Goldman Sachs raises $10 bln mezzanine fund
By Shasha Dai
NEW YORK (MarketWatch) -- Goldman Sachs Group Inc. (GS) has closed on $10 billion for a new mezzanine fund, and likely will close on another $10 billion for its latest traditional buyout fund by the end of this year, said people familiar with the matter.
The new mezzanine fund, GS Mezzanine Partners IV LP, is almost four times the size of its $2.7 billion predecessor, which was raised in 2003. The fund will invest alongside traditional buyout firms, providing mezzanine capital, a layer of debt that has an equity component.
Fund IV aims to capitalize on booming demand for junior capital as the size and volume of buyouts rise in North America and Europe. It plans to invest between $200 million and $600 million per transaction, the people said, up from the $175 million or less that Fund III invested per deal.
(This story also appears in LBO Wire, a newsletter published by Dow Jones that covers private equity.)
The firm isn't the only big player getting more involved in the mezzanine space. Leon Black, chief executive of Apollo Management, said at the Dow Jones Private Equity Analyst Conference in New York this week that Apollo plans to raise mezzanine capital to do deals in Europe, and that he believes mezzanine investing in large deals is safer than in mid-sized or small transactions.
Meanwhile, Goldman Sachs is moving forward with fund-raising for its new buyout fund, which has a target of $10 billion, said one person with knowledge of the situation. The firm is expected to hold the first and likely the only close on the fund, known as GS Capital Partners VI LP, by the end of this year. The fund's predecessor, the $8.5 billion GS Capital Partners V LP, closed only last year.
A Goldman Sachs spokeswoman declined comment.
Goldman Sachs is unusual among banks for its continued aggressive participation in big buyouts, such as the pending $22 billion acquisition of pipeline company Kinder Morgan Inc. (KMI), which it is buying with American International Group Inc. (AIG) and Carlyle/Riverstone. Many of its peers have switched to co-investing with private equity firms, moved down to midmarket deals or gotten out of PE altogether in an effort to avoid angering buyout shops, who are some of their biggest fee-generating clients. |
