Key Takeaways
- • Goldman Sachs and McKinsey alumni are building GP stakes vehicles that buy minority interests in private fund managers, a strategy gaining attention as private equity faces a tougher market.
- • PACT, a GP stakes firm founded by Goldman and McKinsey alumni, will seek 5% to 15% stakes in managers with roughly $3 billion to $10 billion of locked-up assets under management.
- • Goldman Sachs Asset Management is reportedly shedding part of its $59 billion alternatives exposure and replacing it with third-party capital, according to Side Letter coverage.
- • Investors are drawn to GP stakes for the stable fee-related cash flows of private equity managers, per Bloomberg reporting.
- • Strategic Value Partners hired a 25-year Goldman veteran to oversee client relations, infrastructure and strategic development across its $22 billion alternatives platform.
Summary
A Bloomberg newsletter item reports that a group of Goldman Sachs and McKinsey veterans is using minority stakes in private fund managers as a way to navigate the current difficulties facing private equity. The primary article is brief and focuses on how one firm is pursuing this approach, while the broader trend is documented across related coverage in the publisher's database.
The most specific vehicle described in the coverage is PACT, a GP stakes firm launched by Goldman and McKinsey alumni. PACT will seek to acquire stakes of between 5% and 15% in firms with roughly $3 billion to $10 billion of locked-up assets under management. GP stakes strategies have drawn interest as private markets have grown, with investors seeking exposure to the stable cash flows generated by management companies rather than to individual fund returns.
Goldman Sachs itself appears to be part of the same shift. Side Letter coverage reports that Goldman Sachs Asset Management is shedding part of its $59 billion in alternatives exposure and replacing it with third-party capital, and that more minority deals are expected. Separately, Bloomberg reported that Goldman was considering minority investments in private equity firms and a possible new fund to pursue them.
The move comes as private equity firms face longer hold periods and pressure to create value, according to industry coverage. Strategic Value Partners' hiring of a 25-year Goldman veteran to run client relations, infrastructure and strategic development across its $22 billion alternatives platform reflects continued talent movement in the sector.
The primary source also notes that the US IPO market has stalled and that several software and financial services M&A deals were announced on the same day.
The most specific vehicle described in the coverage is PACT, a GP stakes firm launched by Goldman and McKinsey alumni. PACT will seek to acquire stakes of between 5% and 15% in firms with roughly $3 billion to $10 billion of locked-up assets under management. GP stakes strategies have drawn interest as private markets have grown, with investors seeking exposure to the stable cash flows generated by management companies rather than to individual fund returns.
Goldman Sachs itself appears to be part of the same shift. Side Letter coverage reports that Goldman Sachs Asset Management is shedding part of its $59 billion in alternatives exposure and replacing it with third-party capital, and that more minority deals are expected. Separately, Bloomberg reported that Goldman was considering minority investments in private equity firms and a possible new fund to pursue them.
The move comes as private equity firms face longer hold periods and pressure to create value, according to industry coverage. Strategic Value Partners' hiring of a 25-year Goldman veteran to run client relations, infrastructure and strategic development across its $22 billion alternatives platform reflects continued talent movement in the sector.
The primary source also notes that the US IPO market has stalled and that several software and financial services M&A deals were announced on the same day.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.