GSO Capital Partners, a $10bn (€6.4bn) New York-based hedge fund owned by alternatives firm The Blackstone Group, has begun to raise its first mezzanine fund with a target of between $1.5bn and $2bn, according to a source with knowledge of the situation.

The GSO Capital Partners Opportunities fund represents the third mezzanine fund for owner Blackstone, the US private equity firm which bought GSO for $930m in January.