Bennett Goodman's hedge fund GSO Capital Partners has inked a deal with RBC Capital Marketsto buy its collateralized debt obligation business. The entire team, including Daniel Smith, the managing partner and head of debt investments, is moving over this week in what has been described as "an amicable transaction."
The business includes four CDOs and accounts totaling approximately $1.8 billion. The CDOs have exposure to broadly syndicated loans, but what differentiates the operation from rivals is the business' exposure to middle-market credits.
An RBC spokeswoman declined comment. Goodman was traveling and unavailable for comment and other GSO executives declined comment or did not return calls. Smith declined comment. The cost of the acquisition could not be determined.
This is the second major move for the CDO team. In 2001 Smith and buyout pro Ken Kencel left Credit Agricole Indosueztriggering a key-man battle for four CDOs between Royal Bank of Canada and the French bank. Despite being profitable, RBC has now sold most of the businesses it acquired, with one banker noting the division did not fit in with RBC's "gene pool."
Last October, RBC sold the principal finance unit to Ares Management. The team, including Michael Arougheti, transferred over to launch Ares Capital Corp.a business development corporation. As part of the transaction Ares purchased $150 million of private mezzanine and equity coinvestments.