Saba Capital tender offers for shares are below initial expectations

Key Points:

• Saba Capital Management reported that tender offers for shares in non-traded business development companies (BDCs) managed by Blue Owl Capital and Starwood Capital fell short of initial expectations, with limited investor participation especially in Blue Owl shares.
• In March, Saba offered liquidity to investors in Blue Owl Capital Corporation II (OBDC II) at a 35% discount and in Starwood Real Estate Income Trust (SREIT) at a 24-29% discount, acquiring about $10 million mostly from SREIT, while Blue Owl tender offers attracted less than 1% participation.
• The low interest in discounted liquidity options comes amid heightened redemption pressures in private-credit non-traded BDCs, with Blue Owl halting quarterly redemptions in OBDC II and capping redemption requests at 5% in other funds after investors sought $5.4 billion in Q1 redemptions.
• Saba emphasized its commitment to providing liquidity for retail investors in illiquid private credit products and is considering bids on additional funds, viewing the sector as facing inevitable stress and a growing need for secondary liquidity.
• Following Saba's activity in SREIT, Starwood’s CEO committed to injecting equity capital to support investor redemptions, a move Saba believes was catalyzed by their market participation and beneficial to all SREIT investors.