In an exclusive report on Friday, February 7, 2020, by Reuters, Goldman Sachs Group Inc., (Goldman), the leading American investment bank and financial service company targets to raise $8 billion for investing in new buyout deals.
A source told to Reuters, it was the second time for the company that convened its buyout plan since the 2008 financial crisis as part to secure deals worldwide. The source reported that the new plan of Goldman would not be affected by the coronavirus epidemic in China as the investment bank was mainly focusing offshore especially non-Chinese investors.
Fundraising through its Private Equity Firm
Irrespective of the ongoing virus pandemic, the Wall Street giant announced that it would start opening for the fundraising next week via its private equity arm, West Street Capital Partners.
Goldman’s private equity firm, which was established in 1986, has been operating under its merchant banking division. In 2016, the firm has changed its name to West Street Capital Partners after Goldman’s New York City address as a response to a post-crisis rule that prohibited private equity funds from bearing the parent bank’s name.
As per the source by Reuters, the private equity of Goldman has generated a net internal rate of return (IRR) of 19% after the deducting of several expenses in sectors such as management fees, fund expenses and carried interest since 2000. According to industry data provider Preqin, the equity firm was involved in eight rounds of fundraising since its inception and raised about $47 billion with about $7 billion in 2017 alone.
According to the source, the new fundraising of West Street Capital Partners will be focusing on capital investment from both the existing investors and the bank’s own employees. With this fundraising, the investment bank will set off its acquisition venture worldwide and invest the companies where it currently has its majority stake.
New Investment on Buyout Deals
Private equity firms globally have been competing to raise and invest in several markets over the years so as to stay alive in the global competition. Blackstone Group, a US-based world’s largest alternative asset manager, had raised a record of $26 billion for its latest buyout fund in 2019.
As Reuters reported that many major banks including Citigroup Inc. and JPMorgan Chase & Co were severely affected following the introduction of the Volcker Rule, which limited the scope of investments by the private equity firms globally. These bank giants have rolled out or divested their private equity arms in recent years to adjust their operations according to the new rules of investments.
As Preqin data showed, “Goldman’s last fund has made investments including the $2.7 billion buyouts of eye-care manager Capital Vision Services in 2019 and joined energy-focused peer Riverstone Holdings in the $1.6 billion acquisition of Lucid Energy Group’s Delaware Basin unit.”
Reuters reported the new fund would be focusing on buyout deals with those corporations where it has its majority control. As Reuters explained, the investment bank aimed at deploying 60% of its capital fund in the US and extending to about 25 investments in various sectors, which offered the deal size ranging between $150 and $600 million.
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