Goldman Sachs seeks up to $17bn for private credit
Goldman Sachs Merchant Banking Division (MBD) is reported to be seeking up to $17bn (£13.6bn) for private credit investments for senior debt financings and special situations transactions.
According to Reuters, documents from Connecticut’s state pension plan reveal that MBD is targeting $7bn for Broad Street Loan Partners IV and between $5bn and $10bn for West Street Strategic Solutions I.
The former will participate in senior loan deals in the upper middle market and smaller deals in the broadly syndicated loan market. While the latter is a special situations fund that will invest in transactions that include growth capital and balance sheet restructurings.
The Connecticut pension fund, which has a five per cent allocation to private credit, is considering a $350m commitment to Goldman Sachs’ investment funds to manage across different credit strategies, including these two funds.
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Reuters reported that US Securities and Exchange Commission filings reveal that Loan Partners IV has raised around $1bn from investors, excluding leverage, while West Street Strategic Solutions I has raised around $6.4bn.
Loan Partners IV will operate with fund-level leverage, which would allow Goldman Sachs to borrow money to invest alongside limited partner commitments.
The two funds are expected to mainly invest in North American companies. After paying investors’ fees, target returns for Loan Partners IV will be 10 per cent and West Street Strategic Solutions I is targeting between 12 and 14 per cent.
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Reuters cited data from research firm Preqin, which revealed Goldman Sachs’ bid for private credit comes at a competitive time, with 486 funds in the market this month, which is believed to be the most in almost six years. Almost 300 are raising capital for direct lending.
Preqin’s figures also show that fund managers investing in direct lending and special situations are targeting more than $124bn of the $239bn being raised across private credit funds globally since July 2020.
“Credit markets have been volatile during the beginning of 2020, and the coronavirus pandemic has the potential to undermine corporate fundamentals for some time,” Wade O’Brien, a managing director at investment and advisory firm Cambridge Associates, told Reuters.
“Attractive opportunities remain in credit, but investors may need a different playbook than the one developed during the last financial crisis.”
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