Blackstone Bags $5B For Rescue Fund

Firm: The Blackstone Group LP

Fund: GSO Capital Solutions Fund II

Amount Raised: $5 billion

Five years after the collapse of Lehman Brothers, banks are facing increasingly stringent financial regulations that have left an opening for investment firms such as Blackstone in areas that banks are retreating from. Bennett Goodman, who helps manage Blackstone’s credit investment arm called GSO, last year called the Volcker Rule, which limits banks from taking on risky bets using their balance sheets, an “Employment Act for GSO.”

Blackstone said in a statement on Sept. 3 that the new fund, GSO Capital Solutions Fund II, was oversubscribed by investors and proved more popular than its first such fund, which raised more than $3.25 billion in 2010. Unlike banks that often rely on their balance sheets for proprietary trading and investing, Blackstone and other alternative asset managers have at their disposal long-dated capital they have raised from pension funds, insurance firms and other institutional investors.

GSO has deployed to date more than $4 billion in lending to distressed companies facing liquidity issues, with a focus on North America and Western Europe, Blackstone said.

Credit assets accounted for $62.2 billion of Blackstone’s total assets under management of $229.6 billion as of the end of June. Real estate accounted for $63.9 billion, private equity for $53.3 billion and hedge fund assets for $50.1 billion.

Greg Roumeliotis is a correspondent for Reuters in New York.