Saba Capital Expands into BDC and Interval Fund Market with $115M in New Investments
Event summary
- Saba Capital invested $40M in FS KKR Capital Corp. and $75M in Bluerock Private Real Estate Fund, targeting NAV discounts of 30-40%.
- Completed tender offers for Starwood Real Estate Income Trust (SREIT) and Blue Owl Capital Corporation II (OBDC II), acquiring ~$10M in aggregate face value.
- Starwood Capital Group committed additional equity to SREIT following Saba's public activity, accelerating investor redemptions.
- Received substantial interest from registered investment advisers seeking liquidity options for clients holding private BDCs and interval funds.
The big picture
Saba Capital is leveraging its expertise in closed-end fund discounts to address structural liquidity gaps in public and private BDCs and interval funds. The firm's $115M in new investments highlights a broader industry trend where retail investors face limited secondary market access, creating opportunities for activists to provide liquidity at significant NAV discounts. Saba's strategy targets hundreds of billions of dollars in retail capital currently locked in illiquid products.
What we're watching
- Liquidity Demand
- How retail investor demand for liquidity in private BDCs and interval funds will evolve, particularly as credit risk accumulates into 2027-2028.
- Market Stress
- Whether the anticipated stress in the hundreds of billions of dollars of private credit held by retail investors materializes and at what pace.
- Competitive Dynamics
- The extent to which Saba's strategy attracts competitors, potentially altering the liquidity landscape for these products.