Blackstone Credit, formerly known as GSO Capital Partners is an American
hedge fund
A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as ...
and the credit investment arm of
The Blackstone Group
Blackstone Inc. is an American alternative investment management company based in New York City. Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate ...
.
GSO is one of the largest credit-oriented
alternative asset managers in the world and a major participant in the
leveraged finance
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money ( leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loa ...
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 co ...
vehicles investing in
secured loan
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral, an ...
s,
hedge fund
A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as ...
s focused on
special situations investments,
mezzanine debt
In finance, mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typic ...
funds and
private equity
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a typ ...
funds focused on rescue financing.
The firm, which was founded in 2005, is headquartered in
New York City
New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the U ...
with offices in
London
London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...
,
Dublin
Dublin (; , or ) is the capital and largest city of Ireland. On a bay at the mouth of the River Liffey, it is in the province of Leinster, bordered on the south by the Dublin Mountains, a part of the Wicklow Mountains range. At the 2016 ...
, and
Houston, Texas. 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
Credit Suisse First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is 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 198 ...
.
As of 2018, GSO manages approximately $140 billion of assets and operates as the credit-focused subsidiary of
The Blackstone Group
Blackstone Inc. is an American alternative investment management company based in New York City. Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate ...
().
History
GSO was founded in 2005 by Bennett Jay Goodman, J. Albert Smith III, and Douglas Irving 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) is 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 198 ...
, after the acquisition of DLJ.
[Merrill Lynch Takes Hedge Fund Stake]
''New York Times'', May 21, 2007
In May 2007, GSO sold a minority stake in its business to
Merrill Lynch
Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment banki ...
.
The following year, in March 2008,
The Blackstone Group
Blackstone Inc. is an American alternative investment management company based in New York City. Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate ...
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.
Description
Earnouts are often employed when ...
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. 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
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 co ...
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
In finance, mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typic ...
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.
Investments
GSO invests across a variety of credit-oriented strategies.
*
Leveraged finance
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money ( leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loa ...
— 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 co ...
(
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 Distressed securities are securities over companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy. As far as debt securities, this is called distressed debt. Purchasing or holding s ...
. These funds invest across a broad range of securities including secured loans,
high yield debt
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events, ...
,
distressed securities Distressed securities are securities over companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy. As far as debt securities, this is called distressed debt. Purchasing or holding s ...
,
second lien loans,
mezzanine debt
In finance, mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typic ...
as well as equity securities and
credit derivatives.
*
Mezzanine debt
In finance, mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typic ...
— GSO's Capital Opportunities Funds provide mezzanine capital as part of
leveraged buyout
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money ( leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loa ...
s transactions,
mergers and acquisitions and
leveraged recapitalizations 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 investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new mar ...
.
* Rescue Financing — GSO's Capital Solutions Funds provide
private equity
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a typ ...
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
The Blackstone Group
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