We've seen a lot of the top investment banks take minority stakes in hedge funds. There are a lot of reasons for doing so. High net worth investors may want access. The fund may do more trading with the bank. The list goes on. When it comes to Merrill Lynch's deal to buy a 20 percent stake in hedge fund GSO Capital Partners, the dynamic seems to be much different. GSO specializes in mezzanine debt and capital structure arbitrage, according to the Financial Times. GSO supplies mezzanine debt to fill a gap in a deal's capital structure and that "puts it in the thick of a number of private equity bids. For Merrill Lynch, that offers a chance to ride in on GSO's coat tails." You would think, however, that Merrill has enough heft in the deal world. Maybe it sees something we don't. Maybe it is willing to keep the lines of information open.

For more:
- here's the Financial Times article