2025 Market Outlook

Foreword

Entering the first quarter of 2025, we remain cautiously optimistic that the US economy will continue experiencing steady and incremental growth. We expect favorable tailwinds for US businesses to include continuing AI innovation, a more pro-business regulatory framework, and a focus on extending the 2017 tax cuts. Conversely, we may see a potential headwind if there were a resurgence in inflation.

For Blue Owl, our investment concentration in US-based businesses across our Credit, GP Strategic Capital, and Real Estate platforms positions us well to continue delivering value for our investors and users of our capital.

In terms of how we view our business broadly, we foresee three themes cutting across the private markets ecosystem over the coming year.

First is identifying what value creation looks like in a potentially higher for longer interest rate environment. While expansionary policies should stimulate economic growth, there is a potential for higher inflation. LPs will remain laser focused on how GPs are navigating a higher rate environment. Expect more candid conversations around topics such as distributed to paid-in capital (DPI) and liquidity options over the coming months.

Second is understanding that the opportunity set in private markets is rapidly expanding.

The impact of this multi-decade-long arc is readily seen across our business where bank retrenchment enabled us to provide private capital solutions to sponsors and other capital users who historically engaged in public-market financing. The beauty of this shift from public to private financing is better alignment between lenders and capital users, where long-term, often permanent capital, is able to meet long-term investment needs. Areas in public markets where there is a significant capital duration mismatch remain ripe for disruption by private-markets firms.

Third is acknowledging that the competitive advantage afforded by scale is only now being amplified. In the past 12 months, we’ve witnessed an acceleration of M&A activity across private-markets firms. With Blue Owl, our multiple strategic acquisitions and subsequent integrations provide a roadmap for how specialist asset managers can benefit from the scale of a global manager while remaining focused on what they do best – delivering strong returns for investors.

In the corresponding market outlooks, our Credit, Real Estate, and GP Strategic Capital teams outline how the above-mentioned themes will impact their respective sectors.

We invite you to read these outlooks and wish you all the best for 2025.