GSO Capital Partners (GSO) was an American

hedge fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...

and the credit investment arm of

The Blackstone Group Blackstone Inc. is an American alternative investment management company based in New York City. It was founded in 1985 as a mergers and acquisitions firm by Peter G. Peterson, Peter Peterson and Stephen A. Schwarzman, Stephen Schwarzman, who h ...

. It was one of the largest credit-oriented alternative asset managers in the world and a major participant in the leveraged finance marketplace. The firm invests across a variety of credit oriented strategies and products including

collateralized loan obligation Collateralized loan obligations (CLOs) are a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various tranches. A CLO is a type of colla ...

vehicles investing in

secured loan A secured loan is a loan in which the borrower Pledge (law), pledges some asset (e.g. a car or property) as collateral (finance), collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thu ...

s focused on special situations investments, mezzanine debt funds and

private equity Private equity (PE) is stock in a private company that does not offer stock to the general public; instead it is offered to specialized investment funds and limited partnerships that take an active role in the management and structuring of the co ...

funds focused on rescue financing. It was acquired by Blackstone in March 2008. In November 2020, it was rebranded to Blackstone Credit.

History

GSO was founded in 2005 by Bennett Jay Goodman, J. Albert Smith III, and Doug Ostrover. The GSO team had previously managed the leveraged finance businesses at Donaldson, Lufkin & Jenrette and later

Credit Suisse First Boston Credit Suisse First Boston (also known as CSFB and CS First Boston) was the investment banking affiliate of Credit Suisse headquartered in New York. The company was created by the merger of First Boston Corporation and Credit Suisse Group in 1 ...

, after the acquisition of DLJ.Merrill Lynch Takes Hedge Fund Stake
''New York Times'', May 21, 2007 The firm is named for its three founding partners Bennett Goodman, Tripp Smith, and Doug Ostrover who had previously worked together at Donaldson, Lufkin & Jenrette and later

. In May 2007, GSO sold a minority stake in its business to

Merrill Lynch Merrill Lynch, Pierce, Fenner & Smith Incorporated, doing business as Merrill, and previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investm ...

. The following year, in March 2008,

acquired GSO for approximately $1 billion. Blackstone paid GSO $620 million in cash and stock and the GSO team also received an

earnout Earnout or earn-out refers to a pricing structure in mergers and acquisitions where the sellers must "earn" part of the purchase price based on the performance of the business following the acquisition. Earnouts are often employed when the buyer(s ...

worth up to $310 million through payable over the subsequent five years, based on certain earnings targets. Blackstone had existing relationships with the GSO team as an original investor in GSO's funds. The combination of Blackstone and GSO created one of the largest credit platforms in the alternative asset management business, with over $21 billion of total

assets under management In finance, assets under management (AUM), sometimes called fund under management, refers to the total market value of all financial assets that a financial institution—such as a mutual fund, venture capital firm, or depository institutio ...

. Following the completion of the acquisition, Blackstone merged GSO's operations with its existing debt investment operations.Blackstone To Rationalize Single Manager Hedge Funds Businesses In Efficiency Move
Press Release, December 23, 2008 In July 2010, GSO announced the final closing of the Blackstone / GSO Capital Solutions Fund (the Fund) with total commitments of over $3.25 billion. In March 2011, GSO acquired European

manager AIB Capital Markets which included four CLO vehicles worth more than €1.5 billion. GSO had previously acquired $3.1 billion of CLOs from Callidus Capital Management in 2010. In November 2011, it was reported that GSO had raised over $2 billion for its newest mezzanine debt investment fund, making it one of the largest players in that market. In March 2012, GSO raised $4 billion for its second mezzanine investment fund focused on middle-market companies. In 2017, GSO accumulated $330 million in credit protection on US homebuilder Hovnanian Enterprises before making a deal to refinance its debt. In January 2018, a federal judge denied Solus Alternative Asset Management's request to stall the debt exchange, against GSO Capital Partners and Hovnanian Enterprises, explaining the firm provided "insufficient evidence of irreparable harm to them or the market." Solus Alternative Asset Management was attempting to temporarily block GSO and Hovnanian from completing their deal pending outcome of its suit. On November 9, 2020 GSO was rebranded to Blackstone Credit.

Investments

GSO invests across a variety of credit-oriented strategies. * Leveraged finance — GSO is a leading provider of senior secured loans to middle market companies. The firm invests through various pools of capital including:

Collateralized loan obligation Collateralized loan obligations (CLOs) are a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various tranches. A CLO is a type of colla ...

( CLO) vehicles as well as other investment funds and accounts. * Special Situations hedge fund — GSO's hedge funds invest in long/short credit, event-driven opportunities and

distressed securities In corporate finance, distressed securities are security (finance), securities over companies or government entities that are experiencing Financial distress, financial or operational distress, Default (finance), default, or are under bankruptcy. ...

. These funds invest across a broad range of securities including secured loans, high yield debt,

, second lien loans, mezzanine debt as well as equity securities and credit derivatives. * Mezzanine debt — GSO's Capital Opportunities Funds provide mezzanine capital as part of

leveraged buyout A leveraged buyout (LBO) is the acquisition of a company using a significant proportion of borrowed money (Leverage (finance), leverage) to fund the acquisition with the remainder of the purchase price funded with private equity. The assets of t ...

s transactions,

mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...

and

leveraged recapitalization In corporate finance, a leveraged recapitalization is a change of the company's capital structure, usually substitution of debt for equity. Overview Such recapitalizations are executed via issuing bonds to raise money and using the proceeds to b ...

s as well as for

growth capital Growth capital (also called expansion capital and growth equity) is a type of private equity investment, usually a minority interest, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets ...

. * Rescue Financing — GSO's Capital Solutions Funds provide

capital to companies needing liquidity or facing issues with their existing

capital structure In corporate finance, capital structure refers to the mix of various forms of external funds, known as capital, used to finance a business. It consists of shareholders' equity, debt (borrowed funds), and preferred stock, and is detailed in the ...

s.Blackstone’s GSO Doubles Rescue Lending for Distressed Borrowers
Bloomberg, Nov 17, 2011

References

External links

* {{authority control, state=expanded Blackstone Inc. Financial services companies based in New York City Financial services companies established in 2005 Alternative investment management companies Hedge fund firms in New York City Private equity firms of the United States Mezzanine capital investment firms Defunct companies based in New York City