Blackstone Raises $7 Billion for GSO Rescue-Lending Fund

Blackstone Is Said to Raise $7 Billion for Rescue-Lending Fund

06 Apr 2018, 04:42 PM IST

(Bloomberg) -- GSO Capital Partners, the credit arm of Blackstone Group LP, closed on $7 billion for its third rescue-lending fund.

The pool hit its hard cap, the maximum amount of outside capital it could raise under investor agreements, according to the statement, which confirmed an earlier report by Bloomberg. The $7 billion fund is about 40 percent larger than Blackstone’s previous vehicle, which closed on $5 billion in 2013.

The credit strategy, known as capital solutions, provides funding to stressed or distressed companies with liquidity needs, including businesses facing significant debt maturities or nearing bankruptcy. Companies that have been backed by GSO include U.K. builder Morris Homes Ltd., Canadian online-gaming company Stars Group Inc. and C&J Energy Services Inc.

Led by Bennett Goodman, GSO oversaw $138 billion in client assets at year end, close to a third of the total managed by New York-based Blackstone.

Goodman said in Thursday’s statement that the new fund “provides us with the capital necessary to continue our strategy of being a partner of choice to those companies seeking capital to solve their balance sheet and liquidity needs, enabling them to focus on their business and growth objectives.”

Distressed debt deals have grown hard to find as the economy has remained strong and low interest rates have made it easier for companies to refinance. The supply could rise if the economy falters and loan covenants, which have become less restrictive, fail to keep borrowers out of trouble.

Apollo, Centerbridge

Alternative asset managers have more than $100 billion available to invest in distressed debt and struggling companies, according to research firm Preqin Ltd. Since February of last year, Apollo Global Management LLC, Centerbridge Partners and Carlyle Group LP have each completed raising distressed and special situations pools of $2.5 billion or more.

BlackRock Inc., the world’s largest asset manager, has set out to raise a $2.5 billion fund to make loans or invest in the debt of companies facing distress.

One of Goodman’s GSO co-founders, Tripp Smith, is leaving Blackstone at the end of June, according to an internal memo seen by Bloomberg. Blackstone acquired and integrated GSO -- which refers to the last name initials of Goodman, Smith and Doug Ostrover -- in 2008.

To contact the reporters on this story: Melissa Mittelman in New York at mmittelman@bloomberg.net, David Carey in New York at dcarey13@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha