Goldman Sachs, which posted better than expected results yesterday, has raised USD5.5bn from investors for a fund dedicated to buying private equity investments on the secondary market. The new fund, dubbed GS Vintage Fund V, is its fifth dedicated private equity secondaries fund.
GS Vintage Fund V will focus primarily on acquiring portfolios of private equity assets, including limited partnership interests in private equity funds, from both limited partners and general partners. The GS Vintage range of funds consider investments ranging from USD1m to more than USD1bn covering all private equity strategies and geographical regions.
Amid the ongoing credit crisis, the private equity secondary market - the buying and selling of existing investor stakes in private equity funds, usually at a discount - is poised to become of increasing interest to dealmakers.
With an increasing number of sellers in the market, supply is outstripping demand. Banks will continue to divest private equity holdings as they seek to raise capital, but other investors such as hedge funds and pension funds are also now widely seen as sellers too.
In the past the secondaries market has been constrained by the difficulties encountered by buyers and sellers in agreeing on price. With the economic situation forcing many institutions to the table, funds such as Goldman's are well placed to take full advantage.