GSO Capital Partners

GSO Capital Partners is an American privately owned hedge fund and the credit investment arm of The Blackstone Group.[3] GSO is 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 vehicles investing in secured loans, hedge funds focused on special situations investments, mezzanine debt funds and private equity funds focused on rescue financing.

GSO Capital Partners
TypeSubsidiary
IndustryFinancial services, asset management
Founded2005 (2005)
FoundersBennett J. Goodman
J. Albert "Tripp" Smith
Douglas I. Ostrover
HeadquartersNew York City, New York, U.S.
ProductsMezzanine capital
Leveraged finance
Hedge funds
Distressed investments
AUM US$140 billion (2018)[1]
Number of employees
340[2]
ParentThe Blackstone Group
WebsiteOfficial website

The firm, which was founded in 2005, is headquartered in New York City with offices in London, Dublin, 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.

As of 2018, GSO manages approximately $140 billion of assets and operates as the credit-focused subsidiary of The Blackstone Group (NYSE: BX).

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, after the acquisition of DLJ.[4]

In May 2007, GSO sold a minority stake in its business to Merrill Lynch.[4]

The following year, in March 2008, The Blackstone Group acquired GSO for approximately $1 billion.[5] Blackstone paid GSO $620 million in cash and stock and the GSO team also received an earnout 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.[6] Following the completion of the acquisition, Blackstone merged GSO's operations with its existing debt investment operations.[7][8]

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.[9]

In March 2011, GSO acquired European collateralized loan obligation 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.[10]

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.[11]

In March 2012, GSO raised $4 billion for its second mezzanine investment fund focused on middle-market companies.[12]

In 2017, GSO accumulated $330 million in credit protection on US homebuilder Hovnanian Enterprises before making a deal to refinance its debt.[13] 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."[14] Solus Alternative Asset Management was attempting to temporarily block GSO and Hovnanian from completing their deal pending outcome of its suit.[15]

Investments

GSO invests across a variety of credit-oriented strategies.

References
  1. "GSO Closes Acquisition of $2.4 Billion Credit Investment Portfolio from NewStar Financial". Business Wire. December 26, 2017. Retrieved 21 February 2018.
  2. "Overview". Blackstone. Retrieved 21 February 2018.
  3. "Company Overview of GSO Capital Partners LP". Bloomberg. May 28, 2018. Retrieved 28 May 2018.
  4. Merrill Lynch Takes Hedge Fund Stake. New York Times, May 21, 2007
  5. Blackstone buys GSO for $1bn. Financial Times, January 11, 2008
  6. Blackstone to Buy GSO Capital. New York Times, January 10, 2008
  7. Blackstone to Buy Hedge Fund to Strengthen Credit Operations. New York Times, January 11, 2008
  8. Blackstone To Rationalize Single Manager Hedge Funds Businesses In Efficiency Move. Press Release, December 23, 2008
  9. The Morning Leverage: May The Force Be With GSO. WSJ Private Equity Beat, July 14, 2010
  10. Blackstone’s GSO Agrees to Take Over AIB CLO Business. Bloomberg BusinessWeek, March 30, 2011
  11. GSO raising billions in hot mezz market. Private Equity International, November 10, 2011
  12. "Blackstone Group's GSO Capital Raises $4 Billion Credit Fund". Bloomberg. Retrieved 31 May 2013.
  13. Rennison, Joe (January 25, 2018). "GSO bought $330m of protection on Hovnanian before controversial refi deal". Financial Times. Retrieved 21 February 2018.
  14. Childs, Mary (January 29, 2018). "SEARCH Barron's SIGN IN FOCUS ON FUNDS Judge Denies Injunction Request for Fancy CDS Transaction". Barron's. Retrieved 21 February 2018.
  15. Natarajan, Sridhar; Dolmetsch, Chris (January 25, 2018). "Blackstone's Disputed CDS Trade Set for Court Hearing". Bloomberg. Retrieved 21 February 2018.
  16. Blackstone’s GSO Doubles Rescue Lending for Distressed Borrowers. Bloomberg, Nov 17, 2011
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