Owl Rock’s IPO Highlights a Niche Market’s Potential

Asset manager Owl Rock Capital Partners launched an initial public offering this week for its $6 billion business development company, highlighting the potential for growth in direct lending markets as institutional investors expand to remote corners of Wall Street for high-yielding fixed income. The listing, which came less than four years after Owl Rock was founded by a trio of leveraged-finance veterans, is the second-largest publicly traded BDC operator in the country. The IPO, representing a small percentage of the BDC’s total stock, raised $176 million. BDCs raise money by issuing stock and lending out the capital to small and midsize businesses with junk credit ratings, passing back at least 90% of the interest collected on the corporate loans to shareholders through dividends. They are similar to real-estate investment trusts, or REITs.