As Blackstone’s Bennett Goodman Retires, Schwarzman Signals Direct Lending Expansion

Blackstone CEO Steve Schwarzman plans to increase the firm’s direct lending business to its “full potential” after an already large expansion in credit assets led by Goodman.

Mark Abramson/Bloomberg

Mark Abramson/Bloomberg

Blackstone Group’s Bennett Goodman, who co-founded the firm’s credit unit GSO Capital Partners, is retiring at the end of the year after more than a decade with the alternative asset manager.

Goodman, 62, will become a senior adviser to the firm while remaining chairman of GSO’s business development company, which lends to businesses in the middle market, according to a Blackstone statement Thursday. Dwight Scott, named president of GSO in 2017, will continue to oversee the credit business after Goodman retires.

Blackstone’s debt unit has expanded significantly since the private equity firm bought GSO in 2008. Goodman, who led the sale to Blackstone, co-founded GSO in 2005, before the boom in private credit markets that has benefited Blackstone.

“I am grateful to Bennett for the tremendous contributions he has made to the firm as an integral member of our management team over the past twelve years,” Stephen Schwarzman, Blackstone’s co-founder and chief executive officer, said in the statement. “I’m looking forward to continuing to work with Bennett as we scale our direct lending business to its full potential.”

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Blackstone, the world’s largest private equity firm, oversees $545 billion in total assets across its investment strategies. The firm’s credit unit reached $139 billion of assets at the end of June, up from $24 billion at the end of 2009, regulatory filings show.

GSO manages collateralized loan obligations, direct lending funds, and distressed debt strategies, providing financing to companies that are typically below investment grade. As a senior adviser to Blackstone, Goodman will weigh in on all aspects of the firm’s direct lending business, including attracting new capital, deal origination, and regulatory matters, according to the statement.

Direct lending funds targeting mid-market businesses have boomed since the 2008 financial crisis, as banks pulled away from making risky loans to smaller companies. The pullback followed the 2010 Dodd Frank Wall Street Reform and Consumer Protection Act, which was designed to prevent a repeat of the crisis.

The regulation has helped fuel the shadow banking market, where private equity firms seek buyout financing for their mid-market deals.

“We’ve built an exceptional credit franchise and I look forward to remaining involved with Blackstone as it grows its direct lending platform,” Goodman said in the statement. “Having successfully transitioned the business to Dwight and a strong leadership team over the past several years, this is the right time for me to step back from the day-to-day management of the organization.”

In his retirement, Goodman may be busy investing away from his role senior adviser to Blackstone. He plans to create a family office, according to the firm’s statement.