PRIM places $225m with GSO mezz

The Massachusetts pension fund is investing in GSO’s latest mezzanine fund and a companion co-investment vehicle.  

The Massachusetts Pension Reserves Investment Management (PRIM) board recently voted to invest $225 million in GSO Capital Partners’ latest mezzanine vehicle. The $60 billion state pension is committing $150 million to the GSO Capital Opportunities Fund (COF) III main vehicle and $75 million to the GSO COF III co-investment fund.

GSO’s third mezzanine vehicle has been in the market since the beginning of the year seeking a total of $6 billion, with a $6.5 billion hard-cap. The mezzanine funds, and several other large institutional funds at GSO, often offer LPs co-investment opportunities.

The fund has been holding interim closes and continuously raising money. It is expected to hold a final close near its hard-cap towards the end of the summer, sources tell PDI. The mezz funds sometimes co-invest in Europe with GSO’s dedicated Europe funds. The deals in Europe tend be more of a unitranche flavor.

Lou Salvatore, a Blackstone senior managing director, leads GSO’s mezzanine strategies. He has been with GSO since its founding in 2005. Before that, he was a principal of DLJ Investment Partners, the mezzanine fund of CSFB's alternative capital division, which the GSO team spun out from in 2005.

Other large mezz funds in the market right now include HPS Investment Partners’ third mezzanine fund, which is targeting $5.5 billion and recently held a $4.1 billion first close. Crescent Capital Group is also raising its $3 billion seventh mezzanine fund, which is said to be at or near its second close. The firm has a $4 billion hard-cap and is expected to finish up fundraising closer to that number later this year.

PRIM, where Michael Trotsky (pictured) is the chief investment officer, was also an investor in the predecessor COF II at $150 million. That fund closed on $4 billion in March 2012. The retirement fund’s other recent investments in private debt have included funds managed by Avenue Capital, Oaktree Capital Management, HIG Bayside and CarVal Investors, among others, according to PDI Research & Analytics.

Blackstone-owned GSO has $78.6 billion in assets under management across distressed funds, energy credit funds, mezzanine, European senior loan strategies, credit hedge funds and BDCs. The firm is headquartered in New York, with additional offices in London.