How Blue Owl Capital underwrites technology companies — and what the credit selection process looks like
Not every lender approaches technology companies the same way. Some private credit managers treat software loans like any other corporate credit, applying standard leverage multiples and covenant packages without adjusting for the sector’s specific characteristics. Others have built sector-specific underwriting capabilities that account for the recurring revenue dynamics, customer concentration patterns, and growth profiles that define software businesses. Blue Owl Capital falls in the latter group.
Blue Owl’s technology lending book sits primarily within Blue Owl Technology Income Corp. (OTIC), a BDC managing $6.2 billion in fair value across 190 portfolio companies as of Dec. 31, 2025. The credit selection process behind that portfolio reflects specific choices about where in a company’s capital structure to lend, at what valuation levels, and to which types of borrowers.
Where Blue Owl lends within the capital structure
Blue Owl Capital lends to technology companies in nearly all cases through first lien, senior secured positions — the most protected place a lender can sit in a company’s debt stack. First lien means the lender has a security interest in the borrower’s assets and holds the highest priority claim on repayment in a restructuring or liquidation scenario.
Senior secured lending to technology companies differs from the same structure in other industries because the underlying collateral is different. Software businesses do not have physical machinery or real estate to pledge; their value is embedded in recurring revenue contracts, intellectual property, and customer relationships. Underwriting these assets requires a different analytical toolkit than underwriting a manufacturing company with tangible plant and equipment.
How loan-to-value shapes the credit decision
Blue Owl Capital applies a loan-to-value discipline to its technology lending that places the firm’s loans at roughly 30% of the borrower’s estimated enterprise value on average. Expressed differently, Blue Owl’s loan represents 30 cents for every dollar of total appraised business value — leaving a 70-cent equity cushion between the lender’s principal and any scenario that would produce a loss.
That cushion is meaningful. A software company would need to lose more than 70% of its enterprise value before Blue Owl’s principal would be at risk. At businesses with established recurring revenue, multi-year customer contracts, and growing EBITDA, that scenario requires a severe and sustained deterioration in operating performance.
What the borrower selection criteria look like in practice
Blue Owl Capital concentrates technology lending in the upper middle market — companies large enough to support loans of hundreds of millions to over a billion dollars. Larger technology companies tend to have more diversified customer bases, lower revenue concentration risk, and more established free cash flow generation than earlier-stage businesses.
The firm’s 130-person direct lending team applies underwriting that looks closely at recurring revenue quality, customer retention rates, and EBITDA trajectory before committing capital. That process is connected to one of the widest origination funnels in the private credit market, which allows the team to be selective among the available opportunities rather than deploying capital into every deal that meets a minimum threshold.
What the performance data shows
Since November 2022, Blue Owl’s technology borrowers have grown revenue by approximately 40% and EBITDA by approximately 50% on a cumulative weighted average basis. Fourth-quarter 2025 held to that trajectory, with revenue up 10% quarter over quarter and EBITDA rising in the mid-teens. Those operating results reflect the credit quality of the underlying borrower base and the underwriting discipline applied at the point of origination.
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