Blue Owl Capital's Strategic Move to Enhance Digital Infrastructure

Blue Owl Capital's Acquisition of IPI Partners

Blue Owl Capital Inc. (NYSE: OWL), a premier alternative asset manager, has made a significant stride by agreeing to acquire IPI Partners, a notable digital infrastructure fund manager. This strategic acquisition adds approximately $10.5 billion to Blue Owl's assets under management, further enhancing its existing digital infrastructure strategy.

Details of the Acquisition Agreement

The announcement came with the detailing that Blue Owl has secured the IPI business for around $1.0 billion. This deal will involve approximately 80% equity from Blue Owl, with the remaining 20% being cash. The acquisition is anticipated to conclude either in late 2024 or early 2025, pending third-party consents and other key closing conditions.

Impact on Earnings

The acquisition of IPI is projected to be neutral to Blue Owl's earnings for 2025, with a modest accretion expected by 2026. Blue Owl aims to leverage IPI's extensive expertise in the digital infrastructure space, thus positioning itself to capitalize on the growing demand in this sector.

Strengthening Digital Infrastructure Strategy

As of mid-2024, IPI managed assets of approximately $10.5 billion and has established itself as one of the largest investors in the US private data center market since its inception in 2016. The platform operates a portfolio of 82 data centers, offering over 2.2 GW of leased capacity across critical regions, including the US, EMEA, and APAC.

Leadership Transition

With the completion of the acquisition, leadership transitions will facilitate a seamless integration into Blue Owl's Real Estate platform. Marc Zahr, Blue Owl’s Co-President, will continue directing this platform, with IPI's Managing Partner, Matt A'Hearn, stepping in as the Head of Blue Owl's newly enriched digital infrastructure strategy.

Partnership with ICONIQ Capital

An additional layer of growth will be possible through a partnership with ICONIQ Capital. An affiliate of ICONIQ will provide crucial services, comprising investment analysis and relations management, along with potential future payments based on performance targets.

Market Insights on the Acquisition

Blue Owl's Co-CEOs Doug Ostrover and Marc Lipschultz expressed enthusiasm about the acquisition. They pointed out the enormous market opportunity for financing data centers, particularly against the backdrop of rising investor interest in strategies tied to cloud computing and AI-related development. The integration of IPI’s expertise with Blue Owl's existing strategies is set to enhance their overall capital solutions.

Statements from Leadership

Divesh Makan of ICONIQ emphasized the success IPI has achieved in establishing strong relationships within the data center landscape. The trust built with significant industry players positions IPI well amidst the expanding global demands for data centers. Makan reiterated the excitement surrounding the strengthened partnership with Blue Owl in light of this acquisition.

The Future of IPI Partners

Matt A'Hearn congratulated his team for the opportunity to join forces with Blue Owl, highlighting the potential for significant growth in digital infrastructure. He acknowledged the critical roles played by partners at ICONIQ and Iron Point in developing IPI into a leading digital infrastructure manager.

Advisory Support for the Acquisition

Blue Owl is receiving advisory support from notable financial institutions for this acquisition, including Deutsche Bank Securities, J.P. Morgan Securities, and Morgan Stanley, among others. These firms are tasked with ensuring that the acquisition proceeds smoothly and effectively.

About Blue Owl Capital

Blue Owl Capital (NYSE: OWL) is redefining the asset management landscape with over $192 billion in assets under management as of mid-2024. The firm operates through three diverse and innovative platforms: Credit, GP Strategic Capital, and Real Estate.

Investment Philosophy and Strategy

Blue Owl prides itself on its permanent capital base, which affords the flexibility necessary to support long-term growth. By providing tailored private capital solutions, Blue Owl caters to both institutional and individual investors, facilitating an array of compelling investment opportunities.

Frequently Asked Questions

What is the significance of Blue Owl's acquisition of IPI Partners?

This acquisition enhances Blue Owl's assets under management and strengthens its digital infrastructure strategy.

How will the acquisition impact Blue Owl's earnings?

The acquisition is expected to have a neutral impact on earnings for 2025, with modest growth anticipated in 2026.

Who will lead the digital infrastructure strategy at Blue Owl?

Matt A'Hearn will lead the digital infrastructure strategy following the acquisition.

What role will ICONIQ Capital play in the post-acquisition phase?

ICONIQ will provide essential services to Blue Owl, leveraging their investment analysis and investor relations expertise.

How is Blue Owl positioned in the asset management market?

Blue Owl Capital is among the leading asset managers with over $192 billion in assets, focusing on alternative investments and diverse strategies.

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