Owl Rock raising direct lending pool for tech companies

Owl Rock Capital Partners, led by former GSO and KKR executives, is targeting up to $5 billion to lend directly to middle-market technology companies, according to pension documents and a person with knowledge of the firm.

The firm is raising Owl Rock Technology Finance Corp, a business-development company seeking an initial seed round of $1.5 billion, documents from New Jersey Division of Investment show. The state is considering committing up to $100 million to the pool.

BDCs raise money through public listings, as well as borrowing, and then lend money to companies. These pools have traditionally been able to use 1:1 leverage, but Congress recently doubled that limit, allowing BDCs to take on 2:1 leverage.

Owl Rock’s tech BDC will focus on companies that use technology to improve business processes; seek to grow through tech innovations; and operate in tech-related industries.

Such industries will include software, financial services, data and analytics, security, cloud computing, communications, life sciences, healthcare, media and consumer electronics, among others, pension documents said.

The pool will invest across senior secured or unsecured loans, subordinated loans and mezzanine debt, as well as equity-linked securities including convertible debt, convertible preferred equity, growth equity or warrants, documents said.

Owl Rock is raising the pool when other PE managers are raising separate tech-credit products. These include Vista Equity Partners and Thoma Bravo.

Owl Rock was formed by GSO Capital Founder Douglas Ostrover and KKR’s former global head of energy and infrastructure, Marc Lipschultz. It raised $5.5 billion for its debut BDC.

Other Owl Rock executives include Craig Packer, former co-head of leveraged finance in the Americas at Goldman Sachs, who is CEO of Owl Rock Capital; and Alan Kirshenbaum, chief operating and chief financial officer of Owl Rock Capital, Owl Rock Capital Partners and Owl Rock Capital Advisors. Kirshenbaum formerly was CFO of TPG Specialty Lending.

Action Item: Check out Owl Rock Technology Finance Corp’s SEC filing here: https://bit.ly/2QiXbZE