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The Wall Street firm brings together four separate units that invest in private companies, real estate and other hard-to-access contracts, creating a new unit and planning a fundraising campaign, according to knowledgeable people. topic. Goldman is trying to develop the kind of stable, income-generating business that investors value.
The exact composition of the division will be formed over the next few months, but it is expected to have assets of approximately $ 140 billion, making it almost as large as possible.
KKR
& Co. and about a third the size of Blackstone.
This decision is the clearest sign that David Solomon, who took office as general manager last fall, intends to mark the cabinet. Goldman was a private partnership for most of its history, but it is starting to look more like a modern company run by Mr. Solomon and his team of business bankers that he has promoted to executive positions.
Leaders hope that the recent changes under Mr. Solomon – including multi-year budgets and planning efforts, increased shareholder disclosure and tough financial targets – will allow a stock price to remain neutral. Goldman shares are trading much like they did four years ago, during which
JPMorgan Chase
& Co. gained 60%.
Goldman's historical strengths in the areas of investment banking and trading are not developing. Private investment, however, explodes, as investors move away from equities and ordinary bonds to look for higher returns in buyouts, real estate, infrastructure projects and tailor-made loans .
Goldman has been in the private capital business since the 1980s. In his last big effort in the 2000s, he invested billions of dollars in megabuyouts. This time, he seeks to raise funds from outside investors and fees for his management, thus generating the type of stable and low risk income that shareholders prefer.
"We are developing a comprehensive development plan" for private investment, said Goldman President John Waldron at an industry conference held in May. "It will be a multi-year effort to turn this business into more fee income and a more balanced business mix."
The company's ambitions could prove challenging for its relationships with large private equity firms hiring Goldman to buy securities and borrow money. Mr. Solomon has focused on customer service, but is now developing a business in direct competition with key customers.
The core of the new division, according to people familiar with the matter, will be Goldman's existing information bank branch, which holds about $ 100 billion in private equity investments. Goldman's Special Situations Group, an opportunistic portfolio of approximately $ 30 billion, and the bank's strategic investment group, which makes smaller bets on startups in the financial technology sector .
Both groups currently sit in Goldman's trading division and invest their own money. In the future, they will seek to raise external funds, said people informed about the plans.
The new division will also include real estate and private equity groups currently residing in Goldman's asset management division, where they invest their clients' money.
Goldman plans to raise new funds, particularly in real estate, where its offering is narrower than that of Blackstone and other competitors. The company could enter the circuit of fundraising this year for a real estate investment fund, the first since the financial crisis, as well as a successor of the business buyout fund that it raised in 2017 said specialists.
Goldman was creating a new growth equity fund in its asset management business, but put aside the effort in anticipation of this reorganization. This team is not part of the reshuffle, nor is a portfolio of about $ 220 billion of holdings in private equity managers and outside hedge funds, officials said.
Write to Liz Hoffman at [email protected]
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