Goldman Sachs to Open Up In-House Moneymaker to Outside Investors

By WSJ City

A Goldman Sachs profit machine that has invested the bank's own money in Asian property, African startups and troubled US retailers, among other ventures, is opening up to outside investors.

KEY FACTS

--- Goldman plans to raise outside money for its special-situations group, said people familiar with the matter.

--- Also under discussion is a broader reorganisation of the firm's various private investing activities...

--- ...into a new unit that would seek to raise new funds across a variety of strategies, the people said.

--- The group has grown from about $20bn on the eve of the crisis to about $30bn today, people familiar said.

--- It pioneered go-anywhere investing and remains one of the most profitable businesses at Goldman.

--- It will likely be combined with Goldman's merchant-banking group.

"Based on our track record, there is an opportunity to raise additional third-party funds across equity, credit and real estate. We have a world-class alternative investing franchise, which has generated strong returns over three decades [and] presents us with extraordinary opportunities to partner with clients to invest their capital alongside our own."

Goldman Chief Executive David Solomon, speaking to analysts earlier this year

Why This Matters

The discussions show how much has changed on Wall Street since the financial crisis. In Goldman's last big push into private equity, in the 2000s, it put billions of dollars of its own money into megabuyouts. Now it seeks raise money from outside investors like pension funds and clip steady fees for managing it. Shareholders today value steady, low-risk businesses like money management, setting off an asset-gathering race across Wall Street. The reorganisation also shows Solomon busting up silos in an effort to modernise and streamline the firm. Under a "One Goldman" banner, he has launched a firmwide effort to better cover top clients.

A fuller story is available on WSJ.com

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(END) Dow Jones Newswires

March 13, 2019 03:09 ET (07:09 GMT)

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