Kansas commits $50m to GSO

Kansas has committed $50m to GSO Capital Solutions Fund II, which will target rescue lending opportunities.

The Kansas Public Employees Retirement System committed up to $50 million to The Blackstone Group’s debt affiliate GSO Capital's second rescue fund, pending a satisfactory and final legal review of partnership documents, according to spokeswoman Laurie McKinnon. 

The second Capital Solutions fund is expected to hold a first close in November, according to a source with knowledge of the vehicle. It is unclear how much the fund is targeting, though Bloomberg has reported $4 billion. 

That same report indicates that Blackstone will take a reduced management fee – 1.25 percent – for limited partners in the first close. The fund’s regular management fee is 1.5 percent.  

Blackstone could not be reached for comment. 

The previous GSO Capital Solutions Fund, a $3.25 billion 2009 vintage, was generating a 1.1x multiple and 9.7 percent internal rate of return as of 31 December, according to California Public Employees Retirement System documents.

Capital Solutions funds target investments in rescue loans, distressed for control and opportunistic transactions like bankruptcy loans.

GSO also manages a series of mezzanine funds, the second of which it closed in March on $4 billion. 

Kansas’ $13.2 billion retirement system has a 6 percent asset allocation for alternatives. As of 30 June, 2011, the retirement system’s actual allocation to the family of assets was 2.8 percent, according to its annual report.