This in from Bloomberg:
Goldman Sachs Group Inc., the sixth-biggest U.S. bank, raised a fund with about $5.5 billion in capital commitments to purchase private-equity assets on the secondary market.
The GS Vintage Fund V, Goldman Sachs’s fifth dedicated private-equity secondary fund, will acquire portfolios ranging from $1 million to more than $1 billion, the New York-based company said today in a statement.
Private-equity investors such as Harvard University are taking losses, and other schools are selling their future commitments to funds on the secondary market at discounts as high as 50 percent. In 2009, investors may dump as much as $130 billion in commitments, according to David De Weese, a New York- based general partner at Paul Capital Partners, which has $6.6 billion of assets under management.
It’s moves like this that are keeping Goldman Sachs on top. The fund will be buying private equity assets at a significant discount to underlying value, from sellers that are desperate to get out. That is a surefire recipe for big winnings five to ten years down the road, when hopefully, the economy picks up and exit multiples are higher.
By buying at such a big discount, Goldman has a HUGE margin for error on these deals. It’s also using other people’s money rather than its own capital, so it should be able to keep Geithner’s paws out of these dealings, which should fall into the asset-management category.
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