GSO Capital Partners

GSO Capital Partners

Company type	Division (formerly independent)
Industry	Hedge fund, Alternative asset management
Founded	2005
Founder	Bennett Jay Goodman, J. Albert Smith III, Doug Ostrover
Fate	Renamed Blackstone Credit in November 2020
Headquarters	New York City , United States
Area served	Global
Products	Credit-focused alternative asset strategies, CLOs, hedge funds, mezzanine debt, private equity vehicles
Parent	The Blackstone Group

GSO Capital Partners (GSO) was a U.S.-based hedge fund and served as the credit investment division of The Blackstone Group. It ranked among the largest global managers specializing in credit-focused alternative asset strategies, with significant activity in the leveraged finance sector. GSO deployed capital across a variety of credit strategies, including collateralized loan obligation (CLO) vehicles investing in secured loans, hedge funds targeting special situations, funds dedicated to mezzanine debt, and private equity vehicles concentrating on turnaround financing.

Blackstone acquired GSO in March 2008, and the firm was renamed Blackstone Credit in November 2020.

History

Established in 2005 by Bennett Jay Goodman, J. Albert Smith III, and Doug Ostrover—each having prior leadership roles in leveraged finance at Donaldson, Lufkin & Jenrette and subsequently at Credit Suisse First Boston—the name GSO reflects the initials of its three founders.

In May 2007, GSO divested a minority interest to Merrill Lynch. The following year, Blackstone purchased GSO for approximately $1 billion, consisting of $620 million paid in cash and stock, plus up to $310 million contingent on performance milestones over five years. This acquisition merged Blackstone’s pre-existing debt operations with GSO’s platform, forming one of the largest credit platforms within alternative asset management, overseeing assets exceeding $21 billion.

By July 2010, GSO successfully closed the Blackstone/GSO Capital Solutions Fund with capital commitments surpassing $3.25 billion.

In March 2011, GSO broadened its European presence by acquiring AIB Capital Markets’ CLO business, adding more than €1.5 billion in CLO assets. Prior to that, in 2010, it had purchased $3.1 billion of CLOs from Callidus Capital Management.

By November 2011, GSO raised over $2 billion for a new mezzanine debt fund, strengthening its role as a significant participant in that sector. In March 2012, it completed fundraising for a $4 billion mezzanine fund aimed at middle-market enterprises.

In 2017, GSO took a $330 million credit protection position on U.S. homebuilder Hovnanian Enterprises before negotiating a debt refinancing agreement. A federal judge subsequently rejected Solus Alternative Asset Management’s legal attempt to block this refinancing deal.

On November 9, 2020, GSO underwent rebranding to become Blackstone Credit.

Investments

GSO's investment approach encompasses multiple credit-focused strategies:

• Leveraged finance — GSO is a prominent provider of senior secured loans targeting middle-market firms, allocating capital through Collateralized loan obligation (CLO) vehicles, investment funds, and managed accounts.
• Special Situations hedge fund — These funds engage in long/short credit strategies, event-driven investing, and distressed securities opportunities by investing across secured loans, high yield bonds, second lien loans, mezzanine debt instruments, equity securities, and credit derivatives.
• Mezzanine debt — Through its Capital Opportunities Funds, GSO supplies mezzanine financing for leveraged buyouts, mergers and acquisitions, leveraged recapitalizations, and growth initiatives.
• Rescue Financing — The Capital Solutions Funds deliver private equity capital aimed at companies seeking liquidity or undergoing capital structure restructurings.