Blackstone Group LP raised more than $4 billion in 2009 to buy European property assets anticipating that cash-strapped banks would be forced to sell as the region’s debt crisis worsened. Almost all of it sat idle for two years.
Bennett Goodman, who got his start almost 30 years ago helping Michael Milken use junk bonds to fund companies others thought too risky, says he is now the biggest investor in high-yield corporate loans in Europe as local banks back away.
GSO Capital Partners LP, the credit unit of Blackstone Group LP, has doubled rescue lending since August as Europe’s debt crisis pushes more companies to the brink of default, according to co-founder Bennett Goodman.
Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns Cos. had sold itself for just $10 a share to JPMorgan Chase & Co.
Private-equity firms from Blackstone Group LP to Carlyle Group LP that fueled an expansion in the market for junk bonds and loans during the leveraged buyout boom are now loading up on that debt as takeovers dwindle.
After making their founders billionaires, buyout specialists such as Carlyle Group and KKR & Co. are turning into asset managers that run hedge funds and strip malls as fresh capital and takeover targets become scarce.