Wednesday, 29 March 2017
Last updated 54 min ago
Mar 18 2017 | 12:12am ET
Global alternative investment manager Blackstone Group is shuttering its $3 billion GSO Special Situations Fund and has offered investors the option to shift assets to other distressed debt vehicles that keeps their capital committed.
High volatility among distressed assets, particularly less liquid ones such as high-yield credit, can sometimes conflict with typical hedge fund structures that allow for quarterly redemptions, according to a Bloomberg article. Accordingly, the decision will see the assets from the fund still managed from the company’s special situation team but housed in structures that have longer durations with more favorable drawdown terms.
Investors in the special situations fund have generally backed the idea of keeping their capital within the larger GSO Capital Partners unit, Bloomberg added citing unidentified individuals familiar with the matter.
“These funds better complement our competitive strengths and style of investing and will allow us to generate better risk-adjusted returns for our investors,” Blackstone spokeswoman Paula Chirhart said to Bloomberg. The special situations fund has generated an net annualized return of around 6.5% since inception, she continued, compared to 17% and 13% GSO’s 2007 and 2013 mezzanine credit pools, respectively. Neither offers a redemption option.
GSO Capital Partners is one of the largest alternative managers in the world focused on the leveraged-finance, or non-investment grade related, marketplace. Bought by Blackstone in 2008, it invests in a wide array of strategies, including mezzanine debt, distressed investing, leveraged loans and other special-situation strategies and managed $93.3 billion in AUM as of December 31.