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. <\/p>\n
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. <\/p>\n
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. <\/p>\n
“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. <\/p>\n
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.<\/p>\n