Goldman Sachs Raises $20B To Sponsor Deals

At least for now, Goldman Sachs Group, the world’s largest investment bank, can also lay claim to having the largest buyout fund ever raised, a $20 billion pool closed on April 23.

With such a big bat to swing in the marketplace, Goldman Sachs has secured its place as a competitor to The Blackstone Group, Kohlberg Kravis Roberts & Co. and other megafirms that were once only clients of the investment bank. Instead of simply adding equity to club deals, Goldman Sachs has long since begun spearheading big buyouts.

Last year, for example, GS Capital Partners led consortia of investors in two management-backed deals: the $22 billion LBO of pipeline operator Kinder Morgan and in the $8.3 billion take-private of Aramark Inc.

The deal-making activity has begun to ruffle the feathers of buyout veterans. In comments made at a conference in New York last week, KKR co-founder Henry Kravis singled out Merrill Lynch and Morgan Stanley as investment banks that have managed to keep their private equity arms from presenting unwanted competition to buyout shops. Pointedly, Kravis did not place Goldman Sachs among that group, according to Bloomberg.

To assemble GS Capital Partners VI LP, Goldman Sachs tapped $9 billion of its own capital, including contributions from its employees. The remaining $11 billion in commitments came from institutional investors. Goldman Sachs did not name any of its limited partners, but previous investors have included the New York State Common Retirement Fund, Hamilton Lane, Invesco Private Capital and TIAA-CREF.

The new fund more than doubles the size of Goldman Sachs’s vintage 2005, $8.5 billion GS Capital Partners Fund V LP. That fund is fully invested, according to the firm.

Although Goldman Sachs has become the first firm to officially reach the $20 billion fund-raising threshold, it’s expected to be joined soon by Blackstone, which is reported to be closing soon on $20 billion. In a regulatory filing earlier this year, Blackstone said it has closed on $18.1 billion. The firm originally closed its fund last year then reopened it to take in an estimated $4 billion more. KKR, meanwhile, has over $16 billion committed to its KKR 2006 Fund, which is still open.—J.H.