Goldman Sachs boosts private credit focus with restructure
Make us a preferred source
Make us a preferred source on Google
The news: Goldman Sachs said it will combine three key businesses in its global banking and markets division into a new unit designed to better capture the growth in private credit, an increasingly competitive sector dominated by firms like Apollo, Oaktree and Ares.
The new unit, dubbed Capital Solutions Group, will focus on growing its business in private credit, mega deals, corporate loans and alternative financing solutions like asset-backed lending. It will bring together the financial sponsors team, global financing group, and parts of its fixed-income division, it said.
The bank will also expand its alternatives investment team in Asset & Wealth Management, it added.
Pete Lyon, head of the financial institutions and strategic investors groups, and Mahesh Saireddy, head of mortgages and structured products, will lead the new unit and join Goldman’s management committee.
The context: The move comes as bankers expect a sustained surge in capital demand, driven by a rebound in dealmaking, rising private-equity activity and corporate investments in technology and infrastructure.
With public and private markets converging, Goldman’s new structure aims to better serve this demand.
Asset-backed lending in its FICC unit is growing rapidly, but regulatory limits could constrain balance-sheet lending, making capital sourced through asset management increasingly critical, the Wall Street Journal, who first reported the news, noted.
The new group will help create funds for clients like insurers and pension funds to invest in these loans.
What they said: CEO David Solomon called private credit one of the most important structural trends in finance and said the move positions Goldman to capitalise on surging demand for alternative financing and private equity investments.
“There is significant demand from our investing clients for private credit and private equity – from investment grade and leveraged lending to hybrid capital and asset-backed finance as well as equity,” Solomon said.
“Our One Goldman Sachs approach allows us to channel the growing synergies between our clients in Global Banking & Markets and those in Asset & Wealth Management.”
The sources: Goldman Sachs statement , The Wall Street Journal
