Goldman Sachs Reiterates Buy Rating on Blue Owl Capital (OWL)

Goldman Sachs analyst Alexander Blostein reiterated a Buy rating and $21.75 price target on Blue Owl Capital (NYSE: OWL).

The analyst comments "OWL announced an agreement to acquire IPI Partners, a $10.5bn alternative asset manager that specializes in digital infrastructure. Per management, the deal is expected to close in 4Q24 or 1Q25 and comes with a purchase price of ~$1bn (prior to potential earn-out). The $1bn purchase price is expected to be funded through 80% equity and 20% cash. Additionally, OWL will enter into an agreement with ICONIQ, whereby ICONIQ will provide transitory services to OWL such as investment analysis and investor relations, which will result in service payments between 2026-2028 in the form of OWL equity (incremental to the up-front price). Subject to the transaction closing, the addition of IPI will provide OWL with a footprint in digital infrastructure, complementing OWL's existing capabilities in triple-net lease Real Estate and further diversifying the AUM mix of the firm. Further, only ~30% of IPI's current AUM overlap with existing OWL LPs, which will help diversify OWL's LP base and could potentially open the door to incremental cross-selling opportunities down the line. Our illustrative scenario analysis implies modest accretion potential (0.5%-0.8%) to 2026 EPS - fairly consistent with management's expectation of the deal being EPS neutral to 2025 and modestly accretive in 2026 (relative to management's projected earnings). Overall, OWL continues to leverage its platform in an effort to (a) partner with smaller but fast-growing managers within attractive parts of private markets that could accelerate the firms' growth trajectory and (b) to diversify the earnings stream as the Direct Lending business likely becomes more competitive overtime. That said, IPI marks the 4th acquisition announcement for the firm in less than 6 months, which comes with incremental execution and valuation (roll-up) risks."

For an analyst ratings summary and ratings history on Blue Owl Capital click here. For more ratings news on Blue Owl Capital click here.

Shares of Blue Owl Capital closed at $20.72 yesterday.

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