There is a — for a good reason, a very negative sentiment about real estate. So, we have to kind of sell through the up. You said those two words and then get down to number, wait, yes, it’s a disruptive category, but here is the way you succeed in it. And that’s actually showing in this manner, we’re getting great cap rate purchases today, right? There’s a bit of the baby at water where people are saying, real estate, but that’s rated by our measure, a triple net lease warehouse to an investment-grade client if we get the uplift of just negative sentiment therefore, higher cap rates, we’ll take it.
Alan Kirshenbaum: Marc, if I can add to that on the institutional side because we obviously have a very strong wealth platform. We also have a very strong institutional platform. We’re expecting a very strong year on the institutional side as well. We’ve got a number of products. And we saw 4Q, we saw a very strong institutional numbers come in 4Q. We were already off to a strong start in 1Q this year already in institutional. And when you think about the breadth of 2024 and what we have out there, we have multiple products in the credit business. We have our strategic equity product. We have diversified lending strategies, first lien fund strategies. We’ve obviously got GP Stakes Fund VI. We just did a very big initial close, but we have a long way to go here in 2024 and 2025, and we have some existing and new products in the real estate space that we think are going to be very interesting to institutional clients.
Craig Siegenthaler: Great. Thanks Alan. Just for my follow-up on Dyal V. I recall the fundraising for this fund being very kind of bar belled with some big raises in the beginning and some at the end, a little hold out in the middle. Do you expect Dyal VI as raises to be more consistent? I know you just had about $2 billion in 4Q, but something like $2 billion every quarter or two until you get to that $13 billion target. And then I know you launched a new middle markets fund, should there be a first close for that over the near-term?
Alan Kirshenbaum: Sure. So happy to take that. On your last point, we did an initial close with Lunate, so that we just got a press release out just in the last 24 or 36 hours.
Marc Lipschultz: Yes. I should have mentioned, they’re making also a large anchor commitment to the product when I was kind of listing the attributes here gets us right out of the gates, but sorry.
Alan Kirshenbaum: No, not at all. And so we’ve got some — we’ve got our first close there done. And we have a road ahead to continue to raise that product. We think there’s going to be a lot of excitement and interest over that product. It’s going to take some time to raise the product just like GP Stakes Fund VI. For Fund VI, we don’t expect it to be barbelled like what we saw with Fund V that was right in the middle of when we did our listing for Blue Owl. And so we think it will be more of a straight line there. Look, it’s going to ebb and flow a little between institutional and wealth. And so you’ll see one quarter, a little stronger institution, one quarter, a little stronger wealth. It may take some time for us to get on all the wealth platforms that we’d like to.
Don’t forget for Fund V, we were really on one large platform. It was a big private bank. Now we have the ability to bring all the Blue Owl all relationships to the table here and really get out on a lot more wealth platform. So we’re very excited about that. And on the institutional side, if you recall, when we brought all these businesses together, we had single-digit percent overlap amongst our investor bases across our three businesses. Now we have the opportunity to cross-sell across all of those investors. And so we’re very excited about that as well, Craig.
Marc Lipschultz: But look, it’s still as all alternative products, but certainly this one. It definitely has a bit of a front-end load and a back-end load. So — we don’t want to — it will not be $2 billion the quarter. It’s nowhere near that linear. Everyone on this — everyone listening here knows the natural lumpiness of different timings of close. So, we did have a particular attribute in Fund V with the acquisition at that time and then the IPO. So we don’t have that. But I think you should still anticipate more get first close done. It’s — there’s some period of time before we then do another close and then some period of time before you get to another close. So it will not be linear, but it will — it should be quite as hold out in the middle.
Craig Siegenthaler: Thank you, Marc.
Operator: Your next question comes from Bill Katz with TD Cowen. Please go ahead.
Bill Katz: Okay. Thank you very much taking the questions. Just coming back to direct lending. It’s been a theme that’s been sort of coming up through the entire earnings season. Just wondering if you could comment a little bit on volume as well as pricing outlook for the direct lending platform to the extent that competition picks up, appreciate that maybe there’s more unit growth out there. But nonetheless, I’d be particularly curious on how you sort of see the pricing side of things developing? Thank you.
Marc Lipschultz: Sure. It’s certainly been and continues to be a very good environment for direct lending. So said a lot of people are talking about it, Kyle. I’m not chuckling, but it’s a little bit on how much attention all under wants to talk about private credit, whether that is, in fact, a large part of their strategies or not. But we’re happy about it. We’re happy to — we’re perfectly satisfied have a day in the sun. We also get that everything gets and stay in the sun. So look, we’ve been at this for a long time and are going to be at it for a very long time, delivering for our users, a capital solution in scale and in tailored fashion and doing that in a way that is reliable to them, and we don’t compete with them in private equity.
So I think we do have a distinct architecture here. And with all that said, look, it’s a good environment today. I think to call it what it is, the economy is sound. We can all have different views and of course, about where we’ll be in 6 months and 12 months. I will tell you that, if you look at the performance of our portfolio, this — the lag with the last full quarter, we have able to report from all our portfolio companies. Our revenue and EBITDA growth were higher than the prior quarter. In point of fact, the EBITDA growth on average across the platform was 15%. So now we obviously focus on some very, very attractive industries, attractive businesses with the biggest backers, I don’t measure suggesting that’s indicative of the economy or broadly all portfolios, but it does tell me we’ve got a very healthy portfolio.
And certainly, not an unhealthy economy, and I think actually would be a good reason to think we have a pretty solid economy at this point from the micro — we’re not macro experts from the micro up here in the US. So that’s good. We continue to have strong demand. And from what I understand, and again, you all have better insights into this. But if you talk to the M&A community, they’re seeing a lot of activity picking up here as we go into the first quarter. Those are natural cyclicality to all things that are M&A related, which is to say fourth quarter is obviously always a big quarter because people are finishing things and then first quarter, be able to restart these new processes. So setting aside the natural timing. I think we feel like the sentiment is very strong.
So the outlook to us feels very good in terms of likely activity this year. There’s $2.5 trillion of private equity dry powder. And they obviously had a very tepid activity year last year. So I think we imagine that in a world that looks like this, expect there’ll be a lot more activity. And more activity would be the one thing I would have liked to have in direct lending, it would be just more aggregate market activity. We love the credits. We love what we’re getting done. We love our position and market share. But aggregate activity is still ultimately a boundary condition. So hopefully, and it seems reasonable to expect 2024 should be a more active year and we’ll gladly take that. So finally, to come on to your question about spreads competition.
So it’s true, of course, that more dollars have been raised in private credit, but no more in proportion than historically to private equity. And in fact, private equity obviously has been accumulating assets here that now have to get deployed. And so I think we feel like the market remains generally in balance and looking out, again, anticipating more activity we can’t meet the needs of all the capital markets. We need the liquid markets to return to have a fully functioning capital market environment. And so while 2022, of course, it’s a wonderful time for credits and spreads, and there was no meaningful public market, hopefully, what we’ll have is more activity and a functioning public market. But overall, that big iron take spreads have come down from their peaks, we certainly saw them come back in from particularly wide levels.
And that’s okay. Remember, we operated in exactly that environment just a couple of years ago. We’re still getting paid really well by our measure, look, our — since inception, we’ve done over $80 billion in loans, and our running loss rate has been 6 basis points. And in fact, that’s been more than offset by realized gains. So for that kind of underlying credit performance, our ability to deliver double-digit returns. I mean, of course, we’ll take a wider spread if we can have it, but we have a very attractive risk return proposition as we originate today. And in the large end of the market, parting comment is, a lot of the activity in the articles and of course, are new entrants, to your point, it’s like the trendy topic. But that’s a different part of the market we’re in.
