Blackstone’s GSO grows new direct lending platform with $2.6bn BDC raise

The firm may oversee more than $10bn of assets for the strategy a little more than a year after it formally parted ways with FS Investments.

GSO Capital Partners’ business development company has continued to collect capital commitments at a clip, according to Securities and Exchange Commission filings.

New York-based Blackstone / GSO Secured Lending Fund (SLF) has locked down $2.59 billion, according to the firm’s quarterly earnings report. In addition, the firm raised another $625 million for the separate GSO Direct Lending Fund, according to an SEC fundraising form.

For its BDC, Blackstone’s credit arm GSO had raised $2.46 billion as of 30 June. At that point, total US direct lending assets under management for the firm stood at $9.7 billion, according to its second-quarter earnings last month. The BDC secured another $121.5 million following quarter’s end.

Blackstone declined to comment on the geographic or institutional makeup of the firm’s investor base.

SLF had $1.08 billion in committed financing, with $651.24 million outstanding. The facilities include a $200 million subscription facility with Bank of America, a $300 million loan from JPMorgan Chase Bank and a $575 million facility with BNP Paribas and Wells Fargo Bank.

The BDC’s portfolio so far consists of a dozen different industries. Services (18.46 percent of investments), general manufacturing (16.69 percent) and transportation (11.37 percent) are the three largest sectors to which GSO has exposure, according to LPC BDC Collateral. The investments are almost exclusively (97.52 percent) first-lien senior secured loans.

The firm is charging a pre-public listing management fee of 0.75 percent, a figure that is bumped up to 1 percent after a listing. The incentive fee is 15 percent pre-listing and 17.5 percent after, both over a 6 percent hurdle rate.

Blackstone has raised much of the US direct lending capital it oversees since the beginning of last year – $4.4 billion in 2018. In December 2017, GSO and FS Investments announced they were ending their partnership under which the former served as sub-advisor to the latter’s BDCs, including the publicly-traded FS Investment Corporation. In its role as sub-advisor, GSO sourced the deals and made investment decisions.