Investors in a Blue Owl Capital Inc. (NYSE:OWL) fund tendered less than 1% of their shares to Saba Capital Management, led by Boaz Weinstein and Cox Capital Partners, despite the firms' offer to purchase the stakes at a considerable markdown.

Shares in Blue Owl Capital Corp. II, one of the firm's non-traded business development companies (BDCs), were met with limited participation. The tender offer will not be extended, according to Bloomberg.

The lack of participation in the tender offer suggests that investors are choosing to hold their shares rather than sell at prices below their original purchase cost, amid the private credit sector’s chaos.

The $1.8 trillion private credit sector has been under fire in recent weeks as investors are concerned about default risks, high interest rates, and the disruption that artificial intelligence may have on the software sector. This has led to an increase in redemption requests in various private credit companies' portfolios. 

Oaktree Capital Management elected to fully satisfy all redemption requests, representing 8.5% in its private credit fund for the first quarter.

Meanwhile, Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM), BlackRock (NYSE:BLK), and Barings have all begun limiting or restricting redemption requests across their private credit funds as investor concerns grow.

In March, Blue Owl urged its investors to reject the share purchase offer led by Weinstein, stating that the "price was too low."

Weinstein previously said he was "buying pessimism." He aimed to acquire shares at a discount of more than 20% to the most recent estimated net asset value and dividend reinvestment price, Bloomberg reported.

At the time, the CEO said he was considering tender offers for other funds he expected to face redemption pressure, including those invested in a real estate fund managed by Starwood Capital Group.

Earlier this month, Blue Owl Capital capped redemptions in both its funds at 5% after investors requested withdrawals of 22% and 41% in its private credit and technology-focused funds, respectively.

The firm attributed the above-average number of requests to "heightened market concerns around AI-related disruption to software companies."

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