Blue Owl Capital has sold a $1.4bn portfolio of private loans to three major North American pension funds and its own insurance subsidiary, as the firm moves to meet investor redemptions, Bloomberg reports.

The buyers included the California Public Employees’ Retirement System, Ontario Municipal Employees Retirement System, British Columbia Investment Management Corporation, and Chicago-based insurer Kuvare. The loans were sold at 99.7% of par value.

The transaction was split evenly across three funds and formed part of Blue Owl’s effort to return capital to investors in Blue Owl Capital Corp II. The fund faced elevated redemption requests last year.

An earlier proposal to merge the vehicle with one of Blue Owl’s listed funds was abandoned following scrutiny over potential investor losses.

The deal highlights the growing overlap between private credit managers and insurance platforms. Analysts at Barclays cited by Bloomberg said repeated transactions of this nature could move assets from more transparent business development companies into more leveraged collateralised loan obligation structures.

Unlike business development companies, which typically operate at around 1x leverage, CLOs often carry leverage of nine to ten times equity, according to Barclays.

The $1.4bn sale underscores how private credit managers are increasingly using affiliated insurance balance sheets and institutional capital to manage liquidity in a market facing closer scrutiny over valuation and leverage.

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