(Bloomberg) -- Goldman Sachs Group Inc. boosted this year’s goal for alternatives fundraising 20% on the promise of surging demand in credit markets.
Now the firm expects to raise more than $60 billion, Goldman said Tuesday after reporting third-quarter results. The firm is one of the best-placed firms to capitalize on the private-credit boom, given its ability to scour the market for new deals, executives said.
“A lot of the raise has been in the broad credit area,” Marc Nachmann, who runs Goldman’s $3.1 trillion money-management business, said in an interview. “It plays to our strength.”
Nachmann pointed to Goldman’s standing in the investment-banking business as a key aid in sourcing new deals. “That puts us in a unique place,” he said, adding that the company doesn’t have to look for joint ventures to create opportunities.
Citigroup Inc. has agreed to work with Apollo Global Management Inc. on $25 billion of private credit deals in the next five years, to help muscle its way into more dealmaking conversations and benefit from Apollo’s heft in credit investing. Other banks have explored similar opportunities to gin up business in the booming asset class. The goal is to claw away at a piece of the fees for finding deals instead of ceding the business to non-banks.
Goldman has been able to ward off concerns about a crimped fundraising environment as money gravitates toward platforms with a bigger reach. “We continue to see a concentration of fundraising” to the top five or 10 players, Nachmann said.
Private credit remains a key focus at the New York-based bank. That was underscored by Chief Executive Officer David Solomon, who on Tuesday reiterated the firm’s desire to lean into the platform that has already amassed $140 billion in assets. Even within that universe, Nachmann sees pockets where Goldman can drive growth.
“We are growing our asset-backed financing business,” he said. “We are putting a lot of focus there and investing in it.”
In July, Blue Owl Capital Inc., one of the biggest private-credit investors, agreed to buy credit manager Atalaya Capital Management to push deeper into asset-based lending. That business relies on contractual cash flow generated by a defined pool of financial assets. Such financing has been increasingly gaining traction in private markets, where investors are looking beyond directly negotiated loans in the hunt for more lucrative returns.
It’s all in an effort by Goldman to position its asset- and wealth-management business as a reliable center for throwing off predictable and increasing fees. The goal is to give investors reason to stick with its stock as its more prominent investment bank remains prone to gyrating with the broader economic cycle.
To that end, Nachmann ticked off Goldman’s achievements since he was tapped to take on the group in 2022, such as boosting revenue growth, shedding balance-sheet investments and upping its pretax margins.
“A lot of people had doubts whether we could do all this,” Nachmann said. “We have executed well against the top-line metrics.”
©2024 Bloomberg L.P.
