Demystifying GSO Capital (Blackstone)

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Kimura - Certified Professional
Rank: Senior Baboon | banana points 231

Mod Note (Andy) - as the year comes to an end we're reposting the top discussions from 2015, this one ranks #33 and was originally posted 6/9/2015.

I've been searching info about these guys for a while now.
There are few threads on WSO with some insight, but still pretty limited; best source currently is their website.
I came across some good 2015 overview (focus on Europe) recently that I wanted to share here.

I can provide dates for specific numbers on request.
I'd like to use this thread as an invite for other monkeys with more valuable info, so please feel free to chime in.

Firstly, a breakdown of Blackstone's principal investing:

BX Principal Investment Business

- An industry leading 20+ year investment record
- Consistent investment management through cycles
- GSO Capital Partners operated as independent business unit within the Blackstone Group

Next, we got overview of the GSO Capital Partners:

GSO Business Overview

- Global footprint with over 250 Employees in New York, London, Dublin and Houston

Next on the list, some points on GSO's general strategy/considerations:

The GSO Approach

(1) Collaborative and Constructive Capital
- Avoid stakeholder disenfranchisement: Lenders, Management, Equity

(2) Flexibility of Capital
- Credit bias but able to invest across the capital structure in debt or equity
- Function of stakeholder objectives and the appropriate corporate finance

(3) Size and Scale
- Companies, sponsors and banks prefer to face a single counterparty

(4) Patient Capital
- Private Equity style fund structure ensures a longer term Balance Sheet fix and investment time horizon

(5) Comfortable with Cyclicality
- For example, Construction, Cement, Building Products, Steel
- Capital Structure can be designed to withstand short-term uncertainty

(6) GSO / Blackstone "Endorsement"
- Credibility with Boards of Directors, Lenders, shareholders, suppliers, customers

Unfortunately, I have only a breakdown of European investments:

GSO's European Investment Footprint

- GSO has invested EU9.6 Billion across 205 transactions throughout Europe

And lastly for the end...

List of European Originated Investments

- GSO can provide significant capital investments of EU100 - EU750m, and is focused on consensual financings or refinancings alongside incumbent stakeholders

Other relevant links/threads:
www.blackstone.com/businesses/aam/credit-(gso)
www.wallstreetoasis.com/forums/blackstone-gso-customized-credit-strategies-interview
www.wallstreetoasis.com/forums/credit-opportunities

Hope some of you monkeys find this useful,
Cheers

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Comments (45)

Jun 8, 2015

Pretty good overview. Only thing I'd think to add is that they now have dedicated vehicles (comingled and separate accounts) that focus solely on energy.

Jun 9, 2015

Thanks - the pdfs are interesting

Jun 9, 2015

Nice stuff, thanks. By the way, on a (sort-of) unrelated issue - what is your view on the spun off investment banking unit at Blackstone as of today?

Jun 9, 2015

Really great stuff. I would be very interested to see a similar breakdown for BAAM, if available.

If I'm not mistaken, M&A and restructuring are now officially part of PTJ?

    • 1
Jun 9, 2015

Yes, I forgot the name but that's it. Would be interested in hearing some thoughts about the people working there. Obviously, one would have preferred to be under the Blackstone brand but hell these things happen all the time

Jun 9, 2015

I guess the potential for conflict of interest was just too large; I personally would hate to switch from Blackstone to PTJ by simply staying at the firm...

Jun 9, 2015

I mean obviously the Blackstone name brand is much stronger, but Paul Taubman is an absolute BEAST. Co-head of MS IBD at a very young age, managed to be in the top 10 in league tables despite working entirely solo.

Jun 9, 2015

Blackstone's entire power team left to Guggenheim instead of PTJ and a few other groups have left as well, so I assume people dont want to stay on.

Jun 9, 2015

Interesting. Any idea why they don't want to team up with Taubman?

It seems like these megafund PE firms are trying to diversify into too many areas. Carlyle is the best example of this; those guys have bought up even emerging market macro funds as part of their diversification strategy.

Jun 10, 2015
dontbugme:

Blackstone's entire power team left to Guggenheim instead of PTJ and a few other groups have left as well, so I assume people dont want to stay on.

Or were they asked not to join? I have no idea, just saying.

Jun 10, 2015

No idea. Roomate works at Gugg so I get some inside info from him. Could very well be the case.

Jun 9, 2015

This is awesome, thanks for sharing

Jun 10, 2015

Thanks for sharing. Great insight

Jun 14, 2015

GSO just built a ~20% equity stake at Lamda Development (major Greek RE developer/investor founded by one of the richest families in Greece, Latsis), I think through a deal with TPG-Axon.

Colourful TV, colourless Life.

    • 1
Jun 14, 2015

Lol at mbagrad2015 talking about GSO brandname , you probably are not familiar at all with the place. I work alongside these folks at a peer fund , if this is on your resume you can go anywhere else. They are much larger than apollos energy credit desk. They are one of the big gorillas in energy finance for second lien , mezz and other forms of junior capital.

Jun 18, 2015

dutchduke / mbagrad ---> seems like there is some confusion between gso and pjt. you're talking about principal vs. advisory work (obv. 2 different roles). re: pjt, many smds and older folks are not on board w/ the transition. some staying at BX within a different capacity; others retiring / moving on to something else. personal opinion, i think restructuring and park hill go unaffected (still great groups; no material personnel impact). M&A will shoot up the league tables -- hungry bunch of existing directors will be taking up sr roles and i imagine have some juicy equity potential aligning interests. gonna be a good story for that crew come 2016 once COI is out of equation and taubman is opening doors for big league transactions

Jun 18, 2015

re: gso, this is pretty good as far as public info goes. they are an anchor investor when it comes to liquids, so def. one of the biggest among the big boys. BX does not commonly go hostile in the alt/hf oriented space (think good cop to apollo's bad cop). the situations they get into are also a bit less hairy than what you might see from targeted distress funds (OAK / appalloosa / dk, etc). very smart bunch for sure - check linkedin for their bios. hope this is of value

Jun 19, 2015
iMamba:

re: gso, this is pretty good as far as public info goes. they are an anchor investor when it comes to liquids, so def. one of the biggest among the big boys. BX does not commonly go hostile in the alt/hf oriented space (think good cop to apollo's bad cop). the situations they get into are also a bit less hairy than what you might see from targeted distress funds (OAK / appalloosa / dk, etc). very smart bunch for sure - check linkedin for their bios. hope this is of value

I'd disagree with the less hairy, and particularly with your comps. Granted they don't play situations like Iceland claims in the same size as others (DK being the biggest) but i know they don't mind risk, e.g. Russian PIK debt. OAK and DK are very different.

Jun 22, 2015

thx for the response. to clarify, wasn't comping vs. the others -- meant them as contrasting groups.

Jun 22, 2015
Boris23:

Hi guys,

I've been searching through the forum and I've found almost anything about GSO Capital, Blackstone's credit-oriented alternative asset manager.
Does anyone of you know something that isn't the general comment about being debt specialists... Do they take interns? How competitive it is in comparison with other groups within BX? What does an analyst/ summer analyst daily work entails? Finally, how is the London office's group?

Thanks!

I'm glad that you at least know how to copy + paste. Cheers Mate.

The world has changed. And we must change with it.

I'm making it up as I go along.

Jun 22, 2015

Hey Cornelius, do you ever have anything worthwhile to say ?, or do they pay you to make snarky comments in every thread ?

Jun 22, 2015
<span class=keyword_link><a href=//www.wallstreetoasis.com/company/sac-capital target=_blank rel=nofollow>SAC</a></span>:

Hey Cornelius, do you ever have anything worthwhile to say ?, or do they pay you to make snarky comments in every thread ?

every once in a while i have something worthwhile. heh..snarky. Thats just great.

The world has changed. And we must change with it.

I'm making it up as I go along.

Jun 22, 2015

I couldn't agree more with you SAC...know back to the point, come on guys you must have some info!

Jun 22, 2015

Bump

    • 1
Jun 22, 2015

Blackstone will be bankrupt in the near future, concrete info, just watch n learn

Jun 22, 2015
smoke a blunt:

Blackstone will be bankrupt in the near future, concrete info, just watch n learn

nonsense. you are just jealous

Jun 22, 2015

lol. this thread has disintegrated

Jun 22, 2015

careful, smoke a blunt -- the legendary b2 is in hiding after making a similar comment...

Jun 22, 2015

Bump

Jun 22, 2015

GSO does not hire interns, there is no reason for them to.
The fund manages over $20 bil and is composed of the former GSO as well as Blackstone's former distressed funds all rolled into one.
It is a good group at BX, and analysts from M&A or Restructuring sometimes transfer to GSO after 2 analyst years.

Jun 22, 2015

Does anyone here have any experience @ GSO?

I'm currently a BB IBD analyst, but I've got a decent connection with one of the GSO co-founders (decent enough to land an interview at least) next year.. but I just haven't heard any first-hand opinions of the group/work.

Jun 22, 2015

Bump

Jun 22, 2015

The last bump.

Jun 22, 2015

i doubt it though, they are a pretty lean operation and probably don't want to be bothered with the hassle.

I know they have been known to hire credit analysts directly out of college (often with great connections or great internships).

what johndoe2010 was talking about is more of their private investments side. like with most credit-oriented funds, they also have a public side which like most traditional HFs is probably much less structured in recruiting.

also, they recently closed their LA office.

Jun 22, 2015

[x]

Jun 22, 2015

Friend of mine transferred from JPM his second year to GSO Cap - what do you want to know about it

Jun 22, 2015

They do NOT hire interns.

GSO Capital Partners an affiliate of The Blackstone Group

GSO Capital is one of the world's largest credit managers. The firm is focused on investing across the capital structure, including: (i) private equity; (ii) mezzanine securities; (iii) distressed lending; (iv) high yield bonds; and (v) leveraged loans. GSO seeks to provide innovative capital solutions across the entire capital structure, acting as a one-stop-shop for all its clients capital needs. In March of 2008 GSO was acquired by The Blackstone Group and Blackstone's debt investment businesses were added to GSO's operations. As of June 30, 2008 the combined group had approximately $25 billion of assets under management.

GSO offers analysts a chance to work on investments across the capital structure as an industry generalist. Analysts will develop both quantitative and qualitative skills through the investment process and will have the opportunity to gain exposure to a wide range of industries and investment types. As a result of the breadth of the experience, the analyst will develop a unique understanding of companies and capital structures.

Analysts at GSO are expected to participate in all aspects of the investment process from initiation to close. Analysts will be expected to work on numerous projects at a time in various private investment opportunities. The small size of the professional staff and the extent of the deal flow require lean staffing and significant responsibility sharing.

Analyst responsibilities will include financial analysis, computer modeling, research, competitive analysis, assistance in the execution of transactions, legal documentation and drafting of memoranda for internal and external use. Analysts will work on a wide range of transactions including acquisitions, divestitures, loan originations, restructurings, recapitalizations, joint ventures, leveraged buyouts and distressed financings.

Jun 22, 2015

That's some value-add copy/paste right there.

Jun 22, 2015

I don't work at GSO, but I've been on a few deals with the energy / oil & gas group (Dwight Scott's team) as part of an investor group.

Consistent with BX overall, they're a very intense group and they work a ton. The associates I've worked with were meh, smart but pretty generic to other megafunds (Carlyle, Apollo, etc.). I worked with two VP's that were great guys, and was glad they were on the transactions we did. The principal (maybe an MD now) I interacted with from GSO was same for both deals, won't name name's, but this person was one of the biggest dick's I've encountered in finance; very smart and transaction savvy but just made it hell (and their counsel) to get anything done for other investors, I was very glad I wasn't working for this individual.

One of the deals I've mentioned actually ended up getting poached by BX's private equity group and we all (GSO team included) didn't find out we lost the deal until the literal day of bid's due via Reuters/Bloomberg announcing we'd lost the asset. Never got any-type of of debrief on what happened but seems like GSO and PE at BX aren't always playing off the same sheet of music.

But, it's a huge fund with a big team so I wouldn't take any of my observations as fund-wide.

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Jun 22, 2015

bump

Jun 22, 2015
Jun 22, 2015
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