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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (140822)	8/13/2008 7:37:12 AM
From: Giordano Bruno	Read Replies (2) \| Respond to of 306849

The new wave... Goldman Goes All In on 'Secondary' Bet Bank-Led Group to Pay About $1.5 Billion For Portfolio of Private-Equity Investments By PETER LATTMAN August 13, 2008 Much of the financial world has become cautious on private-equity investments. Goldman Sachs Group Inc. is doubling down. A Goldman Sachs-led group has agreed to pay about $1.5 billion for a portfolio of existing private-equity investments divested as part of the $101 billion carve-up of Dutch bank ABN Amro by Banco Santander SA, Royal Bank of Scotland Group PLC and Fortis NV. SECONDARY SCHOOL • The News: Goldman Sachs is buying a large private-equity portfolio from Dutch bank ABN Amro. • Why Does It Matter? It is a "secondary" transaction, meaning a re-sale of an existing private-equity investment. • What Happens Next? The secondary market will continue to grow, as investors seek to cash out of illiquid or unwanted stakes in buyout funds. The Goldman investment comprises 32 European companies as well as roughly $450 million in capital to be invested in future deals. The investments, which include the British arm of restaurant chain TGI Friday's and Netherlands clothing company Oilily, will be managed by the ABN private-equity spinoff called AAC Capital Partners. The deal is one of the largest transactions in the market for secondary private-equity deals. "Secondaries" include the trading of limited-partner interests in existing private-equity funds, such as a slot in the latest Blackstone Group LP buyout vehicle, as well as the buying and selling of direct stakes in companies managed by the private-equity firms. With private-equity assets totaling $2 trillion globally, this market has boomed over the past four years. Private-equity investors -- such as pension funds and endowments -- have begun to more aggressively manage these investments, such as jettisoning poorly performing funds or reducing exposure to a given manager. The problem is these stakes are highly illiquid, as they consist of groups of private companies, each with a separate and hard-to-measure valuation. The opportunity in these deals is to capitalize on motivated sellers, who are willing to offload an investment, often at a discount, to raise cash or discard an unwanted asset. Goldman is putting resources behind this thesis. The bank last year closed its fourth Vintage Partners fund, a $3 billion secondary vehicle, and is raising a new fund that is expected to be in the $5 billion range. Goldman Sachs Managing Director Christopher Kojima heads the group. The investment bank began dabbling in these transactions a decade ago and has since emerged as one of the dominant players in the secondary-buyout area along with Coller Capital and Lexington Partners Inc. The Goldman-led group in the ABN vehicle includes Alpinvest Partners NV and Canada Pension Plan. Write to Peter Lattman at peter.lattman@wsj.com