burdens and costs, which might adversely affect the investment returns of our funds.
−Removed: The effect of global climate change and climate-change related regulation and sustainability concerns could adversely affect our business and the businesses of our products’ portfolio companies.
+Added: To the extent that any applicable jurisdictions enact similar laws and/or frameworks, there is a risk that our products may not be able to maintain alignment of a particular investment with such frameworks, and/or may be subject to additional compliance burdens and costs, which might adversely affect the investment returns of our products.
+Added: Climate change and climate-related effects may expose us to systemic, global and macroeconomic risks and could adversely affect our business and the businesses of our products’ portfolio companies.
Global climate change is widely considered to be a significant threat to the global economy.
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presidential administration has focused on climate change policies and has re-joined the Paris Agreement, which includes commitments from countries to reduce their greenhouse gas emissions, among other commitments.
−Removed: The Paris Agreement and other regulatory and voluntary initiatives launched by international, federal, state, and regional policymakers and regulatory authorities as well as private actors seeking to reduce greenhouse gas emissions may expose our business operations, products and products’ portfolio companies to other types of transition risks, such as:
+Added: The Paris Agreement and other regulatory and voluntary initiatives launched by international, federal, state, and regional policymakers and regulatory authorities as well as private actors seeking to reduce greenhouse gas emissions may expose our
+Added: business operations, products and products’ portfolio companies to other types of transition risks, such as:
(i) political and policy risks, including changing regulatory incentives, and legal requirements (including with respect to greenhouse gas emissions) that could result in increased costs or changes in business operations, (ii) regulatory and litigation risks, including changing legal requirements that could result in increased permitting, tax and compliance costs, changes in business operations, or the discontinuance of certain operations, and litigation seeking monetary or injunctive relief related to impacts related to climate change, (iii) technology and market risks, including declining market for investments in industries seen as greenhouse gas intensive or less effective than alternatives in reducing greenhouse gas emissions, (iv) business trend risks, including the increased attention to ESG considerations by our investors (including in connection with their determination of whether to invest), and (v) potential harm to our reputation if certain stakeholders, such as our investors or stockholders, believe that we are not adequately or appropriately responding to climate change and/or climate risk management, including through the way in which we operate our business, the composition of our products’ existing portfolios, the new investments made by our products, or the decisions we make to continue to conduct or change our activities in response to climate change considerations.
4 unchanged sentences
and around the world.
−Removed: In the latter half of 2021, the SEC brought three charges, sanctioning eight companies, all of which were registered as broker dealers, investment advisory firms or both, for deficient cybersecurity policies and procedures, and settled charges in two separate actions against public companies for deficient disclosure controls and procedures violations related to a cybersecurity vulnerabilities that exposed sensitive customer information.
−Removed: More recently the SEC proposed new rules related to cybersecurity risk management for registered investment advisers, and registered investment companies and business development companies (funds), as well as amendments to certain rules that govern investment adviser and fund disclosures.
−Removed: With the SEC particularly focused on cybersecurity, we expect increased scrutiny of our policies and systems designed to manage our cybersecurity risks and our related disclosures.
−Removed: Many jurisdictions in which we operate have laws and regulations relating to data privacy, cybersecurity and protection of personal information, including the CCPA, the New York SHIELD Act, the GDPR and the U.K.
−Removed: In addition, the SEC has indicated in recent periods that one of its examination priorities for the Office of Compliance Inspections and Examinations is to continue to examine cybersecurity procedures and controls, including testing the implementation of these procedures and controls.
−Removed: There may be substantial financial penalties for breach of privacy laws.
−Removed: For example, the maximum penalty for breach of the GDPR, is the greater of 20 million Euros and 4% of group annual worldwide turnover.
+Added: Recently, the SEC adopted new rules related to cybersecurity risk management for registered investment advisers, registered investment companies and business development companies, as well as amendments to certain rules that govern investment adviser and fund disclosures.
+Added: In July 2023, the SEC adopted rules requiring public companies to disclose material cybersecurity incidents on Form 8-K and periodic disclosure of a registrant’s cybersecurity risk management, strategy, and governance in annual reports.
+Added: The rules became effective beginning with annual reports for fiscal years ending on or after December 15, 2023 and beginning with Form 8-Ks on December 18, 2023.
+Added: The SEC has also particularly focused on cybersecurity, and we expect increased scrutiny of our policies and systems designed to manage our cybersecurity risks and our related disclosures as a result.
+Added: We also expect to face increased costs to comply with the new SEC rules, including increased costs for cybersecurity training and management.
+Added: Many jurisdictions in which we operate have laws and regulations relating to data privacy, cybersecurity and protection of personal information, including, for example the CCPA, the GDPR and the U.K.
+Added: In addition, the SEC has indicated in recent periods that one of its examination priorities for the Division of Examinations is to continue to examine cybersecurity procedures and controls, including testing the implementation of these procedures and controls.
+Added: There may be substantial financial penalties or fines for breach of privacy laws (which may include insufficient security for our personal or other sensitive information).
+Added: For example, the maximum penalty for breach of the GDPR is the greater of 20 million Euros and 4% of group annual worldwide turnover, and fines for each violation of the CCPA are $2,500 or $7,500 per violation for intentional violations.
Non-compliance with any applicable privacy or data security laws represents a serious risk to our business.
−Removed: Some jurisdictions have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data.
+Added: Some jurisdictions have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal information.
Breaches in security could potentially jeopardize our, our employees’ or our product investors’ or counterparties’ confidential or other information processed and stored in, or transmitted through, our computer systems and networks (or those of our third-party vendors), or otherwise cause interruptions or malfunctions in our, our employees’, our product investors’, our counterparties’ or third parties’ operations, which could result in significant losses, increased costs, disruption of our business, liability to our product investors and other counterparties, fines or penalties, litigation, regulatory intervention or reputational damage, which could also lead to loss of product investors or clients.
−Removed: We are subject to litigation risks, and consequently, we may face liabilities and damage to our professional reputation as a result.
+Added: Finally, there has been significant evolution and developments in the use of artificial intelligence technologies, such as ChatGPT.
+Added: We cannot fully determine the impact or cybersecurity risk of such evolving technology to our business at this time.
+Added: We are subject to litigation risks, and consequently, we may face liabilities and damage to our professional reputation.
Legal liability could have a material adverse effect on our business, financial condition or results of operations or cause reputational harm to us.
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As a result, allegations of improper conduct asserted by private litigants or regulators, regardless of whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities or the investment industry in general, whether or not valid, may harm our reputation, which may be damaging to our business.
−Removed: In addition, the laws and regulations governing the limited liability of such issuers and investments vary from jurisdiction to jurisdiction, and in certain contexts the laws of certain jurisdictions may provide not only for carve-outs from limited liability protection for the issuer or portfolio company that has incurred the liabilities, but also for recourse to assets of other entities under common control with, or that are part of the same economic group as, such issuer.
+Added: In addition, the laws and regulations governing the limited liability of such issuers and investments vary from jurisdiction to jurisdiction, and in certain contexts the laws of certain jurisdictions may provide not only for carve-outs from limited liability
+Added: protection for the issuer or portfolio company that has incurred the liabilities, but also for recourse to assets of other entities under common control with, or that are part of the same economic group as, such issuer.
For example, if any of our products’ investments is subject to bankruptcy or insolvency proceedings in a jurisdiction and is found to have liabilities under the local consumer protection, labor, tax or bankruptcy laws, the laws of that jurisdiction may permit authorities or creditors to file a lien on, or to otherwise have recourse to, assets held by other investments (including assets held by our products) in that jurisdiction.
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Certain losses of a catastrophic nature, such as losses arising as a result of wars, earthquakes, typhoons, terrorist attacks or other similar events, may be uninsurable or may only be insurable at rates that are so high that maintaining coverage would cause an adverse impact on our business, our investment funds and their investments.
−Removed: In general, losses related to terrorism are becoming harder and more
−Removed: expensive to insure against.
+Added: In general, losses related to terrorism are becoming harder and more expensive to insure against.
Some insurers are excluding terrorism coverage from their all-risk policies.
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As a result, we, our products and their investments may not be insured against terrorism or certain other catastrophic losses.
−Removed: Changes to the method of determining LIBOR or the selection of a replacement for LIBOR may affect the value of investments held by our products.
−Removed: LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally.
−Removed: Our products, and in particular our BDCs, typically use LIBOR as a reference rate in term loans they extend to investments such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR.
−Removed: The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.
−Removed: The U.K.’s Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it will not compel panel banks to contribute to LIBOR after 2021.
−Removed: In addition, in March 2021, the FCA announced that LIBOR will no longer be provided for the one-week and two-month U.S.
−Removed: dollar settings after December 21, 2021.
−Removed: As of January 1, 2022, USD LIBOR is available in five settings (overnight, one-month, three-month, six-month and 12-month).
−Removed: The ICE Benchmark Administration has stated that it will cease to publish all remaining USD LIBOR settings immediately following their publication on June 30, 2023, absent subsequent action by the relevant authorities.
−Removed: As of January 1, 2022, all non-USD LIBOR reference rates in all settings ceased to be published.
−Removed: It is unclear if after June 30, 2023 LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2023.
−Removed: The discontinuance of LIBOR, as well as uncertainty related to the establishment of any alternative reference rate, may adversely affect our cost of capital and the market for LIBOR-based securities, which could have an adverse impact on the earning from or value of our investment portfolio.
−Removed: Central banks and regulators in a number of major jurisdictions (for example, United States, U.K., EU, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates (“IBORs”).
−Removed: To identify a successor rate for U.S.
−Removed: dollar LIBOR, the Alternative Reference Rates Committee (“ARRC”), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed.
−Removed: On December 6, 2021, the ARRC released a statement selecting and recommending the Secured Overnight Financing Rate (“SOFR”) plus a recommended spread adjustment as its preferred alternative rate for LIBOR, and on March 15, 2022, President Biden signed the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”), pursuant to which certain contracts that rely on LIBOR and do not contain procedures for determining an alternative base rate in the event that LIBOR is discontinued will transition from LIBOR to SOFR, effective July 1, 2023.
−Removed: SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S.
−Removed: Treasury securities, and is based on directly observable U.S.
−Removed: Treasury-backed repurchase transactions.
−Removed: However, given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the case with LIBOR).
−Removed: SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions.
−Removed: Although SOFR plus the recommended spread adjustment appears to be the preferred replacement rate for U.S.
−Removed: dollar LIBOR, and its use continues to steadily grow, at this time it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United States, U.K.
−Removed: or elsewhere.
−Removed: The Bank of England followed suit in April 2018 by publishing its proposed alternative rate, the Sterling Overnight Index Average, or SONIA.
−Removed: Each of SOFR and SONIA significantly differ from LIBOR, both in each actual rate and how each rate is calculated, and therefore it is unclear whether and when markets will adopt either of these rates as a widely accepted replacement for LIBOR.
−Removed: As such, if LIBOR in its current form does not survive and a replacement rate is not widely agreed upon or if a replacement rate is significantly different from LIBOR, it could cause a disruption in the credit markets generally.
−Removed: The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to our investments or on our overall financial condition or results of operations.
−Removed: Since 2022, some of our BDCs’ new investments are indexed to SOFR;
−Removed: however they have material contracts that are indexed to LIBOR.
−Removed: Certain contracts have an orderly market transition already in process, and we do not expect that the transition will have a material impact on their business, financial condition or results of operations;
−Removed: however, our products, borrowers of our products and our Partner Managers and their respective portfolio companies will need to renegotiate the credit agreements extending beyond 2023 that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations.
−Removed: Following the replacement of LIBOR, some or all of these credit agreements may bear interest at a lower interest rate, which, to the extent our products are lenders, could have an adverse impact on their performance, could have an adverse impact on our products’ and their portfolio companies’ results of
−Removed: Moreover, if LIBOR ceases to exist, our products and their portfolio companies may need to renegotiate certain terms of their credit facilities.
−Removed: If our products and their portfolio companies are unable to do so, amounts drawn under their credit facilities may bear interest at a higher rate, which would increase the cost of their borrowings and, in turn, affect their results of operations.
+Added: Loans under our Revolving Credit Facility and the financial credit we extend to our portfolio companies bear interest based
+Added: on SOFR, but the market's experience with SOFR based loans is still limited.
+Added: Our products, and in particular our BDCs, historically used LIBOR, the London Interbank Offered Rate, as a reference rate in term loans they extended to portfolio companies.
+Added: The terms of our BDCs’ debt investments generally included minimum interest rate floors which were calculated based on LIBOR.
+Added: In July 2017, the U.K.’s Financial Conduct Authority “FCA”, as supervisor of ICE Benchmark Administrator (“IBA”), the administrator of LIBOR, announced that it would phase out LIBOR by the end of 2021 (later extended to the end of June 2023 for USD LIBOR only).
+Added: IBA ceased publishing GBP, EUR, CHF and JPY LIBOR rates on January 1, 2022 and ceased publishing overnight and 12-month USD LIBOR on June, 30 2023.
+Added: In January 2023, the Federal Reserve adopted a final rule implementing the LIBOR Act that, among other things, identifies the applicable SOFR-based benchmark replacements under the LIBOR Act.
+Added: Since 2022, our BDCs’ have been transitioning their investments to SOFR, the Secured Overnight Financing Rate, published by the Federal Reserve Bank of New York.
+Added: Our Partner Managers and their respective portfolio companies also amended their credit agreements to replace LIBOR with SOFR.
+Added: SOFR is considered to be a risk-free rate, and USD LIBOR was a risk weighted rate.
+Added: Thus, SOFR tends to be a lower rate than USD LIBOR, because SOFR does not contain a risk component.
+Added: This difference may negatively impact our net interest margin of our investments.
+Added: Also, the use of SOFR based rates is relatively new, and market experience with SOFR based rate loans is limited.
+Added: There could be unanticipated difficulties or disruptions with the calculation and publication of SOFR based rates.
+Added: This could result in increased borrowing costs for the Company or could adversely impact the interest income our products receive from their portfolio companies or the market value of the financial obligations that are due to our products from their portfolio
Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business.
Certain states and other regulatory authorities require investment managers to register as lobbyists.
−Removed: We are registered as a lobbyist in California.
+Added: We are registered as a lobbyist in California and in New York.
These registration requirements impose significant compliance obligations on registered lobbyists and their employers, which may include annual registration fees, periodic disclosure reports and internal record keeping, and may also prohibit the payment of contingent fees.
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Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) administers and enforces laws, executive orders and regulations establishing U.S.
−Removed: economic and trade sanctions, which restrict or prohibit, among other things, direct and indirect transactions with, and the provision of services to,
−Removed: certain non-U.S.
+Added: economic and trade sanctions, which restrict or prohibit, among other things, direct and indirect transactions with, and the provision of services to, certain non-U.S.
countries, territories, individuals and entities.
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Moreover, OFAC enforcement is increasing, which may increase the risk that we become subject of such actual or threatened enforcement.
−Removed: In addition, any sanctions imposed by the United States and other countries in connection with the war between Russia and Ukraine may impact portfolio companies of our funds, which may in turn impact us.
+Added: In addition, further sanctions imposed by the United States and other countries in connection with the war between Russia and Ukraine may impact portfolio companies of our products, which may in turn impact us.
Additionally, Section 2019 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “ITRA”) amended the Exchange Act to require companies subject to SEC reporting obligations under Section 13 of the Exchange Act to disclose in their periodic reports specified dealings or transactions involving Iran or other individuals and entities targeted by OFAC during the period covered by the relevant periodic report.
In some cases, the ITRA requires companies to disclose these types of transactions even if they were permissible under U.S.
−Removed: Companies that currently may be or may have been at the time considered our affiliates, may have from time to time publicly filed and/or provided to us such disclosures.
+Added: Companies that currently may be or may have been at the time
+Added: considered our affiliates, may have from time to time publicly filed and/or provided to us such disclosures.
We do not independently verify or participate in the preparation of these disclosures.
−Removed: We and our publicly traded funds are required, either periodically or annually to separately file with the SEC a notice when such activities have been disclosed, and the SEC is required to post such notice of disclosure on its website and send the report to the President and certain U.S.
+Added: We and our publicly traded products are required, either periodically or annually to separately file with the SEC a notice when such activities have been disclosed, and the SEC is required to post such notice of disclosure on its website and send the report to the President and certain U.S.
Congressional committees.
Disclosure of such activity, even if such activity is not subject to sanctions under applicable law, and any sanctions actually imposed on us or our affiliates as a result of these activities, could harm our reputation and have a negative impact on our business, financial condition and results of operations, and any failure to disclose any such activities as required could additionally result in fines or penalties.
−Removed: We are subject to laws and regulations in the EEA, including AIFMD, which may increase our regulatory costs and burdens.
−Removed: AIFMD regulates the activities of certain private fund managers undertaking fund management activities or marketing fund interests to investors within the EEA.
−Removed: To the extent any one of our products is actively marketed to investors domiciled or having their registered office in the EEA:
−Removed: (i) we and such fund will be subject to certain reporting, disclosure and other compliance obligations under AIFMD, which will result in such funds incurring additional costs and expenses;
−Removed: (ii) we and such fund may become subject to additional regulatory or compliance obligations arising under national law in certain EEA jurisdictions, which would result in such fund incurring additional costs and expenses or may otherwise affect the management and operation of such fund;
−Removed: (iii) we will be required to make detailed information relating to such fund and its investments available to regulators and third parties;
−Removed: and (iv) AIFMD will also restrict certain activities of such fund in relation to EEA investments, including, in some circumstances, such fund’s ability to recapitalize, refinance or potentially restructure an EEA portfolio company within the first two years of ownership, which may in turn affect operations of such fund generally.
−Removed: In addition, it is possible that some EEA jurisdictions will elect to restrict or prohibit the marketing of non-EEA funds to investors based in those jurisdictions, which may make it more difficult for our products to raise their targeted amount of commitments.
−Removed: We rely on a third party provider to ensure our compliance with these regulations, including required registrations, which may increase our compliance costs and risk of non-compliance.
−Removed: In the future, it may be possible for non-EEA alternative investment fund managers (“AIFMs”) to market an alternative investment fund (“AIF”) within the EEA pursuant to a pan-European marketing “passport,” instead of under national private placement regimes.
−Removed: Access to this passport may be subject to the non-EEA AIFM complying with various additional requirements under AIFMD, which may include one or more of the following:
−Removed: additional conduct of business and organizational requirements;
−Removed: rules relating to the remuneration of certain personnel;
−Removed: minimum regulatory capital requirements;
−Removed: restrictions on the use of leverage;
−Removed: additional disclosure and reporting requirements to both investors and EEA home state regulators;
−Removed: independent valuation of an AIF’s assets;
−Removed: and the appointment of an independent depositary.
−Removed: Certain EEA Member States have indicated that they will cease to operate national private placement regimes when, or shortly after, the passport becomes available, which would mean that non-EEA AIFMs to whom the passport is available would be required to comply with all relevant provisions of AIFMD in order to market to professional investors in those jurisdictions.
−Removed: As a result, if in the future non-EEA AIFMs may only market in certain EEA jurisdictions pursuant to a passport, we may not seek to market interests in our products in those jurisdictions, which may lead to a reduction in the overall amount of capital invested in our products.
−Removed: Alternatively, if we sought to comply with the requirements to use the passport, this could have adverse effects including, amongst other things, increasing the regulatory burden and costs of operating and managing certain of our products and their investments, and potentially requiring changes to compensation structures for key personnel, thereby affecting our ability to recruit and retain these personnel.
−Removed: Certain of the funds or accounts we advise or manage are subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code, and our business could be adversely affected if certain of our other funds or accounts fail to satisfy an exception under the “plan assets” regulation under ERISA.
+Added: Certain of the products or accounts we advise or manage are subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code, and our business could be adversely affected if certain of our other products or accounts fail to satisfy an exception under the “plan assets” regulation under ERISA.
A number of investors in our products are subject to the fiduciary and prohibited transaction provisions of Title I of ERISA and the parallel provisions of the Internal Revenue Code;
however, the substantial majority of our products rely on the “insignificant participation” exception under the “plan assets” regulation under ERISA.
−Removed: We are not, therefore subject to the requirements of ERISA (or the parallel provision of the Internal Revenue Code) with respect to the management of those funds.
−Removed: However, if those funds fail to satisfy that exception for any reason and if no other exception is available, that failure could materially interfere with our activities in relation to those funds or expose us to risks related to our failure to comply with the applicable requirements.
+Added: We are not, therefore subject to the requirements of ERISA (or the parallel provision of the Internal Revenue Code) with respect to the management of those products.
+Added: However, if those products fail to satisfy that exception for any reason and if no other exception is available, that failure could materially interfere with our activities in relation to those products or expose us to risks related to our failure to comply with the applicable requirements.
For example, the governing documents of a fund generally impose certain obligations on the general partner or manager of the fund to cause the assets of the fund to not be treated as “plan assets” and a breach of that obligation could create liability for us.
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As required under GAAP, we reviewed the impact on income taxes due to the change in legislation and concluded there was no material impact to the financial statements as of December 31, 2023.
+Added: There may also be changes in tax laws or interpretations of tax laws (possibly with retrospective effect) in a jurisdiction in which we and/or our affiliates operate, are managed, are advised, are promoted or invest, or in which any of the investors in our products is resident, that are adverse to us or our affiliates.
+Added: In particular, both the level and basis of taxation may change.
+Added: Changes to taxation treaties or interpretations of taxation treaties between one or more such jurisdictions and the countries through which we or our affiliates hold investments or in which investors in our products are resident, or the introduction of, or change to, EU directives may adversely affect the ability of our products to efficiently realize income or capital gains and to efficiently repatriate income and capital gains from the jurisdictions in which they arise to partners in the relevant products.
+Added: Consequently, it is possible that we or our affiliates may face unfavorable tax treatment in such jurisdictions that may materially adversely affect the value of our investments or the feasibility of making investments in certain countries.
+Added: This could significantly affect our returns.
+Added: In particular, pursuant to the Organization for Economic Co-operation and Development’s (the “OECD”) BEPS Project, many jurisdictions have introduced domestic legislation implementing certain of the BEPS Actions.
+Added: Several of the areas of tax law
+Added: (including double taxation treaties) on which the BEPS Project focuses are relevant to our ability to efficiently realize income or capital gains and to efficiently repatriate income and capital gains from the jurisdictions in which they arise to investors and, depending on the extent to and manner in which relevant jurisdictions have implemented (or implement, as the case may be) changes in those areas of tax law (including double taxation treaties), our ability to do those things may be adversely impacted.
+Added: Many of the jurisdictions in which we or our affiliates invest or may invest have now ratified, accepted and approved the OECD’s Multilateral Instrument which brings into force a number of relevant changes to double tax treaties within scope.
+Added: While these changes continue to be introduced, there remains uncertainty as to whether and, if so, to what extent we or our affiliates may benefit from the protections afforded by such treaties and whether we or our affiliates may look to investors in order to derive tax treaty or other benefits.
+Added: This position is likely to remain uncertain for a number of years.
+Added: The Anti-Tax Avoidance Directive 2016/1164 (commonly referred to as “ATAD I”) directly implements some of the BEPS Project actions points within EU law.
+Added: On May 29, 2017, the Council of the EU formally adopted the Council Directive amending Directive (“EU”) 2016/1164 as regards hybrid mismatches with third countries (commonly referred to as “ATAD II”).
+Added: ATAD II came into force in Member States on January 1, 2020 (subject to relevant derogation).
+Added: On December 22, 2021, the European Commission issued a proposal for a Council Directive laying down rules to prevent the misuse of shell entities for tax purposes within the EU (the “Unshell Proposal”).
+Added: While the European Commission initially expected the Unshell Proposal to be adopted and published into EU member states’ national laws by June 30, 2023, and to come into effect as of January 1, 2024, there is considerable uncertainty surrounding the development of the proposal and its implementation.
+Added: If adopted in its current form, the proposal could result in additional reporting and disclosure obligations for investment funds and/or their subsidiaries (which may require the sharing with applicable taxing or other governmental authorities information concerning investors) and/or additional tax being suffered by us or our affiliates.
+Added: Further to the BEPS Project, and in particular BEPS Action 1 (“Addressing the Tax Challenges of the Digital Economy”), the OECD published a Report on May 31, 2019 entitled “Programme of Work to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalization of the Economy” (as updated on several occasions since and most recently on October 8, 2021 by the “Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy”), which proposes fundamental changes to the international tax system.
+Added: The proposals (commonly referred to as “BEPS 2.0”) are based on two ‘pillars’, involving the reallocation of taxing rights (“Amount A of Pillar One”), and a new global minimum corporate tax rate (“Pillar Two”).
+Added: Under Amount A of Pillar One, multinational enterprises (“MNEs”) with total group revenues exceeding EUR 20 billion (or equivalent) in a given period and pre-tax profitability exceeding 10% calculated using an averaging mechanism will be subject to rules allocating 25% of profits in excess of a 10% profit margin to the jurisdictions within which they carry on business (subject to threshold rules).
+Added: Certain entities are excluded, including certain investment funds and real estate investment vehicles (as respectively defined) which are the ultimate parent entity of the MNE group (and certain holding vehicles of such entities).
+Added: There are also specific exclusions for MNEs carrying on specific low-risk activities, including “regulated financial services” (as defined).
+Added: Pillar Two imposes a minimum effective tax rate of 15% on MNEs that have consolidated revenues of at least EUR 750 million in at least two out of the last four years (i.e.
+Added: broadly those MNEs which are required to undertake country by country reporting).
+Added: Pillar Two introduces two related tax measures (the “GloBE Rules”):
+Added: the income inclusion rule (“IIR”) imposes a top up tax on a parent entity where a constituent member of the MNE group has low taxed income while the undertaxed payment rule (“UTPR”) applies as a backstop if the constituent member’s income is not taxed by an IIR.
+Added: Specified classes of entities which are typically exempt from tax are outside the scope of the GloBE Rules, including investment funds and real estate investment vehicles (as respectively defined) which are the ultimate parent entity of the MNE group (and certain holding vehicles of such entities).
+Added: Additionally, and part of Pillar Two but separate from the GloBE Rules, a subject to tax rule (“STTR”) will permit source jurisdictions to impose limited additional taxation on certain cross-border related party payments where the recipient is subject to a nominal corporate income tax rate (subject, in some circumstances, to certain adjustments) below 9%, which will be creditable against the GloBE Rules tax liability.
+Added: The GloBE Rules must be implemented through domestic legislation, and on December 20, 2021 the OECD released Pillar Two model rules providing a template for this purpose.
+Added: Many jurisdictions have begun that process, including EU Member States pursuant to the EU minimum tax directive and the UK, with a view to the IIR and the UTPR taking effect for fiscal years beginning on or after December 31, 2023 and December 31, 2024 respectively.
+Added: Amount A of Pillar One will be implemented through a multilateral convention and the STTR will be implemented, where applicable, either through modifications to bilateral tax treaties or alternatively through a multilateral instrument.
+Added: The timeline for implementation of both Amount A of Pillar One and the STTR remains uncertain.
+Added: Subject to the development and implementation of both Amount A of Pillar One and Pillar Two (including the implementation of the EU minimum tax directive by EU Member States) and the details of any domestic legislation, double taxation treaty amendments and multilateral agreements which are necessary to implement them, effective tax rates could increase for Blue Owl and/or its subsidiaries or within the structure of our products or on their
+Added: investments, including by way of higher levels of tax being imposed than is currently the case, possible denial of deductions or increased withholding taxes and/or profits being allocated differently and/or penalties could be due.
+Added: This could adversely affect our returns.
+Added: The implementation of BEPS 2.0 in relevant jurisdictions is complex and likely to remain uncertain for a number of years.
Risks Related to Our Structure and Governance
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As a result, conflicts of interest may arise among the Principals, on the one hand, and us and holders of our Class A and Class C Shares, on the other hand.
−Removed: The Principals have the ability to influence our business and affairs through their ownership of the high vote shares of our common stock, their general ability to appoint our board of directors, and provisions under the Investor Rights Agreement dated as of December 29, 2021, between Blue Owl, Altimar Sponsor LLC, certain equityholders of Altimar Acquisition Corporation and certain former equity holder of Owl Rock and certain former equity holders of Dyal Capital (the “Investor Rights Agreement”) and our certificate of incorporation requiring their approval for certain corporate actions (in addition to approval by our board of directors).
+Added: The Principals have the ability to influence our business and affairs through their ownership of the high vote shares of our common stock, their general ability to appoint our board of directors, and provisions under the Amended and Restated Investor Rights Agreement dated as of August 7, 2023, between Blue Owl, certain former equity holders of Owl Rock and certain former equity holders of Dyal Capital (the “Investor Rights Agreement”) and our certificate of incorporation requiring their approval for certain corporate actions (in addition to approval by our board of directors).
If the holders of our Class A and Class C Shares are dissatisfied with the performance of our board of directors, they have no ability to remove any of our directors, with or without cause.
38 unchanged sentences
In addition to tax expenses, Blue Owl will also incur expenses related to its operations, including Blue Owl GP’s payment obligations under the Tax Receivable Agreement, which could be significant, and some of which will be reimbursed by the Blue Owl Operating Partnerships (excluding payment obligations under the Tax Receivable Agreement).
−Removed: Blue Owl intends to cause Blue Owl GP to cause the Blue Owl Operating Partnerships to make ordinary distributions and tax distributions to holders of the interests in the Blue Owl Operating Partnerships on a pro rata basis in amounts sufficient to cover all applicable taxes, relevant operating expenses, payments by Blue Owl GP under the Tax Receivable Agreement and dividends, if any, declared by Blue Owl.
+Added: Blue Owl intends to
+Added: cause Blue Owl GP to cause the Blue Owl Operating Partnerships to make ordinary distributions and tax distributions to holders of the interests in the Blue Owl Operating Partnerships on a pro rata basis in amounts sufficient to cover all applicable taxes, relevant operating expenses, payments by Blue Owl GP under the Tax Receivable Agreement and dividends, if any, declared by Blue Owl.
However, as discussed above, the Blue Owl Operating Partnerships’ ability to make such distributions may be subject to various limitations and restrictions including, but not limited to, retention of amounts necessary to satisfy the obligations of the Blue Owl Operating Partnerships and restrictions on distributions that would violate any applicable restrictions contained in the Blue Owl Operating Partnerships’ debt agreements, or any applicable law, or that would have the effect of rendering the Blue Owl Operating Partnerships insolvent.
11 unchanged sentences
federal income tax purposes will be treated as a “publicly traded partnership” if interests in such entity are traded on an established securities market or interests in such entity are readily tradable on a secondary market or the substantial equivalent thereof.
−Removed: If either of the Blue Owl Operating Partnerships were determined to be treated as a “publicly traded partnership” (and taxable as a
−Removed: corporation) for U.S.
+Added: If either of the Blue Owl Operating Partnerships were determined to be treated as a “publicly traded partnership” (and taxable as a corporation) for U.S.
federal income tax purposes, such Blue Owl Operating Partnership would be taxable on its income at the U.S.
24 unchanged sentences
Payments under the Tax Receivable Agreement will be based on the tax reporting positions that the Registrant or Blue Owl GP determines, and the IRS or another taxing authority may challenge all or any part of the tax basis increases, as well as other tax positions that the Registrant or Blue Owl GP takes, and a court may sustain such a challenge.
−Removed: In the event that any tax benefits
−Removed: initially claimed by the Registrant or Blue Owl GP are disallowed, recipients of payments under the Tax Receivable Agreement will not be required to reimburse the Registrant or Blue Owl GP for any excess payments that may previously have been made under the Tax Receivable Agreement, for example, due to adjustments resulting from examinations by taxing authorities.
+Added: In the event that any tax benefits initially claimed by the Registrant or Blue Owl GP are disallowed, recipients of payments under the Tax Receivable Agreement will not be required to reimburse the Registrant or Blue Owl GP for any excess payments that may previously have been made under the Tax Receivable Agreement, for example, due to adjustments resulting from examinations by taxing authorities.
Rather, excess payments made to such holders will be netted against any future cash payments otherwise required to be made by Blue Owl GP under the Tax Receivable Agreement, if any, after the determination of such excess.
35 unchanged sentences
In addition, the volume of trading in our Class A Shares may fluctuate and cause significant price variations to occur.
−Removed: If the market price of our Class A Shares declines significantly, holders of our Class A Shares may be unable to resell their shares at or above their purchase price, if at all.
+Added: If the market price of our Class A Shares declines significantly, holders of our Class A Shares may be unable to resell
+Added: their shares at or above their purchase price, if at all.
Some of the factors that could negatively affect the price of our Class A Shares or result in fluctuations in the price or trading volume of shares of our Class A Shares include:
3 unchanged sentences
• changes in market valuations of similar companies;
−Removed: • the impact of the COVID-19 pandemic on Blue Owl’s business;
• speculation in the press or investment community;
22 unchanged sentences
Issuing additional Class A Shares or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders or reduce the market price of our Class A Shares or both.
−Removed: Upon liquidation, holders of debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our Class A Shares.
+Added: Upon liquidation, holders of
+Added: debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our Class A Shares.
Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.
1 unchanged sentence
Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing and nature of our future offerings.
−Removed: Unresolved Staff Comments.
−Removed: Our principal executive offices are located in leased office space at 399 Park Avenue, New York, New York.
−Removed: We also lease office space in other cities around the world.
−Removed: We consider these facilities to be suitable and adequate for the management and operation of our business.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.