On Tuesday, Blue Owl Capital Inc. (NYSE: OWL) saw its price target increased to $22.00 from $21.00 by Evercore ISI, while the firm maintained its Outperform rating on the stock.
The revision reflects Blue Owl's announcement of acquiring IPI, which is set to add $10.5 billion in digital infrastructure assets under management (AUM) for a $1 billion purchase price. IPI's portfolio includes 82 data centers with major hyperscaler companies as tenants under long-term leases.
The acquisition is noted for expanding Blue Owl's global presence, particularly in Europe, and for increasing its exposure to the family office channel. The deal is expected to boost Blue Owl's AUM to over $230 billion. This transaction marks Blue Owl's fourth in 2024, as the company continues to diversify its offerings in the private markets sector.
Blue Owl's strategy includes a focus on growth segments and the use of its strong valuation multiple to facilitate deals. Prior to the IPI acquisition, Blue Owl expanded into the insurance channel by partnering with Kuvare, ventured into real estate credit with Prima, and entered asset-backed finance with Atalaya. These moves are aimed at enhancing distribution capabilities and introducing new products, such as ORENT for wealth management.
The firm's previous success in acquiring Oak Street and significantly growing its AUM from $12 billion to $28 billion in under three years is cited as a factor in Blue Owl's ability to secure desirable deals. The rapid succession of four deals within seven months, however, suggests that the integration process should be monitored to ensure that Blue Owl does not begin to resemble a multi-affiliate structure in alternative investments.
In other recent news, Blue Owl Capital has maintained a steady course of strategic growth and diversification. Goldman Sachs (NYSE:GS) has reaffirmed a Buy rating on Blue Owl, with a target of $21.75, in light of the company's planned acquisition of IPI Partners, a digital infrastructure asset manager with $10.5 billion in assets under management. The $1 billion deal, set to be finalized between late 2024 and early 2025, is expected to enhance Blue Owl's presence in the digital infrastructure space and diversify its asset management mix.
In addition to the IPI acquisition, Blue Owl has also reported strong Q2 results, with fee-related earnings of $0.21 per share and distributable earnings of $0.19 per share. The company declared a dividend of $0.18 per share during this period. These recent developments also saw the company expand its portfolio with the acquisition of Atalaya Capital Management, Prima, and Kuvare Asset Management, significantly boosting its assets under management to over $220 billion.
Furthermore, Blue Owl has made strategic personnel appointments, including John Valtwies as the head of its Australian private wealth business, indicating the company's commitment to global expansion. The company has also amended a key financial agreement, reflecting its active management of financial commitments.
InvestingPro Insights
Blue Owl Capital's recent acquisition of IPI aligns with its strong financial performance and market position. According to InvestingPro data, the company has shown impressive revenue growth of 26.2% over the last twelve months, with quarterly revenue growth reaching 31.88% in Q2 2024. This growth trajectory supports Blue Owl's aggressive expansion strategy.
InvestingPro Tips highlight that Blue Owl has raised its dividend for 3 consecutive years, with a current dividend yield of 3.47%. This consistent dividend growth, coupled with the company's profitability over the last twelve months, suggests a strong financial foundation for its acquisition-driven growth.
The stock's performance has been notable, with a 57.68% total return over the past year and trading near its 52-week high. However, investors should note that the stock is trading at a high P/E ratio of 110.37, which may indicate high growth expectations are already priced in.
For those interested in a deeper analysis, InvestingPro offers 11 additional tips for Blue Owl Capital, providing a more comprehensive view of the company's financial health and market position.
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