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Blue Owl shares surge after private credit firm cites 10X gains from SpaceX
Shares of Blue Owl, the private credit firm at the center of recent jitters over exposure to software companies, jumped 10% in trading Thursday after executives disclosed sizable gains tied to SpaceX.
“We made about 10 times our money on that investment,” an executive said on the firm’s first-quarter earnings call.
Blue Owl has already sold roughly half its position at a $1.25 trillion valuation and continues to hold the remainder, he said.
The call was hosted by Marc Lipschultz, co-chief executive officer, and Alan Kirshenbaum, chief financial officer. It wasn’t immediately clear which executive spoke specifically about the SpaceX investment.
The gains on SpaceX, which is headed toward what may be the largest IPO in history later this year, could offset potential losses elsewhere in Blue Owl’s portfolio if software companies default, the executive said. That helps allay concerns around the fact that the latest artificial intelligence models may force some software companies out of business.
While private credit funds are composed mostly of loans, they can also hold preferred and common shares of companies. That gives them potential equity upside and effectively makes them hybrid credit-equity vehicles.
“We made a loan to the company, and had the privilege of getting to know them very well and then participating in ongoing conversations about other financing opportunities, and ultimately, in this case, an equity investment,” the Blue Owl executive said of SpaceX.
Another factor: Blue Owl said it expects to maintain a roughly 58.5% fee-related earnings margin this year, meaning it keeps more than half of its management fee revenue as profit, even under a continued “softer environment” for the industry.
On Thursday’s earnings call, Blue Owl management also noted that while loan-to-value rates have deteriorated amid the software slump, there is still a “tremendous amount of remaining cushion” before losses are seen.
Blue Owl reported solid first-quarter results on Thursday, with fee-related earnings and assets under management rising as the firm continued to attract inflows.
While the firm’s shares reacted positively after that report, they jumped sharply at around 9:49 a.m. ET, during the conference call with analysts.
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Business
India Crude Imports: India’s crude imports in April 85% of February level, Russia largest source – The Times of India
NEW DELHI: Russia remained the largest source of crude for India in April, supplying 1.6 million barrels a day (mbd), followed by Saudi Arabia, the UAE, Venezuela and Qatar, data from shipment-tracking firm Kpler has shown.India imported nearly 4.4 mbd of crude in April, marginally lower than in March (4.5 mbd) and 85% of Feb shipments (5.2 mbd), amid the ongoing disruption of supply flows through Strait of Hormuz. Supplies from Russia were down 20% from nearly 2 mbd in March, which was the highest since May last year. While Saudi Arabia (685,000 barrels a day) and UAE (575,000 barrels a day) ramped up supplies, India resumed imports from Iran and Venezuela to plug the gap caused by disruptions from other West Asian nations.
No shipments arrived from Iraq, Kuwait, Qatar or Saudi-Kuwait neutral zone in April, despite Iraq usually being among India’s top crude suppliers.While shipments from Saudi Arabia came through East-West crude pipeline, the UAE sent consignments via ADCOP pipeline to Fujairah on the Gulf of Oman. Supplies from other Gulf producers continue to depend largely on the Strait of Hormuz. ‘India’s LPG import situation to remain tight in near term’ For the first time since March 2019, Indian refiners also sourced nearly 1.3 lakh barrels of oil a day from Iran in April, after the US eased sanctions for a month to help reduce global crude prices. They also secured about 2.9 lakh barrels a day from Venezuela after a gap of 11 months.Imports of LPG fell to less than 1 million tonnes (MT) in April, down from 2-2.2 MT during the pre-crisis months. Data showed that India received nearly 9.5 lakh tonnes of the primary cooking fuel in April, about 16% less than March shipments, which were estimated at a little over 1.1 MT. The supply gap was plugged by a 30% increase in domestic LPG production. With no resolution to the global energy crisis in sight, experts believe imports are likely to remain affected in the near future.“India is, therefore, likely to continue facing tight LPG import availability in the near term. The situation remains sensitive, as disruptions of Middle East supply, India’s key sourcing region, are keeping import availability constrained,” said Sumit Ritolia, lead analyst at Kpler. The diversification of supplies from non-Gulf countries – including the US, Australia, Canada, Norway and Russia – helped India secure 1.9 million tonnes of natural gas in April, up from 1.6 MT in March.
Business
Rivian renegotiates DOE loan down to $4.5 billion, adjusts capacity plans for Georgia plant
Rivian Automotive on Thursday said it has renegotiated a $6.57 billion loan from the U.S. Department of Energy down to $4.5 billion and is adjusting its production expectations at an under-construction plant in Georgia.
The DOE loan was previously set to support two phases of production for a total of 400,000 units annually. The amended loan covers one phase of production with a total capacity of 300,000 vehicles, the company said Thursday.
The changes enable Rivian to draw on the loan sooner and have greater initial production but lowers its total production capacity for the plant amid uncertain demand for all-electric vehicles.
The initial loan terms were negotiated under the Biden administration. It had been in limbo under the Trump administration, which has taken action to cut or reduce such loans and has pulled back government investments to promote EVs.
Rivian said it plans to tap into the loan in 2027, a year ahead of previously scheduled. The automaker also said production of the company’s upcoming R2 electric vehicle is on track to begin at the facility in late 2028, following its recent start to production at its current facility in Normal, Illinois.
Rivian CEO RJ Scaringe on Thursday told CNBC’s Phil LeBeau that any future expansion of the Georgia plant would be funded by the company, which has been raising capital through partnerships with companies such as Volkswagen and Uber.
The EV maker announced the new loan details in connection with its first-quarter results, which included a net loss of $416 million, or 33 cents per share, down from a loss of $541 million, or 48 cents per share, a year ago. Those per-share results were not comparable to Wall Street expectations.
Rivian’s revenue for the quarter was $1.38 billion, up from $1.24 billion a year earlier and slightly ahead of the $1.36 billion expected by analysts, according to LSEG.
The company’s gross profit, which is closely watched by investors, was $119 million — down $87 million during the first quarter compared with a year earlier. That included a $62 million loss for its automotive segment and a $181 million profit for its software and services division.
The decline in automotive profit was primarily due to a $100 million slump in sales of automotive regulatory credits and lower production volumes, Rivian said.
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