GSO Capital Partners, an affiliate of The Blackstone Group, has collected $1.5 billion for its second mezzanine debt fund, the firm said Thursday during an earnings call.
Launched in 2010, GSO Capital Opportunities II is targeting between $3 billion and $3.75 billion, according to documents from the New Jersey Division of Investment. The fund will focus on exploiting the lack of available credit for upper mid-market companies in both the US and Europe. New Jersey committed $150 million to the fund last month.
GSO Capital Opportunities II will provide capital aimed at buyouts, recapitalisations, acquisitions and other types of transactions. The fund is expected to make between 20 and 30 investments in blocks of $75 million to $200 million, with up to 85 percent being made in debt and the remainder used for equity stakes. Limited partners in the fund include the Oregon Investment Council, which committed $100 million late last year.
GSO will charge a 1.5 percent management fee on invested capital for the first five years of the fund’s term. After five years, the fee will drop to 1.25 percent per annum of net invested capital. Management fees will be reduced by 100 percent of any origination or transaction fees.
As of 31 March, GSO Capital Opportunities I was valued at 1.4x of original cost on a levered basis and had generated a net internal rate of return of 16 percent, according to pension fund documents.
In July 2010, GSO closed its $3.2 billion Capital Solutions Fund, which focuses on distressed investments and bankruptcy transactions.
GSO Capital was acquired by The Blackstone Group in 2007 for almost $1 billion to expand the firm’s credit capabilities.