a leading alternative asset manager€¦ · the owl rock story . owl rock is a leading alternative...

A LEADING ALTERNATIVE ASSET MANAGER

This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein. Only a prospectus for Owl Rock Capital Corporation II can make such an offer. This material is authorized only when it is accompanied or preceded by the Owl Rock Capital Corporation II prospectus. Neither the SEC, the Attorney General of the State of New York nor any state securities commission has approved or disapproved of these securities or determined if the prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Securities are offered through Owl Rock Capital Securities LLC, member of FINRA/SIPC, as Dealer Manager.

ORCC-II-BRO-6-18R

Risk FactorsAn investment in Owl Rock Capital Corporation II (“ORCC II” or “our”, “we” or “us”) is speculative and involves a high degree of risk, including the risk of a substantial loss of investment, as well as substantial fees and costs, all of which can impact an investor’s return. The following are some of the risks involved in an investment in our common shares; however, an investor should carefully consider the fees and expenses and information found in the “Risk Factors” section of our prospectus before deciding to invest: • Youshouldnotexpecttobeabletosellyoursharesregardlessofhowweperformandyoushouldconsiderthatyoumaynothaveaccesstothe moneyyouinvestforanindefiniteperiodoftime.Aninvestmentinsharesofourcommonstockisnotsuitableforyouifyouneedaccesstothe moneyyouinvest. • Wedonotintendtolistoursharesonanysecuritiesexchangeforwhatmaybeasignificanttimeafterthefirstclosingofthisoffering,andwe donotexpectasecondarymarket inoursharestodevelop.Asaresult,youmaybeunabletoreduceyourexposureinanymarketdownturn. Ifyouareabletosellyoursharesbeforealiquidityeventiscompleted,youwilllikelyreceivelessthanyourpurchaseprice. • We have implemented a share repurchase program pursuant to which we intend to continue to conduct quarterly repurchases of a limited numberofoutstandingsharesofourcommonstock.Ourboardofdirectorshascompletediscretiontodeterminewhetherwewillengageinany sharerepurchase,andifso,thetermsofsuchrepurchase.Weintendtolimitthenumberofsharestoberepurchasedineachquartertothelesser of (a)2.5% of theweightedaveragenumber ofsharesofour common stockoutstanding in theprior 12-monthperiodand(b) thenumber of shareswecanrepurchasewiththeproceedswereceivefromthesaleofsharesofourcommonstockunderourdistributionreinvestmentplan. Whileweintendtocontinuetoconductquarterlytenderoffersasdescribedabove,wearenotrequiredtodosoandmaysuspendorterminate thesharerepurchaseprogramatanytime. • Distributions on our common stock may exceed our taxable earnings and profits, particularly during the period before we have substantially investedthenetproceedsfromourpublicoffering.Therefore,portionsofthedistributionsthatwepaymayrepresentareturnofcapitaltoyou. Areturnofcapitalisareturnofaportionofyouroriginalinvestmentinsharesofourcommonstock.Asaresult,areturnofcapitalwill(i)lower yourtaxbasisinyoursharesandtherebyincreasetheamountofcapitalgain(ordecreasetheamountofcapitalloss)realizeduponasubsequent saleorredemptionofsuchshares,and(ii)reducetheamountoffundswehaveforinvestmentinportfoliocompanies.Wehavenotestablished anylimitontheextenttowhichwemayuseofferingproceedstofunddistributions. • Distributionsmayalsobefundedinsignificantpart,directlyorindirectly,from(i)thewaiverofcertaininvestmentadvisoryfees,thatwillnot be subject to repayment to our Adviser and/or (ii) the deferral of certain investment advisory fees that may be subject to repayment to our Adviserand/or(iii)thereimbursementofcertainoperatingexpenses,thatwillbesubjecttorepaymenttoourAdviseranditsaffiliates.Significant portions of distributions may not be based on investment performance. In the event distributions are funded from waivers and/or deferrals offeesandreimbursementsbyouraffiliates,suchfundingmaynotcontinueinthefuture.Ifouraffiliatesdonotagreetoreimbursecertainof ouroperatingexpensesorwaivecertainoftheiradvisoryfees,thensignificantportionsofourdistributionsmaycomefromofferingproceeds orborrowings.Therepaymentofanyamountsowedtoouraffiliateswillreducefuturedistributionstowhichyouwouldotherwisebeentitled. • Wehavealimitedoperatinghistoryandwehavenotidentifiedspecificinvestmentsthatwewillmakewiththeproceedsofthisoffering,sowe maybeconsideredablindpoolbecauseaninvestormaynothavetheopportunitytoevaluatehistoricaldataorassessfutureinvestmentsprior topurchasingourshares. • Thepaymentoffeesandexpenseswillreducethefundsavailableforinvestment,thenetincomegenerated,thefundsavailablefordistribution andthebookvalueofthecommonshares.Inaddition,thefeesandexpensespaidwillrequireinvestorstoachieveahighertotalnetreturnin ordertorecovertheirinitialinvestment.PleaseseeORCCII’sprospectusfordetailsregardingitsfeesandexpenses. • Weintendtoinvestinsecuritiesthatareratedbelowinvestmentgradebyratingagenciesorthatwouldberatedbelowinvestmentgradeifthey wererated.Belowinvestmentgradesecurities,whichareoftenreferredtoas“junk,”havepredominantlyspeculativecharacteristicswithrespect totheissuer’scapacitytopayinterestandrepayprincipal.Theymayalsobeilliquidanddifficulttovalue. • TheAdviseranditsaffiliatesfaceanumberofconflictswithrespecttous.Currently,theAdviseranditsaffiliatesmanageotherinvestment entities, includingOwlRockCapitalCorporation,andarenotprohibitedfromraisingmoneyforandmanagingfuture investmententitiesthat makethesametypesof investmentsasthosewetarget.Asaresult, thetimeandresourcesthattheAdviserdevotestousmaybediverted. Inaddition,wemaycompetewithanysuchinvestmententityalsomanagedbytheAdviserforthesameinvestorsandinvestmentopportunities. Furthermore, the Adviser may face conflicts of interest with respect to services it may perform for companies in which we invest as it may receivefeesinconnectionwithsuchservicesthatmaynotbesharedwithus. • TheincentivefeepayablebyustotheAdvisermaycreateanincentivefortheAdvisertomakeinvestmentsonourbehalfthatareriskyormore speculativethanwouldbethecaseintheabsenceofsuchcompensationarrangements.WemaybeobligatedtopaytheAdviserincentivefees evenifweincuranetlossduetoadeclineinthevalueofourportfolioandevenifourearnedinterestincomeisnotpayableincash. • Theinformationprovidedaboveisnotdirectedatanyparticularinvestororcategoryofinvestorsandisprovidedsolelyasgeneralinformation aboutourproductsandservicestoregulatedfinancialintermediariesandtootherwiseprovidegeneralinvestmenteducation.Noinformation containedhereinshouldberegardedasasuggestiontoengageinorrefrainfromanyinvestment-relatedcourseofactionasOwlRockCapital SecuritiesLLC,itsaffiliates,andOwlRockCapitalCorporationIIarenotundertakingtoprovideimpartialinvestmentadvice,actasanimpartial adviser,orgiveadviceinafiduciarycapacitywithrespecttothematerialspresentedherein.

Owl Rock Capital Corporation II 1

The Owl Rock Story Owl Rock is a leading alternative asset manager with deep expertise in the credit markets. At Owl Rock, our competitive edge is rooted in the experience of our founders and a world class, credit-focused investment team.

Doug, Marc and Craig formed Owl Rock with the goal of building a comprehensive direct lending platform that seeks to address two key challenges in today’s markets:

• Challengesofincome-seekinginvestorsintoday’slowrateandlow returnenvironment • ChallengesofU.S.middlemarketbusinessesinsearchofcapital

OwlRock’sFoundersOfferDeepExpertiseandBroadExperience InvestingthroughoutMarketCyclesandAcrosstheCapitalStructure

DouglasI.Ostrover

CraigW.Packer

MarcLipschultz

• Co-Founder,GSOCapitalPartners,Blackstone’screditdivision and one of the world’s largest credit-oriented alternative asset managers

• ManagingDirector,ChairmanofCreditSuisseFirstBoston’s LeveragedFinanceGroup

• GlobalCo‐HeadofCreditSuisseFirstBoston’sLeveraged FinanceGroup

• MemberofKKR’sManagementCommittee

•Extensiveinvestingexperienceacrossawiderangeof alternatives including private equity, infrastructure and real assets

•M&AandPrincipalInvestmentActivities,GoldmanSachs

• Partner,GoldmanSachs

• Co-headoftheLeveragedFinanceGroupintheAmericas, GoldmanSachs

• MemberofGoldmanSachs’FirmwideCapitalCommittee

8

Definitions

CreditSuisseLeveragedLoanIndexrepresentstheinvestableuniverseoftheU.S.dollardenominatedleveraged loan market. U.S.Treasury 10 Year Note is a debt owed by the United States governmentforaperiodoftenyears.Eachnotehasastatedinterestrate,whichispaidsemi-annually.BecausetheUnitedStatesisseenasaverylow-riskborrower,manyinvestorsseeU.S.Treasury10YearNoteinterestratesasindicativeofthewiderbondmarket.ThereisariskthattheUSgovernmentmaynotbe able to repay its short- or long-term debts in full or on time.

Bloomberg Barclays Municipal Bond Index currently contains approximately 46,200 bonds. To beincludedintheindex,bondsmustberatedinvestment-grade(“Baa3/BBB-”orhigher)byatleasttwoof thefollowingratingsagencies:Moody’s,Standard&Poor’sandFitch, ifall threeratethebond. Ifonly two of the three agencies rate the bond, the lower rating is used to determine index eligibility. If onlyoneof thethreeagenciesratesabond, theratingmustbe investment-grade.Tobe included inthe index, bonds must have an outstanding par value of at least $7 million and be issued as part of a transactionofatleast$75million.Thebondsmustbefixedrate,haveadated-dateafterDecember31,1990,andmustbeatleastoneyearfromtheirmaturitydate.

Bloomberg Barclays Aggregate Bond Index is a broad base index, maintained by Barclays Capital,and is often used to represent investment grade bonds being traded in United States. BloombergBarclays AAA Corporate Index measures the investment grade, fixed-rate, taxable corporate bondmarket.ItincludesUSDdenominatedsecuritiespubliclyissuedbyU.S.andnon-U.S.industrial,utilityand financial issuers.

Bloomberg Barclays U.S. MBS Index tracks agency mortgage backed pass-through securities (bothfixedrateandhybridARM)guaranteedbyGinnieMae(GNMA),FannieMae(FNMA),andFreddieMac(FHLMC).

Senior-Secured Loans are the primary source of debt financing for private companies. These loansaretypically“secured,”orbackedbyacompany’sassets.Theyalsotypicallyhavefloatingrates,whichadjust with changes in market interest rates.

Unsecured Debt (high yield bonds, mezzanine or subordinated debt) is a type of debt or generalobligation that is not protected by a guarantor, or collateralized by a lien on specific assets of theborrowerinthecaseofabankruptcyorliquidationorfailuretomeetthetermsforrepayment.High-yieldbondsarebondswithlowercreditratingsthaninvestment-gradecorporatebonds,Treasurybondsandmunicipalbonds.Becauseofthehigherriskofdefault,thesebondstypicallypayahigheryieldthaninvestment grade bonds. Mezzanine capital is any subordinated debt or preferred equity instrumentthat represents a claim on a company’s assets which is senior only to that of the common shares. Mezzaninefinancingcanbestructuredeitherasdebt(typicallyanunsecuredandsubordinatednote)orpreferredstock.Subordinateddebtisaloanorsecuritythatranksbelowotherloansandsecuritieswithregardtoclaimsonacompany’sassetsorearnings.Subordinateddebtisalsoknownasajuniorsecurity or subordinated loan.

Equityreferstocommonstockoranyothersecurityrepresentinganownershipinterest.Thismaybein a private company (not publicly traded), in which case it is called private equity. Common stockranks as the lowest priority in a company’s capital structure, and consequently, is often the class of stock held by company founders and employees. While common stockholders are afforded certain voting rights, economic participation in the event of a liquidity event or declaration of dividends is subordinate to creditor and preferred shareholder cash distributions. Given its relative rank in thecapital structure, common stockholders often assume the most risk of any investor class in a given company.

ChallengesinToday’sMarketINVESTORSARESEARCHINGFORINCOMEIn today’s low rate and low return environment, investors may want to consider enhancing their traditional60/40assetallocationmodelwithadditionalsourcesofincome.Alternativeinvestmentstypically provide a different stream of income than traditional cash and bond investments and may improvediversificationwhenaddedtoanoverallportfolio.Diversificationmaypotentiallyhelptoreduce risk within an investment portfolio over time.

Source: FederalReserveBankofSt.LouisEconomicResearch(FRED)asofMarch31,2018.PASTPERFORMANCEISNOGUARANTEEOFFUTURERESULTS.

Thereisnoguaranteethatthepotentialbenefitsofalternativeinvestmentswillbeachieved.IncomeprovidedbyORCCII isderivedfromdistributions. Distributions are not guaranteed and they may be changed or suspended at any time.

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01993 1998 2003 2008 2013 2018

10-Y

ear T

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Rate

- Da

ily

(Per

cent

)

InterestRatesAreStillWellBelowHistoricalAverages

Today’smarkets may present a challenge for income-seekinginvestors

10-YearTreasury 25YearHistoricalAverage

Traditional60/40 AssetAllocation

Model

Cash Cash

Alternatives

AssetAllocationModel withAlternatives

Bonds BondsStocks Stocks

WhyOwlRock?

Formoreinformation, pleasegotowww.owlrock.comorcall888-215-2015.

AlternativeSourceofIncomePotentialforInstitutionalandIndividualInvestors1InvestmentinSenior-Secured,FloatingRateLoans2CompetitiveEdgeRootedintheExperienceofOurFoundersandaWorldClass,Credit-FocusedInvestmentTeam3

2 Owl Rock Capital Corporation II 7

TAXAllows“passthrough”taxtreatmentifatleast90%ofincomeandcapitalgainsare distributed to shareholders annually

GOVERNANCESubjecttotheInvestmentCompanyActof1940;BoardofDirectorswithmajority independent directors

VALUATIONQuarterly valuation of each investment by an independent third party

INVESTINGAtleast70%ofportfoliomustbeinvestedinprivateU.S.companiesorpublicU.S.companiesthathaveamarketcapitalizationoflessthan$250million;withinBDCportfolios,positionconcentrationrestrictionscanpromotediversification

ACCESSAccess to sources of return typically not available through traditional investments

TRANSPARENCYRequiredtofilequarterly10-Qsandannual10-K(auditedfinancialstatements)and detailed disclosure of each investment included in a schedule of investments

Our StructureOwlRockCapitalCorporationII isabusinessdevelopmentcompany(BDC)investmentoffering.CreatedbyCongressin1980,BDCswereestablishedtoencouragetheflowofcapitaltosmall-andmedium-size American companies to help them grow. They provide investors with exposure toinvestmentsinpredominantlyprivatecompanies,whicharetypicallydifficulttoaccess.BDCsmayoffer different returns than stocks and bonds and can potentially help to provide diversificationwhen added to an overall portfolio.

AttributesofBusinessDevelopmentCompanies

OwlRock:PositionedtoMeetTwoDistinctChallengesA leading alternative asset manager with deep expertise in the credit markets, Owl Rock provides directlendingsolutionstomiddlemarketcompaniesseekingcapital.Thisprivatecreditstrategyisavailable to income-seeking investors through Owl Rock Capital Corporation II.

CommercialBankParticipationinLeveragedLoansHasSignificantlyDeclined

U.S.MIDDLEMARKETBUSINESSESARESEARCHINGFORCAPITALBankconsolidationandincreasedbankingregulationshavedramaticallyreducedtheamountofcommercial loans available to middle market borrowers. At the same time, U.S. middle marketcompanies need capital to facilitate growth, acquire businesses and support daily operations.

Source: S&PGlobalMarketIntelligence,Standard&Poor’sLeveragedCommentary&Dataasof3Q2018. PASTPERFORMANCEISNOGUARANTEEOFFUTURERESULTS.

Thereisnoguaranteethattheseobjectiveswillbeachieved.

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8–

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≥90%ofTaxableIncome Distributed

LoansProvidedto U.S.MiddleMarket Companies

Combined Investor Capital

Interest Payments

6 Owl Rock CapitalCorporationII 3

71.7%

86%reduction inparticipation

9.7%

BankParticipationinLeveragedLoansTrendLine

I I I I I I I I I I I I I I I I I I I I I I I I I I I

Source: Bloomberg, monthly, 12/31/1991–6/29/2018. Senior secured floating rate loans are represented by the Credit Suisse Leveraged Loan Index. Respective traditional fixed income indices are represented by the Bloomberg Barclays Municipal Bond Total Return Index, the Bloomberg Barclays U.S. Aggregate Bond Index, the Bloomberg Barclays U.S. MBS (Mortgage Backed Securities) Index, the Bloomberg Barclays Aaa Corporate Total Return Index and the 10 Year U.S. Treasury, respectively. SEE INDEX DEFINITIONS IN THE BACK. This data is for illustrative purposes only and is not indicative of any investment. An investment cannot be made directly in an index. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

Source: Federal Reserve, Bloomberg as of May 2018. Performance is cumulative for holding periods shown. Loan performance is represented by Credit Suisse Leveraged Loan Index and represents the investable universe of the U.S. dollar denominated leveraged loan market. Senior secured loans are subject to major risk factors, including credit risk, liquidity risk and interest rate risk. Bond performance is represented by Barclays U.S. Aggregate Bond Index, an unmanaged index of domestic investment-grade bonds, including corporate, government and mortgage-backed securities. Bond investing involves major risk factors, including interest rate and credit risk, which may result in the loss of principal. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. SEE INDEX DEFINITIONS IN THE BACK.

Senior-Secured Loans Have the Highest PaymentPriority and Are Collateralized by a Company’s Assets2

focuses on SENIOR SECURED LOANS

Highest

Lowest

Why Owl Rock Capital Corporation II?Owl Rock Capital Corporation II (ORCC II) is a business development company that offers the potential to generate income by originating loans to, and making debt investments in, U.S. middle market companies. ORCC II seeks to leverage Owl Rock’s significant institutional backing and deep relationships in the private equity market to generate investment opportunities that have attractive risk-adjusted return potential. Why consider ORCC II as part of your core income allocation?

Correlation is a statistic that measures the degree to which two investments move in relation to each other. A perfect positive correlation coefficient of 1 implies that as one investment moves, either up or down, the other investment moves in lockstep, in the same direction. A perfect negative correlation of -1 means that two assets move in opposite directions, while a zero correlation implies no relationship between investments at all. The low correlations in the chart above indicate that senior-secured floating rate loans have performed differently than traditional fixed income asset classes and may provide diversification benefits when added to a core income allocation.

1Owl Rock focuses primarily on originating senior-secured loans to middle market companies but, as disclosed in our prospectus, ORCC II may also invest in unsecured loans, subordinated loans, and to a lesser extent, equities and warrants. In addition, up to 30% of the portfolio may be in investments of non-qualifying portfolio companies. 2Collateral securing any loan may lose some or all of its value over time, which could have adverse consequences on ORCC II, including loss of principal. SEE DEFINITIONS IN THE BACK.

1 OPPORTUNITY TO INVEST IN A LARGE, UNTAPPED MARKET

3 INVESTMENT IN FLOATING RATE LOANS

2 POTENTIAL TO PRESERVE CAPITAL THROUGH SENIOR SECURED LOANS1

Investing in privately held middle market companies presents certain challenges, including the lack of available information about these companies. Middle market loans are often illiquid and issued by below-investment-grade companies.1 Source: International Monetary Fund 2017; National Center for the Middle Market (NCMM) December 2017. NCMM defines middle-market companies as those with $10 million to $1 billion of annual revenue. Owl Rock Capital Corporation II’s definition of middle-market companies, which is companies with EBITDA between $10 million and $250 million annually and/or annual revenue of $50 million to $2.5 billion at the time of investment.

U.S. Middle Market: Third-Largest Economy in the World1

Gross Domestic Product ($ Trillions)

U.S. Middle MarketRanks as the

3RD LARGEST

Economy in the World

$19.4

$4.8

$3.7

The U.S. Middle Market in Numbers1

• Approximately 1/3 of private sector U.S. GDP

• Nearly 200,000 businesses

• Annual revenue ranging from $10 million to $1billion

• 48 million workers

• 1/3 of all U.S. jobs

$5.9

$11.9

SENIOR SECURED LOANS

EQUITY

UNSECURED DEBT (High Yield Bonds, Mezzanine

or Subordinated Debt)

Paym

ent P

riorit

y

201510

50

-5-10-15-20-25-30-35

Traditional Fixed Income Correlation with Senior-Secured Floating Rate Loans

Floating Rate Loans Have Experienced Strong Performance Across Interest Rate Cycles

Municipal Bonds

U.S. Aggregate Bonds

U.S. Mortgage Backed

Securities

U.S. Corporate Bond Index There is no guarantee that these

investment objectives will be achieved.

U.S. 10-Year Treasury Bond

Potential Benefits of Adding ORCC II to a Core Income

Allocation

Low CorrelationTo Traditional

Income Sources

May Lower

Interest Rate Risk

Attractive Income & Return Potential

PortfolioDiversification

RESULT ENHANCED INCOME POTENTIAL AND PORTFOLIO DIVERSIFICATION

-34.8

-11.5-10.6

16.5

-2.0

Rising Rates2/94 - 2/95 Loans: 8.87%Bonds: 1.78%

Rising Rates5/99 - 5/00 Loans: 3.93% Bonds: 2.11%

Rising Rates6/04 – 6/06 Loans: 11.92% Bonds: 5.94%

Rising Rates12/15 – 5/18 Loans: 17.27% Bonds: 3.91%

Declining/Flat Rates1/92 - 2/94 Loans: 21.73%Bonds: 19.01%

Declining/Flat Rates2/95 - 5/99 Loans: 34.48% Bonds: 38.67%

Declining/Flat Rates5/00-6/04Loans: 22.59% Bonds: 36.60%

Declining/Flat Rates6/06-12/15Loans: 43.95% Bonds: 56.60%

7%

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5%

4%

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2%

1%

0%‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18

Federal Funds Target Rate


I I I I I I I I I I I I I I I I I I I I I I I I I I I

Source: Bloomberg,monthly,12/31/1991–6/29/2018.SeniorsecuredfloatingrateloansarerepresentedbytheCreditSuisseLeveragedLoanIndex.RespectivetraditionalfixedincomeindicesarerepresentedbytheBloombergBarclaysMunicipalBondTotalReturnIndex,theBloomberg Barclays U.S. Aggregate Bond Index, the Bloomberg Barclays U.S. MBS (Mortgage Backed Securities) Index, the BloombergBarclaysAaaCorporateTotalReturnIndexandthe10YearU.S.Treasury,respectively.SEEINDEXDEFINITIONSINTHEBACK.Thisdataisforillustrativepurposesonlyandisnotindicativeofanyinvestment.Aninvestmentcannotbemadedirectlyinanindex.PASTPERFORMANCEISNOGUARANTEEOFFUTURERESULTS.

Source: FederalReserve,BloombergasofMay2018.Performanceiscumulativeforholdingperiodsshown.LoanperformanceisrepresentedbyCreditSuisseLeveragedLoanIndexandrepresentstheinvestableuniverseoftheU.S.dollardenominatedleveragedloanmarket.Seniorsecuredloansaresubjecttomajorriskfactors,includingcreditrisk,liquidityriskandinterestraterisk.BondperformanceisrepresentedbyBarclaysU.S.AggregateBondIndex,anunmanagedindexofdomesticinvestment-gradebonds,includingcorporate,governmentandmortgage-backedsecurities.Bondinvestinginvolvesmajorriskfactors,includinginterestrateandcreditrisk,whichmayresultinthelossofprincipal.PASTPERFORMANCEISNOGUARANTEEOFFUTURERESULTS.Unlessotherwisestated,indexreturnsdonotreflecttheeffectofanyapplicablesalescharges,commissions,expenses,taxesorleverage,asapplicable.Itisnotpossibletoinvestdirectlyinanindex.SEEINDEXDEFINITIONSINTHEBACK.

Senior-SecuredLoans HavetheHighest PaymentPriorityandAreCollateralizedbyaCompany’s Assets2

focusesonSENIORSECUREDLOANS

Highest

Lowest

Why OwlRockCapital CorporationII?Owl Rock Capital Corporation II (ORCC II) is a business development company that offers thepotentialto generate incomebyoriginatingloansto, andmakingdebtinvestmentsin,U.S.middlemarketcompanies.ORCCIIseeksto leverageOwlRock’s significantinstitutionalbackinganddeeprelationships in the private equity market to generate investment opportunities that have attractive risk-adjusted return potential. Why consider ORCC II as part of your core income allocation?

Correlation is a statistic that measures the degree to which two investments move in relation to each other. A perfect positive correlation coefficientof1impliesthatasoneinvestmentmoves,eitherupordown,theotherinvestmentmovesinlockstep,inthesamedirection.Aperfectnegativecorrelationof-1meansthattwoassetsmoveinoppositedirections,whileazerocorrelationimpliesnorelationshipbetweeninvestmentsatall.Thelowcorrelationsinthechartaboveindicatethatsenior-securedfloatingrateloanshaveperformeddifferentlythantraditionalfixedincomeassetclassesandmayprovidediversificationbenefitswhenaddedtoacoreincomeallocation.

1Owl Rock focuses primarily on originating senior-secured loans to middle market companies but, as disclosed in our prospectus, ORCC II may also invest in unsecured loans, subordinated loans, and to a lesser extent, equities and warrants. Inaddition, upto 30%oftheportfoliomaybeininvestmentsofnon-qualifyingportfoliocompanies.2Collateral securing any loan may lose some or all of its value over time, which could have adverse consequences on ORCC II, including loss of principal. SEEDEFINITIONSINTHEBACK.

1 OPPORTUNITYTO INVESTINALARGE,UNTAPPEDMARKET

3 INVESTMENTINFLOATINGRATELOANS

2 POTENTIALTO PRESERVECAPITALTHROUGHSENIORSECUREDLOANS1

Investing in privately held middle market companies presents certain challenges, including the lack of available information about these companies. Middle market loans are often illiquid and issued by below-investment-grade companies.1 Source: International MonetaryFund 2017;NationalCenterfortheMiddleMarket(NCMM)December2017.NCMMdefinesmiddle-market companies as those with $10 million to $1 billion of annual revenue. Owl Rock Capital Corporation II’sdefinitionofmiddle-marketcompanies,whichiscompanieswithEBITDAbetween$10millionand$250millionannuallyand/or annualrevenue of$50millionto $2.5billionatthetimeofinvestment.

U.S. MiddleMarket:Third-Largest Economy intheWorld1

Gross DomesticProduct ($Trillions)

U.S.MiddleMarketRanks as the

3RDLARGEST

Economyin the World

$19.4

$4.8

$3.7

The U.S. MiddleMarketin Numbersasof2Q20171

•Approximately1/3 ofprivatesector U.S.GDP

•Nearly200,000 businesses

•Annualrevenue ranging from$10millionto $1billion

•48million workers

•1/3ofallU.S.jobs

$5.9

$11.9

SENIORSECUREDLOANS

EQUITY

UNSECUREDDEBT (HighYieldBonds,Mezzanine

orSubordinatedDebt)

Paym

entP

riorit

y

.20.15.10.05

0-.05-.10-.15-.20-.25-.30-.35

TraditionalFixedIncomeCorrelationwithSenior-Secured FloatingRateLoans

FloatingRateLoansHaveExperiencedStrongPerformanceAcrossInterestRateCycles

Municipal Bonds

U.S. Aggregate Bonds

U.S. Mortgage Backed

Securities

U.S. Corporate Bond Index Thereisnoguaranteethatthese

investment objectives will be achieved.

U.S. 10-Year Treasury Bond

Potential Benefits of Adding ORCC II to a Core Income

Allocation

Low CorrelationTo Traditional

Income Sources

May Lower

Interest Rate Risk

Attractive Income & Return Potential

PortfolioDiversification

RESULT ENHANCEDINCOMEPOTENTIAL ANDPORTFOLIODIVERSIFICATION

-0.35

-0.12-0.11

0.17

-0.02

RisingRates2/94-2/95Loans:8.87%Bonds:1.78%

RisingRates5/99-5/00 Loans:3.93%Bonds:2.11%

RisingRates6/04–6/06 Loans:11.92%Bonds:5.94%

RisingRates12/15–5/18 Loans:17.27%Bonds:3.91%

Declining/FlatRates1/92-2/94 Loans:21.73%Bonds:19.01%

Declining/FlatRates2/95-5/99 Loans:34.48% Bonds:38.67%

Declining/Flat Rates5/00-6/04Loans:22.59% Bonds:36.60%

Declining/FlatRates6/06-12/15Loans:43.95% Bonds:56.60%

7%

6%

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4%

3%

2%

1%

0%‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18

FederalFundsTargetRate


TAXAllows“passthrough”taxtreatmentifatleast90%ofincomeandcapitalgainsare distributed to shareholders annually

GOVERNANCESubjecttotheInvestmentCompanyActof1940;BoardofDirectorswithmajority independent directors

VALUATIONQuarterly valuation of each investment by an independent third party

INVESTINGAtleast70%ofportfoliomustbeinvestedinprivateU.S.companiesorpublicU.S.companiesthathaveamarketcapitalizationoflessthan$250million;withinBDCportfolios,positionconcentrationrestrictionscanpromotediversification

ACCESSAccess to sources of return typically not available through traditional investments

TRANSPARENCYRequiredtofilequarterly10-Qsandannual10-K(auditedfinancialstatements)and detailed disclosure of each investment included in a schedule of investments

Our StructureOwlRockCapitalCorporationII isabusinessdevelopmentcompany(BDC)investmentoffering.CreatedbyCongressin1980,BDCswereestablishedtoencouragetheflowofcapitaltosmall-andmedium-size American companies to help them grow. They provide investors with exposure toinvestmentsinpredominantlyprivatecompanies,whicharetypicallydifficulttoaccess.BDCsmayoffer different returns than stocks and bonds and can potentially help to provide diversificationwhen added to an overall portfolio.

AttributesofBusinessDevelopmentCompanies

OwlRock:PositionedtoMeetTwoDistinctChallengesA leading alternative asset manager with deep expertise in the credit markets, Owl Rock provides directlendingsolutionstomiddlemarketcompaniesseekingcapital.Thisprivatecreditstrategyisavailable to income-seeking investors through Owl Rock Capital Corporation II.

CommercialBankParticipationinLeveragedLoansHasSignificantlyDeclined

U.S.MIDDLEMARKETBUSINESSESARESEARCHINGFORCAPITALBankconsolidationandincreasedbankingregulationshavedramaticallyreducedtheamountofcommercial loans available to middle market borrowers. At the same time, U.S. middle marketcompanies need capital to facilitate growth, acquire businesses and support daily operations.

Source: S&PGlobalMarketIntelligence,Standard&Poor’sLeveragedCommentary&Dataasof3Q2018. PASTPERFORMANCEISNOGUARANTEEOFFUTURERESULTS.

Thereisnoguaranteethattheseobjectiveswillbeachieved.B

ank

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LTM

3/1

8–

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70

60

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40

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≥90%ofTaxableIncome Distributed

LoansProvidedto U.S.MiddleMarket Companies

Combined Investor Capital

Interest Payments

6 Owl Rock CapitalCorporationII 3

71.7%

86%reduction inparticipation

9.7%

BankParticipationinLeveragedLoansTrendLine

ChallengesinToday’sMarketINVESTORSARESEARCHINGFORINCOMEIn today’s low rate and low return environment, investors may want to consider enhancing their traditional60/40assetallocationmodelwithadditionalsourcesofincome.Alternativeinvestmentstypically provide a different stream of income than traditional cash and bond investments and may improvediversificationwhenaddedtoanoverallportfolio.Diversificationmaypotentiallyhelptoreduce risk within an investment portfolio over time.

Source: FederalReserveBankofSt.LouisEconomicResearch(FRED)asofMarch31,2018.PASTPERFORMANCEISNOGUARANTEEOFFUTURERESULTS.

Thereisnoguaranteethatthepotentialbenefitsofalternativeinvestmentswillbeachieved.IncomeprovidedbyORCCII isderivedfromdistributions. Distributions are not guaranteed and they may be changed or suspended at any time.

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01993 1998 2003 2008 2013 2018

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ear T

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- Da

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)

InterestRatesAreStillWellBelowHistoricalAverages

Today’smarkets may present a challenge for income-seekinginvestors

10-YearTreasury 25YearHistoricalAverage

Traditional60/40 AssetAllocation

Model

Cash Cash

Alternatives

AssetAllocationModel withAlternatives

Bonds BondsStocks Stocks

WhyOwlRock?

Formoreinformation, pleasegotowww.owlrock.comorcall888-215-2015.

AlternativeSourceofIncomePotentialforInstitutionalandIndividualInvestors1InvestmentinSenior-Secured,FloatingRateLoans2CompetitiveEdgeRootedintheExperienceofOurFoundersandaWorldClass,Credit-FocusedInvestmentTeam3


Owl Rock Capital Corporation II 1

The Owl Rock Story Owl Rock is a leading alternative asset manager with deep expertise in the credit markets. At Owl Rock, our competitive edge is rooted in the experience of our founders and a world class, credit-focused investment team.

Doug, Marc and Craig formed Owl Rock with the goal of building a comprehensive direct lending platform that seeks to address two key challenges in today’s markets:

• Challengesofincome-seekinginvestorsintoday’slowrateandlow returnenvironment • ChallengesofU.S.middlemarketbusinessesinsearchofcapital

OwlRock’sFoundersOfferDeepExpertiseandBroadExperience InvestingthroughoutMarketCyclesandAcrosstheCapitalStructure

DouglasI.Ostrover

CraigW.Packer

MarcLipschultz

• Co-Founder,GSOCapitalPartners,Blackstone’screditdivision and one of the world’s largest credit-oriented alternative asset managers

• ManagingDirector,ChairmanofCreditSuisseFirstBoston’s LeveragedFinanceGroup

• GlobalCo‐HeadofCreditSuisseFirstBoston’sLeveraged FinanceGroup

• MemberofKKR’sManagementCommittee

•Extensiveinvestingexperienceacrossawiderangeof alternatives including private equity, infrastructure and real assets

•M&AandPrincipalInvestmentActivities,GoldmanSachs

• Partner,GoldmanSachs

• Co-headoftheLeveragedFinanceGroupintheAmericas, GoldmanSachs

• MemberofGoldmanSachs’FirmwideCapitalCommittee

88

Definitions

CreditSuisseLeveragedLoanIndexrepresentstheinvestableuniverseoftheU.S.dollardenominatedleveraged loan market. U.S.Treasury 10 Year Note is a debt owed by the United States governmentforaperiodoftenyears.Eachnotehasastatedinterestrate,whichispaidsemi-annually.BecausetheUnitedStatesisseenasaverylow-riskborrower,manyinvestorsseeU.S.Treasury10YearNoteinterestratesasindicativeofthewiderbondmarket.ThereisariskthattheUSgovernmentmaynotbe able to repay its short- or long-term debts in full or on time.

Bloomberg Barclays Municipal Bond Index currently contains approximately 46,200 bonds. To beincludedintheindex,bondsmustberatedinvestment-grade(“Baa3/BBB-”orhigher)byatleasttwoof thefollowingratingsagencies:Moody’s,Standard&Poor’sandFitch, ifall threerate thebond. Ifonly two of the three agencies rate the bond, the lower rating is used to determine index eligibility. If onlyoneof thethreeagenciesratesabond, theratingmustbe investment-grade.Tobe included inthe index, bonds must have an outstanding par value of at least $7 million and be issued as part of a transactionofatleast$75million.Thebondsmustbefixedrate,haveadated-dateafterDecember31,1990,andmustbeatleastoneyearfromtheirmaturitydate.

Bloomberg Barclays Aggregate Bond Index is a broad base index, maintained by Barclays Capital,and is often used to represent investment grade bonds being traded in United States. BloombergBarclays AAA Corporate Index measures the investment grade, fixed-rate, taxable corporate bondmarket.ItincludesUSDdenominatedsecuritiespubliclyissuedbyU.S.andnon-U.S.industrial,utilityand financial issuers.

Bloomberg Barclays U.S. MBS Index tracks agency mortgage backed pass-through securities (bothfixedrateandhybridARM)guaranteedbyGinnieMae(GNMA),FannieMae(FNMA),andFreddieMac(FHLMC).

Senior-Secured Loans are the primary source of debt financing for private companies. These loansaretypically“secured,”orbackedbyacompany’sassets.Theyalsotypicallyhavefloatingrates,whichadjust with changes in market interest rates.

Unsecured Debt (high yield bonds, mezzanine or subordinated debt) is a type of debt or generalobligation that is not protected by a guarantor, or collateralized by a lien on specific assets of theborrowerinthecaseofabankruptcyorliquidationorfailuretomeetthetermsforrepayment.High-yieldbondsarebondswithlowercreditratingsthaninvestment-gradecorporatebonds,Treasurybondsandmunicipalbonds.Becauseofthehigherriskofdefault,thesebondstypicallypayahigheryieldthaninvestment grade bonds. Mezzanine capital is any subordinated debt or preferred equity instrumentthat represents a claim on a company’s assets which is senior only to that of the common shares. Mezzaninefinancingcanbestructuredeitherasdebt(typicallyanunsecuredandsubordinatednote)orpreferredstock.Subordinateddebtisaloanorsecuritythatranksbelowotherloansandsecuritieswithregardtoclaimsonacompany’sassetsorearnings.Subordinateddebtisalsoknownasajuniorsecurity or subordinated loan.

Equityreferstocommonstockoranyothersecurityrepresentinganownershipinterest.Thismaybein a private company (not publicly traded), in which case it is called private equity. Common stockranks as the lowest priority in a company’s capital structure, and consequently, is often the class of stock held by company founders and employees. While common stockholders are afforded certain voting rights, economic participation in the event of a liquidity event or declaration of dividends is subordinate to creditor and preferred shareholder cash distributions. Given its relative rank in thecapital structure, common stockholders often assume the most risk of any investor class in a given company.

A LEADING ALTERNATIVE ASSET MANAGER

This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein. Only a prospectus for Owl Rock Capital Corporation II can make such an offer. This material is authorized only when it is accompanied or preceded by the Owl Rock Capital Corporation II prospectus. Neither the SEC, the Attorney General of the State of New York nor any state securities commission has approved or disapproved of these securities or determined if the prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Securities are offered through Owl Rock Capital Securities LLC, member of FINRA/SIPC, as Dealer Manager.

ORCC-II-BRO-6-18

a leading alternative asset manager€¦ · the owl rock story . owl rock is a leading alternative...

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