Early this year, The Blackstone Group LP (NYSE: BX) agreed to purchase GSO Capital Partners, a hedge fund that focuses on leveraged finance, for a cool $930 million. Stephen A. Schwarzman, Blackstone's CEO, said that the deal would create "one of the largest credit platforms in the alternative asset management business." Yes, it's an attractive space, especially in light of the credit crunch.

Moreover, Blackstone isn't wasting time in leveraging the GSO platform. According to a report in Bloomberg, it looks like it is raising a new fund that is focused on distressed debt.

True, there hasn't been a surge in defaults and bankruptcies, but such things usually have lag times, and if the economy remains sluggish, there are likely to be many distressed opportunities.

Although, the distressed investment market is getting crowded. Some of the recent players include the Carlyle Group and Oaktree Capital Management. In fact, Monarch Alternative Capital and Cerberus Capital Management LP are in the market raising their own distressed funds.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Blackstone's GSO wants more fun with distressed investing originally appeared on BloggingStocks on Tue, 17 Jun 2008 12:12:00 EST. Please see our terms for use of feeds.