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Merrill Lynch takes minority stakes in hedge fund managers

Merrill Lynch has added to its minority stakes in hedge fund management firms by acquiring within the space of a few days non-controlling investments in GSO Capital Partners and Sterling Stamos Capital Management, firms with a combined USD12bn in assets under management.

Founded in 2002 by chairman and chief executive Peter Stamos, Sterling Stamos is a private investment firm that manages more than USD4bn in assets on behalf of high net worth individuals and institutional investors globally. It invests in public and private equity assets, fixed income and real estate as in pursuit of traditional and alternative investment strategies and has offices in New York, Menlo Park in California and Tokyo.

'Sterling Stamos is a leading investment firm with an outstanding management team,' says Rohit D'Souza, head of global alternative investments and global head of equities at Merrill Lynch. 'We will work with Sterling Stamos to grow their successful business by using Merrill Lynch's global resources.'

Says Stamos: 'We believe this partnership uniquely positions us in the industry by bringing together Merrill Lynch's global infrastructure and resources with our experience in the alternative investment space.'

Before founding the firm that bears his name, Stamos was chief executive of SAI, a Perot Systems company, a management consultant with Booz Allen & Hamilton and McKinsey, and chief of staff and chief economist for US senator Bill Bradley. He also taught economics at Harvard University.

Merrill Lynch is also taking a minority stake in GSO Capital Partners, a New York-based investment firm with approximately USD8bn in assets under management and offices in New York, London, Houston and Los Angeles, and will invest capital in a number of GSO's strategies.

'GSO has a uniquely talented team of investment professionals who have extensive expertise in the leveraged finance marketplace,' says Merrill Lynch co-president Greg Fleming. 'We look forward to working together to grow their firm.'

Says GSO senior managing partner Bennett Goodman: 'Merrill Lynch has world-class franchises in products and geographies that are very relevant to our investment strategies. We look forward to collaborating with them on future projects.'

According to D'Souza, the investment is part of Merrill's ongoing strategy to invest in best-in-class alternative investment managers worldwide. Merrill Lynch is one of the world's leading wealth management, capital markets and advisory companies with offices in 37 countries and territories and total client assets of approximately USD1.6trn.

GSO, which was founded in July 2005 by Goodman, Tripp Smith and Doug Ostrover and has 115 employees, invests in a broad array of public and private securities through investment strategies that include leveraged loans, distressed investments, special situations, capital structure arbitrage, mezzanine securities and private equity, on behalf of insurance companies, banks, pension funds, endowments, foundations, family offices and fund of funds.

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