Goldman Sachs Asset Management Private Equity
FormerlyGoldman Sachs Capital Partners
TypeSubsidiary
IndustryPrivate equity
Founded1986 (1986)
Headquarters200 West Street
New York City, New York, United States
ProductsLeveraged buyout
Growth capital
AUMUS$95 billion (June 2023)
Number of employees
140+
ParentGoldman Sachs
Websitewww.goldmansachs.com/pia/

Goldman Sachs Asset Management Private Equity (previously Goldman Sachs Capital Partners) is the private equity arm of Goldman Sachs, focused on leveraged buyout and growth capital investments globally. The group, which is based in New York City, was founded in 1986.[1]

History

Goldman Sachs has historically invested capital in a variety of businesses alongside its investment banking clients.[2] In the early and mid-1980s, Goldman was a slow entrant into the financing of leveraged buyouts and junk bonds and preferred to focus on its traditional mergers and acquisitions advisory business. Beginning in 1983, however, Goldman began making longer-term equity investments in private equity transactions that came through its investment banking and other clients.[3]

Goldman Sachs Capital Partners was founded in 1986, at the same time that similar groups were founded at other investment banks including Lehman Brothers Merchant Banking, Morgan Stanley Capital Partners and DLJ Merchant Banking Partners. Goldman established investment partnerships that allowed its clients to participate alongside the firm in private equity transactions.

On April 23, 2007, Goldman closed GS Capital Partners VI with $20 billion in committed capital, $11 billion from institutional and high-net-worth investors and $9 billion from Goldman Sachs and its employees.[4] In late 2019, Goldman's Chief Executive, David M. Solomon, announced that the firm would combine GS Capital Partners into one division with Goldman's other direct-investing units, such as the Special Situations Group and Growth Equity unit, called the Merchant Banking Division (MBD), which added up to $140 billion under management.[1]

Investment funds

Since 1992, GSCP has raised third party capital as well as investing on behalf of Goldman, its clients and its employees through institutional private equity funds. GSCP's third party investors include pension funds, insurance companies, endowments, fund of funds, high-net-worth individuals, sovereign wealth funds and other institutional investors.

As of the end of 2008, GSCP had completed fundraising for seven investment funds with total committed capital of approximately US$39.9 billion:

Fund Vintage Year Committed Capital ($m)
GS Capital Partners 1992 $1,104
GS Capital Partners Asia 1994 $300
GS Capital Partners II 1995 $1,750
GS Capital Partners III 1998 $2,780
GS Capital Partners 2000 2000 $5,250
GS Capital Partners V 2005 $8,500
GS Capital Partners VI 2007 $20,300
West Street Capital Partners VII[5] 2017 $7,000
West Street Capital Partners VIII[6] 2020 $9,700

Investments

GS Capital Partners emerged in the late 1990s as one of the largest private equity investors globally competing and partnering with the largest independent firms, Kohlberg Kravis Roberts, Blackstone Group, Bain Capital, Carlyle Group and TPG Capital. Since the raising of its Goldman Sachs Capital Partners 2000 Fund, GS Capital Partners has completed some of the most notable leveraged buyouts:

Investment Year Company Description Ref.
Burger King 2002 In July 2002, GS Capital Partners, together with TPG Capital and Bain Capital, announced the high-profile $2.3 billion leveraged buyout of Burger King from Diageo. However, in November the original transaction collapsed, when Burger King failed to meet certain performance targets. In December 2002, the consortium agreed on a reduced $1.5 billion purchase price for the investment. The consortium had support from Burger King's franchisees, who controlled approximately 92% of Burger King restaurants at the time of the transaction. Under its new owners, Burger King underwent a major brand overhaul including the use of The Burger King character in advertising. In February 2006, Burger King announced plans for an initial public offering. [7][8][9]
SunGard 2005 GS Capital Partners was one of seven private equity firms involved in the buyout of SunGard in a transaction valued at $11.3 billion. GSCP's partners in the acquisition were Silver Lake Partners, Bain Capital, TPG Capital, Kohlberg Kravis Roberts, Providence Equity Partners, and The Blackstone Group. This represented the largest leveraged buyout completed since the takeover of RJR Nabisco at the end of the 1980s leveraged buyout boom. Also, at the time of its announcement, SunGard would be the largest buyout of a technology company in history, a distinction it would cede to the buyout of Freescale Semiconductor. The SunGard transaction is also notable in the number of firms involved in the transaction, the largest club deal completed to that point. The involvement of seven firms in the consortium was criticized by investors in private equity who considered cross-holdings among firms to be generally unattractive. [10][11]
Alltel 2007 GS Capital Partners and TPG Capital announced the acquisition of Alltel Wireless in a $27 billion buyout in May 2007. The transaction was approved by the Federal Communications Commission and closed on November 16, 2007. However just over six months later, on June 5, 2008, Goldman and TPG agreed to sell Alltel to Verizon for slightly more than it had paid for the company amidst a deteriorating economic outlook. [12][13]
Biomet 2007 GS Capital Partners, The Blackstone Group, Kohlberg Kravis Roberts, and TPG Capital acquired the medical devices company for $11.6 billion. [14]
Energy Future Holdings (formerly known as "TXU") 2007 An investor group of GS Capital Partners, Kohlberg Kravis Roberts and TPG Capital completed the $44.37 billion[15] buyout of the regulated utility and power producer. The investor group had to work closely with ERCOT regulators to gain approval of the transaction but had significant experience with the regulators from their earlier buyout of Texas Genco. TXU is the largest buyout in history, and retained this distinction when the announced buyout of BCE failed to close in December 2008. The deal is also notable for a drastic change in environmental policy for the energy giant, in terms of its carbon emissions from coal power plants and funding alternative energy. On April 29, 2014, Energy Future filed for bankruptcy protection under Title 11 of the United States Bankruptcy Code. [16][17]

In addition to its successful buyout transactions, Goldman was involved in the high-profile failed buyout of Harman International Industries (NYSE: HAR), an upscale audio equipment maker. On April 26, 2007, Harman announced it had entered an agreement to be acquired by GS Capital Partners and Kohlberg Kravis Roberts.[18] As the financing markets became more adverse in the summer of 2007, the buyout was on tenuous ground. In September 2007, Goldman and KKR backed out of the $8 billion buyout of Harman. By the end of the day, Harman's shares had plummeted by more than 24% on the news.

References

  1. 1 2 Jenkins, Patrick (December 2, 2019). "Can Goldman's merchant bank help group regain old edge?". The Financial Times. Financial Times.
  2. ↑ "Goldman Sachs Asset Management Completes Final Close of West Street Capital Partners VIII". www.gsam.com. Retrieved January 20, 2023.
  3. ↑ GS Capital Partners V Closes at $8.5 Billion. PE Source, April 13, 2005
  4. ↑ "Goldman closes fund after raising $20 bln". Reuters. April 23, 2007. Retrieved January 20, 2023.
  5. ↑ Zhu, Julie (February 7, 2020). "Exclusive: Goldman Sachs to raise $8 billion for new buyout fund - sources". Reuters.
  6. ↑ "Goldman Sachs Asset Management Completes Final Close of West Street Capital Partners VIII". Goldman Sachs. September 27, 2022.
  7. ↑ U.S. Investors Agree to Buy Burger King From Diageo for $2.26 Billion. New York Times, July 26, 2002
  8. ↑ A Lower Price Is Said to Revive Burger King Sale, New York Times, December 12, 2002
  9. ↑ Grace Wong (May 12, 2006). "Burger King IPO set to fire up". CNN Money. Retrieved September 30, 2007.
  10. ↑ "Capital Firms Agree to Buy SunGard Data in Cash Deal." Bloomberg L.P., March 29, 2005
  11. ↑ Do Too Many Cooks Spoil the Takeover Deal?. New York Times, April 3, 2005
  12. ↑ http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-185A1.pdf
  13. ↑ Alltel | Investors | Press Release
  14. ↑ de la MERCED, MICHAEL J. "Biomet Accepts Sweetened Takeover Offer." New York Times, June 8, 2007.
  15. ↑ Source: Thomson Financial
  16. ↑ Lonkevich, Dan and Klump, Edward. KKR, Texas Pacific Will Acquire TXU for $45 Billion Bloomberg, February 26, 2007.
  17. ↑ "KKR, Texas Pacific-led group to buy TXU Corp". Reuters. February 26, 2007. Archived from the original on May 17, 2007. Retrieved January 23, 2009.
  18. ↑ Harman International press release Archived July 4, 2007, at the Wayback Machine
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