(Bloomberg) -- Blue Owl Capital Inc. sees asset-based lending as “the next big boom” in private credit as regional banks retreat from the space, according to Doug Ostrover, the firm’s co-chief executive.
“We’ve always been focused on the disintermediation of the banks,” Ostrover said at the CAIS Alternative Investment Summit in Beverly Hills on Tuesday. “Whether it’s equipment, rail, aerospace, consumer funding, the total addressable market is way bigger than the private credit market.”
Asset-based finance, a type of financing that is backed by a pool of assets such as mortgages or consumer loans, has become a key area of growth for private credit managers including Blue Owl. KKR & Co. has pinned the size of the market at $6 trillion.
With over $192 billion of total assets under management, Blue Owl has already taken steps to expand into the market. Last month, it completed its acquisition of Atalaya Capital Management, a manager focused on the space.
Blue Owl last week agreed to buy as much as $2 billion of consumer installment loans from financial technology lender Upstart Holdings Inc. as part of an effort to push into asset-based finance.
Ostrover also said he sees continuation vehicles, which private equity firms use to hold on to investments for longer while repaying existing investors, as “the way to play private equity in the long run.”
Buyout firms have been using continuation vehicles as traditional ways of selling assets become challenged amid a slump in M&A activity.
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