GS raises $2.7bn for primary, secondary funds

Goldman Sachs Private Equity Group has closed its seventh primary fund of funds vehicle on $1.2bn shortly after wrapping up a $1.5bn secondary vehicle.

The private equity division of Goldman Sachs Asset Management (GSAM) has announced the closing of its latest primary fund investment vehicle on $1.2 billion (€900 million).

The fund, called GS Private Equity Partners 2004, is the group’s seventh primary structure and closed in February. Most of the interest came from existing European and US investors, with additional demand from some new institutional clients according to a press release.
 
The closing came shortly after GSAM’s successful formation of GS Vintage Fund III, a new dedicated secondary fund that closed in December on $1.5 billion.
 
Commenting on Goldman’s recent fundraising success, chairman and chief investment officer of GSAM’s private equity group Michael Miele said in the release: “The strong support we have received from the firm’s institutional and high net worth investor base over the last 12 months is most encouraging.”
 
GSAM’s private equity business now has more than $13 billion under management across a range of primary fund of funds, secondary funds and distressed vehicles.

The firm’s latest distressed fund, GS Distressed Opportunities Fund II, closed in May 2004 on $386 million. The fund, which according to GSAM is 72 percent committed at this stage, is a follow on to the group’s $385 million inaugural distressed fund which was raised in June 2002.
 
Goldman's fund investment operation isn't the only part of the firm to expand an already sizeable franchise in the asset class. In a related development, according to a recent reports, Goldman Sachs Capital Partners, a separate part of the bank that makes direct private equity investments, is making progress with a new vehicle that could be as large as $8.5 billion.

Such a fund would represent one of the largest private equity funds ever raised by the private equity arm of an investment bank and flies in the face of recent decisions taken by other major investment banks to scale down their private equity activity to avoid conflict with their private equity clients.
 
On Tuesday, merchant bank JP Morgan announced that it will spin out its $13 billion private equity arm JP Morgan Partners. The news follows the announcement by Credit Suisse First Boston late last year that it intended to spin off its principal investment operation, DLJ Merchant Banking Partners, into an independent unit.