Blackstone closes €400m CLO

In the wake of a liquidity crisis that has affected megadeals, The Blackstone Group continues to expand its activities in other areas with the closing of its fourth European collateralised loan obligation fund.

The Blackstone Group has closed its fourth European collateralised loan obligation, St. James’s Park CLO BV, on €400 million ($585 million). The fund will be managed by Blackstone Debt Advisors, bringing the group’s total assets under management to €2 billion.

“The St. James’s Park CLO was priced and distributed during difficult market conditions,” managing director Debra Anderson said in a statement. “It is a testament to Blackstone’s commitment to the European leveraged loan market and to Blackstone’s ability to execute transactions at market-leading levels.”

Blackstone expanded its US leveraged loan business into Europe in 2005 with the establishment of its London office. In addition to the four European vehicles managed by Blackstone Debt Advisors, the Blackstone Corporate Debt Group manages seven US CLOs worth a total of $4.7 billion and two private investment partnerships worth a total of $2.1 billion.

Blackstone’s president, Tony James, said during a conference call after the release of the firm’s third quarter earnings that Blackstone will turn its attention away from mega buyouts. Instead, he said, it planned to divert funds toward other regions, mainly China and India, and other types of investment, such as minority investments through private investment in public equities, or PIPEs.

James also said Blackstone would continue to make debt plays, a strategy which he emphasised in the firm’s second quarter earnings conference call as well.

“The mortgage black hole is … deeper, darker and scarier than what the banks thought,” James said.