So we take everybody seriously, and there’s, great value propositions. The banks do a great job. I think we do a great job and a healthy ecosystem as both of us doing our job.
Patrick Davitt: Very good. Helpful. A quick follow-up, the 15% EBITDA growth in the portfolio, obviously, great, but I assume that excludes the recurring revenue loans. So could you update us on what percentage of the portfolio is recurring revenue and how those borrowers are performing?
Marc Lipschultz: Don’t have the percentage in front of me. So I can’t quite answer that, but I can say they’re doing very well. That is to say that the Software area continues to be extremely healthy. We continue to be in a place where we have not yet had a loss on a software loan. In fact, we’ve not had a default on a software loan. And that continues to be true. So the recurring revenue loans are — or those businesses continue to do very well. And when I think about the portfolio I would stand by what we concluded six years ago, software on average is — are the best credit to the market, which is why we went there in the first place and why we go there now. So, the recurring revenue loans are doing very well. Remember, one other thing on recurring revenue loans, because again, for reasons I understand, it gets a lot of attention in the sort of, hey, that’s not what people traditionally pictured.
But recurring revenue loan in the context of a big SaaS company is a company that has a lot of revenue, a tremendous amount of gross profit, right, 80%, 90% margins. But is spending a lot of that to further grow their business and therefore, further grow those gross margin dollars at rates way above the average enterprise in the US, or elsewhere. As a lender to that company, you don’t get to spend 50% of your revenues on marketing and sales, if you don’t pay your interest bill. So I think one of the durability elements that has shown, and we bought to be true, and I think still though sometimes in this distinction, not to say it’s lost, but I think it’s undervalued. If I have $400 million of revenue and a 90% gross margin, I have $360 million to spend.
And I may want to spend it all on growing my business. But I don’t get to spend any of it until I pay for that 30%. And it’s only on average by 30% and a fraction percent of my capital structure that Blue Owl has financed. So I feel very good about the stability of those positions, and we’ve experienced that when there have been questions raised. Those are some of the earliest people to say, no problem. We got you. Like let’s just talk this through. And we love our company, and we want to keep growing. So how about we put up some more money? How about we come up with something that works for everybody.
Operator: Your next question comes from Brennan Hawken with UBS. Please go ahead.
Brennan Hawken: Covered a lot this morning. So hopefully, my questions aren’t too long here. I was curious about what has been from the listing so far, I know it’s early days, but OBDE. Shares haven’t traded that well. So curious whether or not that’s impacted any of the reception? And maybe could you talk about any potential to consider a merger between some of the listed BDCs and what benefits those would bring to investors in those vehicles?
Marc Lipschultz: Of course, one of your questions are certainly not too long. I think, we can all conclude there’s any danger to my answers are too long. But we like to be transparent. So with that said, with regard to the listing, the listing has been extremely well received, and here’s why. We told people when we create these private vehicles that we will, in an orderly basis in an appropriate amount of time, create the option, but not the obligation to — for liquidity. People that had an illiquid position earning a wonderful return, now have a liquid position, earning a wonderful return. And so that one has to sell anything. And in fact, it remained, I don’t say a mystery to us, but we certainly would prefer to many investors that are considering direct lending, why wouldn’t you buy BDCs in the public market at a discount to their NAV?
Now, there’s a reason for that. Some people don’t want that level of volatility. So back to the point, create the ecosystem, create different access points, different people have different preferences for how they want to invest. But it’s a heck of a fine proposition. So, if you don’t sell them these variances in trading really aren’t going to matter, and you’re going to get your dividends. But if you want to sell because you have other priorities, adjusted for wherever that price may be, then great. Now you have that option that doesn’t exist in a traditional fund. So I think, it’s been very well received because we — for us, it’s important to us to deliver on our commitments to our investors and our commitment was to deliver that option at the right time.
So with regard to the possibilities going forward, mergers, maybe Alan, I’ll turn it to you for that.
Alan Kirshenbaum: Sure. Thank you, Mark. Brendan, thank you for the question. Look, we continue to evaluate the strategic options that are available to our BDC shareholders. On the diversified lending side, we have BDC2, we have BPC3, which is now OBDE. We could continue to have that it on the New York Stock Exchange. It could also be natural to over time, merge something like OBD into OBDC. But we continue to look at that and continue to talk to our shareholders. On the tech side, on the software lending side, we have two private, private to public BDCs, OTF and OTF 2. And we continue to evaluate options for those shareholders as well. We have OTF, which is fully invested, fully deployed. It’s fully levered OTF II, we still are deploying some of the capital.
We have not drawn down all the capital from our shareholders there. But over the course of this next year, we’ll make a lot of progress there. And we’ll continue to evaluate whether it makes sense to merge those two and then list them or to list one and then continue to look at that.
Brennan Hawken: Got it. Thanks for that color. And then I know it was only three months ago, when you guys last spoke about the dividend and the potential risk to the dollar, but the environment does seem to be getting better. So you guys are putting up some nice growth in the dividend for this year. Has that risk to the dollar in 2025 diminished, given the improvement that you guys have seen in the environment? Or should we still consider those — that outlook unchanged?
Marc Lipschultz: Listen, we remain on track to deliver in or around dollar. And certainly, we’ve taken another really nice step, right? We’ve raised the dividend 29% to $0.72 and fundamentals in the business are strong. So every time we step closer, obviously, that feels good in trying to get there and deliver. And obviously, you can give us all collectively more comfort. There’s still enough variables here in 2025 that we in and around, we pick on purpose. The dollar remains our target. We feel good about being in that range. I think the really important point I want to come back to here is that because of the predictability of our model, the stability and the growth we’ve now this year, grown kind of all our key metrics, 25%.
And that’s more than kind of double the average of our many of our peers when we look at results, which are all good results, an incredible organization. So we’ve done that in a highly predictable way. Remember also where we are right now is exactly where we all talked about a year ago. And that is true. I think what maybe is most distinct about our performance this year is not just the pure strength of it, which, I mean obviously, we’re very pleased with, but also the consistency and predictability despite all the changes in the market. We don’t have carry in our numbers. We did — a lot of people have some really strong fourth quarters, but that was after people didn’t expect things to be good in the fourth — people didn’t think there’d be much carry.
So numbers came down. So I think that predictability gives us the following comfort. And every time you get closer, probably qualitatively a tighter band, the band around that dollar should be narrow. So our aim remains the dollar. We continue to see the pathway forward. But in any case, that band gets narrower and it should be within a narrow band given just the nature of our business.
Alan Kirshenbaum: So Mark, what I’d love to do for folks, and hopefully, Brennan, you and your colleagues will find this helpful. When we think about, how do we paint the picture for you all of, how do you get to the $1 a share in your modeling. It’s really straightforward, and it’s not that many things that have to happen. It’s just keeping that real focus on a handful of things to get to that goal. So when I think about 2023 revenues of $1.6 billion to $1.7 billion, we have another $1 billion of revenue that we have line of sight on. So what is that $1 billion? Some of that, by the way, about $400 million, $425 million of those revenues are not from raising any more equity fundraise dollars. And so we have a 25% growth in the 2023 revenues, just from taking our AUM not yet earning fees and deploying that, as well as the fee step-ups from our private to public BDCs. That’s over $400 million that would represent 25% growth on our revenue line from 2023 without doing any fundraising whatsoever.
Then when you add fundraising for just a few products, our GP Stakes VI product and our non-traded BDCs, OCIC and OTIC, that’s another $450 million to $500 million of revenues over the next two years, right? So we’ve talked about GP Stakes VI. That’s a two-year — we’re targeting 2024 and 2025. As Marc commented, as I commented earlier, that’s going to ebb and flow a little between closes, but that’s a total of a 60% revenue growth. And so when you think about what do we need to do to hit the $1 a share, we need to keep fundraising on the wealth side. We have to raise — continue to raise non-traded products, CIC, TIC or — all of those are key to this, fundraise for GP Stakes Fund VI. We’ve already listed OBDC III, now traded as OBDE. And then if we can list one, maybe both, but one of our software lending BDCs, there’s an accretive M&A deal out there.
We achieved our goal of $1 a share. It’s not 12 things that have to happen. When you look out beyond 2025, obviously, we’re putting a number of calls in the fire to continue that growth, and we’ve talked about the 60% FRE margin and how we’re putting a lot of that R&D dollars back into the business to keep a very strong growth rate out beyond 2025. But it’s a few things that have to happen for us to achieve that dollar a share dividend. It’s going to take a lot of hard work, just to be clear, but it’s not a lot of things that have to happen.
Brennan Hawken: Thanks for that all the color. Very helpful.
Alan Kirshenbaum: Great. Thank you, Brennan.
Operator: Your next question comes from Crispin Love with Piper Sandler. Please go ahead.
Crispin Love: Thanks. Good morning everyone. Appreciate taking my questions. Just one question for me. On the European net lease product, can you talk a little bit more about that? Is that expected to be done all organically over time? And if there are any major differences between the European and the U.S. product other than the obvious?
Marc Lipschultz : Yes, happy to. So Today, we do some opportunities in Europe, but we have a U.S.-centric product, obviously, in a U.S.-centric focus. But the companies we work with are global. And so they have regularly come off and said, hey, listen, this really great solution we have with you in the U.S., how about Europe? And periodically, we do one. But what we need now is a dedicated pool of capital to expand what we have available to be able to meet that need, and we’ll do that through a structure that’s appropriate for Europe. And so we’re really following our customers, really following the demand and that demand is substantial. Is there a difference? Well, the similarities is they’re very high-quality companies and in many cases, the same global enterprises, not obviously, in every case.
