GSO Soars Past Fund I Target

Firm: GSO Capital Partners

Fund: GSO Capital Opportunities Fund LP

Target: $750 million

Amount Raised: $2 billion

Placement Agent: Park Hill

GSO Capital Partners, the structured credit fund owned by The Blackstone Group, is set to close its first control-oriented fund with just under $2 billion in commitments, blasting past its $750 million target, a source familiar with the effort told Buyouts.

The fund, GSO Capital Opportunities Fund LP, will allow the firm, which specializes in debt, to expand its investments in the buyout business to include more control investments. The fund will also seek to buy distressed debt in anticipation that more companies will default as the economy weakens, according to Bloomberg. Park Hill, a placement agent also owned by Blackstone Group, is helping GSO Capital raise the fund.

Although the fund is seen as taking the firm in a new direction, GSO Capital has made control investments before, including the $135 million acquisition of the thermal processing assets of Gibraltar Industries Inc. in June 2006. Soon after that deal, it bought ArrMaz Custom Chemicals from Wind Point Partners. Earlier this year, GSO Capital abandoned a $1.1 billion take-private of Reddy Ice Holdings, joining the ranks of firms to cancel deals made during the height of the buyout boom.

Bennett Goodman, the former high-yield debt chief at Credit Suisse and before that a structured credit whiz at DLJ, along with colleagues Albert Smith and Douglas Ostrover, formed GSO Capital in 2004 and closed a $1.5 billion fund the following year. In March, Blackstone Group acquired the firm for $930 million.

As of March 31, GSO Capital had about $22.7 billion in assets under management across its distressed debt funds, hedge funds and mezzanine funds, according to previously published reports. The firm has also been stepping in for banks stung by the credit crunch to finance deals.

GSO Capital did not return a call requesting comment.