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 b ...

. 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 col ...

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 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 (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 t ...

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 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 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 i ...

. 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; finan ...

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 1988 ...

. As of 2018, GSO manages approximately $140 billion of assets and operates as the credit-focused subsidiary of

().

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

and later

, 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 ba ...

. 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. 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

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

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 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 col ...

( 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,

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 ...

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 co ...

. *

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 loa ...

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 aspec ...

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 ...

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 mar ...

. * 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 th ...

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