Blue Owl keeps chasing AI infrastructure deals and is writing the loans to back them

• Business Insider has learned of three large loans Blue Owl recently placed against data centers.
• The deals show how the firm is broadening its exposure to lucrative digital infrastructure.
• The lending comes as the firm has faced investor withdrawals elsewhere in its portfolio.

Blue Owl Capital is doubling down on artificial intelligence infrastructure investments — including loans to two more data centers, Business Insider has learned.

Last year, the Wall Street investment and credit firm raised nearly $10 billion for digital infrastructure, primarily for ownership interests in data center projects. The company has also expanded its lending to the sector.

Blue Owl, based in New York City, recently agreed to provide $240 million of financing for a data center in Minneapolis that was purchased by investors Cloud Capital and Arcapita Group, according to two people with knowledge of the transaction.

The company plans to both invest in and lend to a recently announced large data center development in Wichita Falls, Texas, being built by the Dallas-based firm Skybox Datacenters, according to a person with knowledge of the structure of that project. Blue Owl's role as a lender in that development hasn't previously been public.

Blue Owl declined to comment on the loans.

In February, the firm disclosed that it holds a $500 million loan connected to a data center being built in Lancaster, Pennsylvania, for the AI cloud provider CoreWeave.

Analysts said they see the firm's growing focus on debt as a way for it to broaden its exposure to lucrative digital assets.

"They are in a position to be able to evaluate the efficacy of any deal, and they are definitely smart credit investors," Glenn Schorr, a research analyst at Evercore ISI who covers Blue Owl, said of the company's data center lending. "It makes complete sense conceptually to me."

The firm's success in data center investment is a contrast to headwinds being felt elsewhere in its portfolio. In the fourth quarter, the company was hit with an increase in client withdrawals from two of its credit funds, in part because both hold collections of loans tied to software companies.

AI models have made rapid strides, enabling users to build sophisticated applications with simple prompts, stoking fears that software businesses could be upended.

The company's credit business manages about $160 billion in assets and is the largest segment of the firm's portfolio. The company has disclosed about $15.4 billion of digital infrastructure.

Focus on digital infrastructure

Blue Owl executives have said the firm plans to dramatically grow its data center portfolio. Much of that activity has focused on acquiring ownership stakes in deals and development projects. Last year, it agreed, for instance, to invest $2.45 billion to purchase an 80% ownership interest in a large data center campus being built for Meta in Louisiana, expected to cost $30 billion or more.

The company, through the data center platform it owns, Stack Infrastructure, is building large-scale data facilities in Texas and New Mexico, and recently announced it would develop a $12 billion campus for Amazon in Louisiana.

It is eyeing even more opportunities.

A person involved in the sale of a data center development land site outside of Birmingham, Alabama, told Business Insider that Blue Owl has expressed interest in acquiring the property. The person said the firm was one of several interested parties and that the sales effort for the site was at a preliminary stage and may not proceed.

In the fourth quarter, Blue Owl closed a $1.7 billion fundraise for a new private wealth-focused vehicle called Blue Owl Digital Infrastructure Trust that will acquire data centers. Last May, the company announced that it had separately raised its third digital infrastructure fund, with $7 billion of capital, almost double its initial target.

On its fourth-quarter earnings call, the company's co-CEO Marc Lipschultz said another digital infrastructure fund would be raised this year.

"You saw the great success we had in raising our latest Digital Infrastructure Fund III, which we already are heavily invested, so we'll be back this year with Digital Infrastructure Fund IV," Lipschultz said, according to a transcript of the call from AlphaSense.

Credit fears and growing withdrawals

In the fourth quarter, two funds in Blue Owl's credit portfolio saw elevated withdrawals. Blue Owl Technology Income Corporation, a roughly $3.5 billion fund, received redemptions totaling 15.6% of its net asset value — more than three times the fund's quarterly withdrawal limit of 5%. Another fund, Blue Owl Credit Income Corporation, saw roughly $1 billion of redemptions totaling about 5.2% of the fund, which was also in excess of its 5% withdrawal cap. Although the redemption requests were above the funds' exit thresholds, Blue Owl met them. Some analysts have said the concerns that drove the withdrawals are overblown.

The retreat among investors from private credit has reached beyond Blue Owl. Blackstone reported that a private credit fund saw withdrawal requests totaling 7.9% in the first quarter. It also met those redemptions.

A collection of private credit funds tracked by Robert A. Stanger & Company saw average withdrawals of 4.84% of their net asset value in the fourth quarter, more than double the third quarter average of 1.75%.

"We're in the cycle of upcoming elevated redemptions for all of the BDCs," said Michael Covello, a managing director at Stanger, referring to business development companies, a structure used by many private credit funds.