Goldman to Combine Four Private Market Groups into $140 Billion Giant

Firm plans to capitalize on industry’s private equity boom, raise stagnant stock price.

Goldman Sachs is merging four private investment groups into one big unit said to house about $140 billion in assets under management, The Wall Street Journal reported Sunday.

Over the next few months, the bank will combine divisions to boost its stagnant stock price, which has hardly budged from where it was four years ago. Other banks, such as JPMorgan Chase, Citi, and Bank of America have increased nicely (Chase and BofA have risen about 60% during that period).

Goldman also wants to appeal to clients’ appetite for alternative investments, as investors have been shying away from stocks and bonds in favor of seeking higher returns in real estate, infrastructure projects, and other non-public areas.

The divisions invest in private markets, real estate, and other areas not easy to access.

Goldman’s crown jewel that will join this new, as-yet unnamed, endeavor is its existing merchant banking unit, which already has about $100 billion in private assets. The bank will also put two other units from its trading division and some private equity and real estate groups in its asset management business into the sector.

Rich Friedman will chair the new venture, according to an internal memo obtained by CIO. Julian Salisbury, Andrew Wolff, and Sumit Rajpal will be the unit’s global division heads.

The memo said the “unified investing platform” plans to raise “additional third-party capital” from Goldman’s institutional and private wealth clients, enhance its marketing approach across strategies, and boost its ability to attract and retain talent.

Although the mammoth private business was not specifically announced at the firm’s industry conference in May, John Waldron, the firm’s president, said it was “developing a comprehensive plan” to grow private investing. He said this restructure would be a “multiyear effort to evolve this business into more fee revenue and a more balanced business mix.”

Goldman has been playing in the private equity world since the 1980s, but hasn’t done anything notable in the space for at least a decade. It last put billions of its proprietary riches into a mega-buyout fund that closed at $20 billion. Buyout funds take stakes in other companies.

The Journal says the latest move is CEO David Solomon’s effort to put his stamp on the Wall Street giant. He took over from Lloyd Blankfein last fall.

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