GSO posts 20% AUM growth since March 2016

The credit arm deployed $3.6bn in Q1, with Europe and energy focus.

GSO remains the Blackstone’s “fastest growing segment” at the firm, Michael Chae, chief financial officer at Blackstone, said in an earnings call Thursday.

The credit platform’s total assets under management reached $93.1 billion by the end of the first quarter, the earnings results show. That number is essentially unchanged from GSO’s total assets at the end of the previous quarter, at $93.28 billion, but marks a nearly 20 percent increase from AUM the same quarter last year, at $78.66 billion.

By comparison, the firm’s private equity platform grew by 4 percent year-on year at the end of Q1, while its hedge fund platform grew by 7 percent over the same time, and real estate platform grew by 1 percent.

The credit platform deployed or committed $3.6 billion in capital over the quarter, with a focus on investments in Europe and the energy sector, earnings results show.

Chae said on the call that GSO portfolio’s energy exposure hovers around 19-20 percent, double the energy exposure in the firm’s private equity portfolio.

Tony James, chief operating officer at Blackstone, said a “capital squeeze” in today’s energy industry has made more companies willing to agree to higher return financings. He added that this squeeze has impacted the firm’s energy investments more than the new Trump administration.

Gross return over the quarter for the performing credit portfolio – which includes mezzanine lending funds, business development companies and performing credit funds – was 3.5 percent, while the distressed credit portfolio gross return showed 2.8 percent. Over the 12-month period those numbers for performing credit and distressed debt were, respectively, 26.2 percent and 24.9 percent.

Total investment income for quarter hit $10.5 million, compared to $10.17 million the fourth quarter 2016 and $20.54 million the same quarter last year. GSO’s realisations topped $3.3 billion over the quarter, including $1.7 billion across drawdown funds.

Stephen Schwarzman, chairman and chief executive officer, added on the call that he was still optimistic about the Trump administration’s tax reform, infrastructure and regulatory overhauls, even though they may not happen this year.

“The thrust of where things are going remains on track,” he said. “I think things will just be slower.”