Shares in Blue Owl Capital tumbled almost 6% on Thursday after the private market and alternative assets manager sold $1.4 billion of loan assets held in three of its private debt funds.

Blue Owl said Wednesday it had agreed the sale with four North American pension and insurance investors, with the loans changing hands at 99.7% of par value.

The largest sale comes out of the Blue Owl Capital Corporation II fund, also known as OBDC II, a semi-liquid private credit strategy aimed at U.S. retail investors.

OBDC II offloaded $600 million in loans, amounting to about 34% of its $1.7 billion portfolio.

In a major switch, Blue Owl said that following the deal, OBDC II would end regular quarterly liquidity payments to the fund’s investors.

Instead, the business development company — which specializes in private credit lending to U.S. middle-market companies — will pivot to periodic payouts that will be funded by asset sales, earnings, repayments and other strategic deals.

That shift more tightly restricts investor liquidity and their ability to withdraw their money. The move underlines the challenges surrounding liquidity and transparency in private markets, amid the ongoing push by private asset managers and alternative investment funds into the more liquid retail wealth space.

It follows a recent rise in redemption requests in some of Blue Owl’s business development companies, according to a Bloomberg report.

Last November, Blue Owl Capital attempted to merge OBDC II with the larger, publicly-traded Blue Owl Capital Corporation (OBDC) fund. Before abandoning its plans, Blue Owl halted redemptions in OBDC II until the deal — which could have brought losses of some 20% to investors — was completed.

The episode rattled investors, sending Blue Owl Capital’s shares lower.

Now, Blue Owl will use the proceeds from this sale to pay down debt and return capital to OBDC II shareholders, at up to $2.35 per share or approximately 30% of OBDC II’s net asset value.

Elsewhere, the other funds — the OBDC and Blue Owl Technology Income Corp (OTIC) — each sold $400 million in assets, representing 2% and 6% of their respective portfolios.

“These sales consist of 97% senior secured debt investments with an average size of $5 million and include investments in 128 distinct portfolio companies across 27 industries,” Blue Owl said in a statement.

“The largest industry represented is internet software and services at 13%, generally consistent with the industry composition of Blue Owl’s overall direct lending strategy and reflecting continued confidence in the quality and valuations of these software investments.”

Logan Nicholson, president of OBDC II and OBDC, said the deal “opportunistically” delivers value to shareholders and, in OBDC II, provides a “significant liquidity event” while maintaining a diversified portfolio with strong earnings potential.