Goldman Sachs to raise $8bn for new buyout fund

The new fund will focus on deals where it gets majority control

Goldman Sachs plans to make about 25 investments in various sectors. Reuters

Goldman Sachs plans to raise $8 billion (Dh29.4) in only its second buyout fund since the 2008 financial crisis, bolstering its ability to secure deals worldwide, said two people with direct knowledge of the matter.

Undeterred by a coronavirus epidemic in China that has cast a shadow over the global economy, the Wall Street heavyweight will kick off the fundraising next week via its private equity arm West Street Capital Partners, said the people.

The fast-spreading virus is not seen as a hurdle to the fundraising as the bank is mainly targeting offshore, non-Chinese prospective investors, said one of the people.

It is aiming for a first close by the end of March - an important milestone indicating the fund has crossed a minimum threshold and can begin making investments, said the other person.

The new fund, substantially smaller than Goldman's biggest fund of $20bn in 2007, underscored its commitment to the private equity business.

Many banks, including Citigroup and JPMorgan Chase, have spun out or divested their private equity arms in recent years following the adoption of the Volcker Rule, which limited banks from investing their own balance sheets in funds.

Private equity firms have also been raising record amounts of capital globally, with Blackstone Group, the world largest alternative asset manager, last year raising a record $26bn for its latest buyout fund.

Goldman's new fund will focus on deals where it gets majority control, with the goal of deploying 60 per cent of the capital in America, said the first person. It also plans to make about 25 investments in various sectors, with the deal size ranging between $150 million and $600m.

Like its last fund - West Street Capital Partners VII that raised about $7bn in 2017 - the new fund will seek capital from both institutional investors and the bank's own employees, said the person.

Goldman declined to comment. The sources declined to be identified as they were not authorised to speak to the media.

Goldman's private equity arm, established in 1986, has been managed by its merchant banking division. It has raised about $47bn since inception across eight funds, according to industry data provider Preqin.