Most non-traded fund investors wait years for meaningful liquidity. Quarterly tender offers — the standard mechanism for many non-traded business development companies — typically allow shareholders to exit a small percentage of their holdings at a time, often capped near 5% per quarter. For a fund with large positions and limited immediate cash, even that modest release can feel slow.
Blue Owl Capital’s OBDC II is doing something different. Following a Feb. 18 asset sale, the fund announced a return-of-capital distribution of up to $2.35 per share — roughly 30% of the fund’s net asset value as of Dec. 31, 2025. That single payment is roughly six times the size of the 5% quarterly tender previously planned for the first quarter.
Why OBDC II is different from a standard BDC
OBDC II was formed in 2016, before perpetually offered non-traded BDCs had become the dominant vehicle format in the private wealth market. At that time, periodic tender offers were the primary liquidity mechanism. Shareholders could submit shares for repurchase at set intervals, subject to the fund’s quarterly cap and available cash.
That cap meant the fund could return a maximum of approximately 5% of NAV to investors per quarter. Useful for ongoing liquidity needs, but not structured to deliver a large lump-sum event unless the fund specifically engineered one.
How the distribution compares to old liquidity windows
The $600 million asset sale that funds the distribution gives OBDC II a cash event that dwarfs what any single quarterly tender would have provided. Paying out approximately 30% of net asset value on or before March 31, 2026, delivers more liquidity to shareholders in one transaction than years of quarterly tenders might have accumulated.
Logan Nicholson, president of OBDC II and OBDC, described the outcome this way: “Today’s announcement reinforces the rigor of our valuation process and the quality of our direct lending investments. It also demonstrates our ability to opportunistically deliver value to our shareholders. At this stage for OBDC II, we are pleased to provide a significant liquidity event at fair value while still maintaining a diversified portfolio with strong earnings potential.”
What comes next for the fund
Going forward, OBDC II’s board intends to replace quarterly tender offers with quarterly return-of-capital distributions. Those distributions may be funded by earnings, loan repayments, asset sales, or other transactions — a more flexible mechanism that allows the board to size liquidity events based on actual cash availability rather than a preset percentage cap.
As of Dec. 31, 2025, OBDC II held positions in 183 portfolio companies with an aggregate fair value of $1.6 billion. Cumulative distributions since inception, before the anticipated return-of-capital payment, total $6.14 per share.
Read: CNBC: Craig Packer discusses the $1.4bn asset sale across three of our BDCs on Squawk on the Street
