GSO Capital Launches Fund Geared Toward Buyouts

Firm: GSO Capital Partners

Fund: GSO Capital Opportunities Fund LP

Target: $750 million

Amount Raised: Newly launched

Placement Agent: Park Hill Group

A new fund being launched by GSO Capital Partners will allow the debt-specializing hedge fund to expand its investments in the buyout business. Park Hill is serving as placement agent.

GSO Capital Opportunities Fund LP, with a $750 million target, will allow the hedge fund to take fuller advantage of the kinds of illiquid investments that are normally more difficult for hedge funds. “They are effectively raising a fund that can deal with lock-up situations better,” a source familiar with the firm’s fundraising told Buyouts.

GSO Capital Partners was formed in 2004 by Bennett Goodman, the former high-yield debt chief at Credit Suisse, and colleagues Albert Smith and Douglas Ostrover. The trio launched their investment firm with a $1.5 billion fund that closed in July 2005.

Since then, the firm has put the money to work in a variety of investments. And despite the billing of the new fund as an avenue in the buyout arena, GSO Capital Partners isn’t new to control-type investing.

In June 2006, the firm spent $135 million to buy the thermal processing assets of Gibraltar Industries Inc. A month later, GSO Capital Partners bought ArrMaz Custom Chemicals from Wind Point Partners for an undisclosed sum. Later in July 2006, the firm snapped up a $60.5 million stake in a Michigan power plant. GSO Capital Partners was also part of the consortium led by Ripplewood Holdings that bought out Readers’ Digest.

One of GSO Capital Partners’s most recent deals took place in March, when it sold Flex, a German tool maker that was once a division of Black & Decker, to AXA Private Equity, the buyout arm of French insurance company AXA.

A representative for GSO Capital Partners did not respond to a request for comment.—J.H.