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Goldman Sachs has raised more than $15 billion to buy investors’ stakes in private equity funds and invest in deals where buyout groups sell portfolio companies from one fund to another, continuing to support rapid growth The latest signs of the “secondary market” strategy.
Harold Hope, Goldman’s global head of secondary markets, told the Financial Times that Goldman Sachs Asset Management raised more than $14 billion for its largest-ever flagship secondary markets fund, as it focuses on fundamentals The first fund in secondary market transactions in the facilities sector raised more than $1 billion.
“This is a very big improvement, and it’s done in a difficult market,” Hope added. The firm’s last secondary fund raised just over $10 billion in 2020.
Private equity funding has slowed over the past 12 months as many investors found themselves over-allocated to so-called alternatives, which also include private credit, real estate and infrastructure, or struggled to generate liquidity as global deals slowed.
But some of the top secondary funds, which offer investors such as pension funds and sovereign wealth funds the opportunity to cash out their investments early, are still able to raise significant capital for these deals.
Goldman’s peers, including Wall Street rival Blackstone Group and French private equity group Ardian, have each raised more than $20 billion for their secondary funds this year.
“The opportunity is greater than ever,” Hope said. He added that some investors need access to liquidity in an asset class that typically locks up funds for more than a decade, providing attractive investment opportunities.
“We prefer to buy traditional LP (limited partner) portfolios, and we’re able to price them at an appropriate discount,” Hope said.
Goldman Sachs is one of the oldest players in the secondary market, which has grown significantly over the past decade as the private markets industry expanded to nearly $13 trillion today.
Goldman Sachs’ decision to raise its first fund specifically targeting investor equity in infrastructure comes as the firm sees increased deal volume in the space.
Many private equity groups that have traditionally focused on leveraged buyouts of companies have been able to raise increasing amounts of capital to buy infrastructure assets. Other specialist players have also emerged, targeting assets that will benefit from macroeconomic trends such as the energy transition.
“This is a natural evolution for us. We hope to be able to prove to investors that we can solve the liquidity needs of your entire private market portfolio.” Hope said.
The bumper funding boost boosts Goldman’s asset management unit, which has been hit this year by a number of high-profile departures, including chief investment officer Julian Salisbury. The asset management segment also manages private equity and infrastructure funds and has more than $2 trillion in regulated assets globally.
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