Jose Luis Magana/AP
David Solomon speaks during at an event during the World Bank/IMF Annual Meetings in Washington in October.
- Goldman Sachs plans to add people to a 30-person team helping clients to better understand - and put their money into - a suite of alternative investments managed by the bank, according to people with knowledge of the effort.
- One of the people characterized the hiring plans as modest, describing them as "tactical" additions.
- The people asked for anonymity to describe closely guarded details about a high-level plan CEO David Solomon announced in a memo earlier this month.
- The new team, dubbed the Alternatives Capital Markets and Strategy Group, is part of Solomon's plan to raise awareness about Goldman's alternative investing platform and raise billions of dollars in outside funding.
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Goldman Sachs is looking for a few good men and women.
The Wall Street firm plans to hire for a new team announced this month that's tasked with helping clients make better sense of the alternative investments offered by the bank, according to Goldman insiders who asked for anonymity to discuss the group's strategy. One of the people characterized the hiring plans as modest, describing them as "tactical" additions.
A spokesperson declined to provide more precise figures.
Investor demand for alternatives like private equity and real estate has surged, and managing those kinds of investments happens to be a business that Goldman is looking to grow. But until now, Goldman was lacking a dedicated team to help clients navigate all the strategies it had on offer.
The new hires will join a collection of about 30 people who now make up the Alternatives Capital Markets and Strategy Group, a new team announced this month in a memo seen by Business Insider. The group will act as a single point of entry, or "storefront," for clients interested in alternative investments, one of the people said.
The new group is part of CEO David Solomon's plan to grow revenue from managing tens of billions of dollars in hedge funds, private equity, venture capital, real estate, and infrastructure investments. Solomon believes that Goldman can do better in marketing and organizing itself as an alternative asset manager more akin to Blackstone or Millennium Management than a diverse collection of strategies buried within an investment bank.
To do so, Solomon believes Goldman must do more to break down silos and encourage various corners of the firm to work together, an effort he has tagged with the One Goldman Sachs moniker. He believes Goldman has missed out on revenue by making it more difficult than it should be for clients to discover various alternative investing strategies inside the bank.
"As investors continue to expand their allocations to alternatives, we have a unique opportunity to leverage our global scale, deep client relationships and market insights to deliver an even more comprehensive suite of investment solutions for our clients," Solomon, Goldman President John Waldron and CFO Stephen Scherr said in the memo.
It comes at a propitious time as investors are increasingly looking to alternative investments and private markets for outsized investment returns. In May, Waldron explained the firm's focus by citing a 50% growth rate over the last five years for private market assets under management, to $6 trillion.
The new team will help Goldman streamline its communications with clients and help them navigate the bank's offerings across direct investing teams in private equity, private credit, real estate, infrastructure and special situations, as well as external managers chosen by the bank's Alternative Investments & Manager Selection group.
It'll be run by Goldman partners Chris Kojima, who has run AIMS since 2008, and Michael Koester, chief commercial officer of the merchant banking unit, according to the memo.
So far, their 30-person team has come from taking a majority of people from the merchant banking division, with a handful coming from AIMS, according to the people.
New hires will act as client advisers, or alternative investment specialists. They'll help conduct diagnostics to check out portfolios and gain a better understanding of how they might behave in various market scenarios, share research reports or ideas generated in other areas of the firm, and generally explain what Goldman can do for them, the people said. Even as it gets bigger, the team will work closely with product specialists, research analysts and salespeople in other areas of the bank.
The team will also manage the fundraising calendar, being careful not to overwhelm clients with too many fundraising options all at once, and act as quality control managers to make sure funds are performing as expected. In some cases, the team will design new products based on client feedback, the people said.
The effort is in some ways an attempt to adapt to a new reality where alternative investments aren't chosen product by product, but in more of a sophisticated and comprehensive way, they said.
"What we're talking about here is meeting the client in a modern way," one of the people said. "More and more of their allocations are going to alternatives, and as their allocations have grown, they've gotten more complex. We're trying to help with that."
