Merrill Lynch will acquire a minority stake in GSO Capital Partners, an $8 billion hedge fund run by Bennett Goodman. It is Merrill’s second investment in a hedge fund in the past eight months.

The fund specializes in distressed investments, such as making loans to companies that have low credit ratings.

“This investment in GSO is a continuation of our strategy to invest in best-in-class alternative investment managers worldwide,” said Rohit D’Souza, head of Merrill’s trading division.

Merrill now joins other investment banking firms, including Morgan Stanley and Lehman Brothers, in taking stakes in hedge funds and private equity firms.

“The value of these hedge funds has been growing very fast, and it’s a good idea to make an equity investment in the early stages,” John Godden, head of IGS Group, told Bloomberg.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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