Goldman Sachs raised $15bn in order to purchase investors’ stakes and to invest in transactions where buyout groups are selling portfolio companies to other funds. This is the latest indication of Goldman Sachs’ continued support of the “secondary” strategy, which has been growing rapidly.
Harold Hope, Goldman’s global head for secondaries, said that the asset management unit raised over $14bn in its largest-ever flagship fund for secondary deals and more than $1bn in its debut fund focused in the infrastructure sector.
Hope said, “This is an important step and was achieved in a challenging market.” The firm’s secondaries fund raised just under $10bn by 2020.
Private Equity Fundraising has slowed in the last 12 months as many investors have become entrapped by so-called alternative investments, which include real estate, infrastructure and private credit. They are also struggling to generate cash due to a global slowdown.
Some of the best secondary funds that offer pension funds and sovereign funds the opportunity to cash out their investments early have been able raise substantial sums for these deals.
Goldman’s competitors, including Wall Street rival Blackstone as well as French private equity firm Ardian, have raised over $20bn for their secondary funds this year.
Hope stated that the opportunity set was as large as ever. Hope said that some investors’ need to have liquidity in a class of assets that can lock money away for over ten years has created attractive investment opportunities.
Hope explained that they were able to offer a discount on the traditional LP portfolios.
Goldman has been one of the most established players in the secondary market, which has seen a significant growth over the last decade. This is due to the massive expansion of the industry on the private markets. It now amounts to nearly $13tn.
Goldman has seen a surge in deals in this area, which led to the decision to launch its first infrastructure fund.
Private equity groups that have traditionally concentrated on leveraged acquisitions of companies are now able to raise larger funds for infrastructure assets. There are also other specialist players who target assets that will be benefited by macroeconomic trends like the energy transformation.
“For us, this was a natural progression. Hope stated that they wanted to show investors how we could solve their liquidity problems across the private markets portfolio.
Goldman’s Asset Management unit has seen a number high-profile departures in the past year, including Chief Investment Officer Julian Salisbury. Asset management, which manages infrastructure and private equity funds, oversees more than $2tn of assets globally.