Blue Owl Capital is close to completing a $2.7bn secondary transaction on its Dyal Capital Partners IV fund, in a move designed to return cash to investors and lift performance metrics, Bloomberg reports.

The deal shifts part of Blue Owl’s minority stakes in private asset managers into a new vehicle that raised $1bn in equity and $1.7bn from debt instruments backed by the fund’s assets. Traditional secondary buyers participated in the equity component, while insurance firms and other investors committed to the debt side.

The transaction will boost distributions to paid-in capital for investors in the $9bn fund, which closed in 2019, to 1.25x, up from 0.86x at the end of last year. Distributions are a key measure for private markets investors, comparing cash returned to capital committed.

Dyal Capital Partners IV, which takes minority stakes in private equity firms in exchange for shares of management fees and profits, counts Bridgepoint, H.I.G. Capital, Clearlake Capital, and Golub Capital among its portfolio.

The deal, expected to close as early as this week, reflects the growing trend of managers using secondary structures to provide liquidity and enhance fund performance.

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