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Blue Owl in talks to invest in Linden Capital Partners

Illustration of a tidal wave of money about to overtake a red cross.

Illustration: Aïda Amer/Axios

Blue Owl is setting it sights on acquiring a stake in health care specialist sponsor Linden Capital Partners, Axios has confirmed.

Why it matters: Growing anxiety around returning money to LPs is pushing sponsors to consider minority stake sales for liquidity.

Zoom in: Bloomberg first reported the two firms are nearing a deal, though a source familiar tells Axios a transaction is not imminent.

  • If completed, the deal would give Blue Owl a minority stake in Linden.
  • Per the report, Blue Owl would back Linden through its flagship GP stakes fund as well as its first vehicle dedicated to mid-size managers.

Catch up quick: Chicago-based Linden's health care portfolio includes Aspen Surgical, Avalign Technologies, BioTouch and IVX Health.

  • Linden closed its fifth buyout fund in 2021 at close above its hard cap of $3 billion.
  • Blue Owl's investments include Ginkgo Bioworks and Coherent. The portfolio consists of 7% health care services and providers, 5% health tech and 4% health care equipment and services.

The big picture: At the annual Milken Global Conference, several buyout pros acknowledged fundraising challenges to Axios' Dan Primack, as limited partners have grown tired of low distributions (in addition to other challenges, like foreign exchange rates).

  • But those mentions were almost always as everyone else's problem, because their DPI was deep in the black, Primack writes.

💭 Our thought bubble: As sponsors are feeling heightened pressure to return capital to LPs, the market could see more of these deals take shape.

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