Merrill buys big stake in GSO hedge fund

Merrill Lynch & Co. Inc. is purchasing a 20% minority stake in a hedge fund with $8 billion in assets under management.
MAY 21, 2007
Merrill Lynch & Co. Inc. is purchasing a 20% minority stake in a hedge fund with $8 billion in assets under management. GSO Capital Partners LP is a registered investment-management firm. The terms of the deal were not disclosed, but a Wall Street Journal report said that Merrill will own a stake slightly less than 20%, paying an amount less than what the deal would have generated in the public market. As part of the transaction, Merrill will invest capital in several of GSO's strategies. GSO is a New York-based hedge fund which helps finance deals for private equity firms who buy struggling companies and then sell them off. "This investment in GSO is a continuation of our strategy to invest in best-in-class alternative investment managers worldwide," said Rohit D'Souza, head of Global Alternative Investments and global head of Equities at Merrill Lynch, according to a statement. Merrill Lynch joins other investment banks, including Morgan Stanley and Lehman Brothers Holdings Inc., which have made investments in hedge funds in recent months to increase income. Merrill Lynch manages $1.6 trillion in assets.

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