Goldman Sachs is getting back into the corporate buyout game
The new fund dubbed "West Street Capital Partners" is shooting for an initial close by end of 2016, according to Liz Hoffman at The Wall Street Journal, citing people familiar with the matter.
The new fund is much smaller than GS Capital Partners VI, the largest Goldman buyout fund in recent years according to the Journal, where the firm raised $20.3 billion back in 2007. And unlike earlier funds, the new one won't bear Goldman's name to comply with postcrisis rules.
Regulators have been discouraging banks from making big, risky bets in the wake of the financial crisis. Under the Dodd-Frank reform act known as the "Volker Rule," banks are barred from contributing more than 3% of their capital in hedge funds and private equity funds, or owning more than 3% of the funds.
As a result, Goldman is shrinking the size of its own investment to an estimated $500 million this time. The bank used to contribute up to one-third of the capital in its funds prior to the crisis.
Goldman is competing with private equity giants that are sitting on a record-high level of dry powder, eyeing opportunities ranging from private debt to struggling energy companies.
Other Wall Street firms, however, have let go of their private equity arms in recent years. Citigroup sold its Metalmark Capital buyout unit late 2013, while JPMorgan said it's breaking up its $22 billion in-house private equity business last October.