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 sho ...
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 bu ...
.
GSO is one of the largest credit-oriented
alternative asset
An alternative investment, also known as an alternative asset or alternative investment fund (AIF), is an investment in any asset class excluding stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as ...
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 loan ...
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 coll ...
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 sho ...
s focused on
special situations A special situation in finance is an atypical event which has the high potential to alter the future course of a business, materially impacting the company's value. The connotation of the event may be both positive (for example, merger or acquisitio ...
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 (typicall ...
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 ty ...
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 List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
with offices in
London
London is the capital and 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 down to the North Sea, and has been a majo ...
,
Dublin
Dublin (; , or ) is the capital and largest city of Republic of Ireland, Ireland. On a bay at the mouth of the River Liffey, it is in the Provinces of Ireland, province of Leinster, bordered on the south by the Dublin Mountains, a part of th ...
, and
Houston, Texas
Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 in ...
. 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
Donaldson, Lufkin & Jenrette (DLJ) was a U.S. investment bank founded by William H. Donaldson, Richard Jenrette, and Dan Lufkin in 1959. Its businesses included securities underwriting; sales and trading; investment and merchant banking; fina ...
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, First Boston Corporation and Credit Suisse, ...
.
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 bu ...
().
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
Donaldson, Lufkin & Jenrette (DLJ) was a U.S. investment bank founded by William H. Donaldson, Richard Jenrette, and Dan Lufkin in 1959. Its businesses included securities underwriting; sales and trading; investment and merchant banking; fina ...
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, First Boston Corporation and Credit Suisse, ...
, 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 bank ...
.
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 bu ...
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 coll ...
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 (typicall ...
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
Hovnanian Enterprises, Inc. is a United States real estate company which is involved in every aspect of marketing homes, including design, construction and sales. The company works with individual detached housing as well as higher-occupancy dwel ...
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 loan ...
— 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 coll ...
(
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 ...
. 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 ...
,
second lien loan
The vast majority of all second lien loans are senior secured obligations of the borrower. Second lien loans differ from both unsecured debt and subordinated debt.
First lien secured loans
In the event of a bankruptcy or liquidation, the assets ...
s,
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 (typicall ...
as well as equity securities and
credit derivatives
In finance, a credit derivative refers to any one of "various instruments and techniques designed to separate and then transfer the ''credit risk''"The Economist ''Passing on the risks'' 2 November 1996 or the risk of an event of default of a cor ...
.
*
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 (typicall ...
— 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 loan ...
s transactions,
mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
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 bu ...
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 investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new mark ...
.
* 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 ty ...
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