Bloomberg – Blackstone Group LP, the world’s largest leveraged-buyout firm, agreed to buy hedge-fund manager GSO Capital Partners LP for $930 million in cash and stock to increase credit investments as LBOs dry up.
GSO, founded by former Credit Suisse Group executive Bennett Goodman, oversees $10 billion in leveraged loans and distressed debt, New York-based Blackstone said today in a statement. Blackstone, whose shares have dropped 41 percent since their initial public offering in June, also announced a $500 million stock buyback.
Chief Executive Officer Stephen Schwarzman is increasing the company’s debt funds to $21 billion after the U.S. subprime- mortgage crisis forced investors to shun all but the safest assets. Private-equity firms are struggling as the price of loans and bonds required to fund deals increases, limiting fees and profits they make from buying and selling companies.
“Given the current dislocation in the credit markets, this is an ideal time to create a more powerful, diversified platform,’ Schwarzman said in the statement.
Buyout firms announced $202 billion of deals worldwide in the second half of 2007, two-thirds less than in the first six months, according to data compiled by Bloomberg. Blackstone manages $98.2 billion of assets, including a $21.7 billion LBO fund that is the world’s largest.
