Blackstone’s GSO Raises $5 Billion Fund for Distressed Companies

GSO Capital Partners LP, the credit arm of Blackstone Group LP, raised a $5 billion fund to provide financing to distressed companies.

The GSO Capital Solutions Fund II LP will help companies in need of cash and facing such liquidity issues as pending debt maturities and covenant violations, according to a statement today distributed by Business Wire.

“A fund of this size uniquely positions GSO as one of few firms that can provide companies in the U.S. and Europe with large commitments to solve their balance sheet and liquidity challenges,” Tripp Smith, a co-founder of GSO, said in the statement.

Investors in the new fund include U.S. state and corporate pension funds, sovereign-wealth funds, insurance companies, endowments, foundations and family offices.

New York-based GSO has invested more than $4 billion of so-called rescue financing, with a focus on North America and Western Europe, according to the statement. The new fund is more than 50 percent larger than its first such pool, which was raised in 2010.

Bennett Goodman, Smith and Doug Ostrover co-founded GSO in 2005 to invest in junk-grade corporate debt. The unit, acquired by Blackstone in 2008, had about $62 billion of assets under management at the end of June.

High-yield, high-risk, or junk-grade, debt is rated less than Baa3 by Moody’s Investors Service and below BBB- at Standard & Poor’s.

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