Goldman Sachs raises $5.5bn for fifth secondaries fund

GS Vintage Fund V will focus on LP private equity interests and providing liquidity to LPs and GPs around the world, focusing on deals ranging in size from $1m to $1bn.

Goldman Sachs Asset Management has raised $5.5 billion for its fifth secondaries fund with returning and new limited partners from the Americas, Europe, Asia and Australia.

The fund, GS Vintage Fund V, will be used to acquire portfolios of private equity assets, including LP interests in private equity funds. The fund also will provide liquidity to LPs and GPs around the world.

Goldman announced the fund's launch in May 2008 and said it would target between $3 billion and $5 billion, according to a private equity markets report from RR Donnelley. Goldman has made some small investments from the fund that have not been made public, a spokeswoman for the firm said.

The vintage funds look for opportunities ranging in size from $1 million to $1 billion, across all private equity platforms and geographies.

The fund was raised by the alternative investments and manager selection group of Goldman Sachs Asset Management. The AIMS group has more than $32 billion in capital commitments for funds of funds, secondaries and co-investments. 

Goldman closed its fourth vintage fund on $3 billion in 2007. Investments from the fourth fund include the purchase of LP interests in 67 private equity funds and acquiring interests in 34 portfolio companies from Mellon Financial. The third vintage fund closed on $1.5 billion in 2004.

In 2003, Goldman bought the plastics and aluminium company Tredegar’s private equity partnership interests in a deal that also included W Capital Partners buying the company’s direct investment portfolio. The investment was made from the $1.15 billion second vintage fund.

Investors in Goldman’s past vintage funds include the West Yorkshire Pension fund, Australia-based AUSCOAL Super and AP Fonden 3, the third Swedish national pension fund.

Goldman's fund closes at a time when volume on the secondaries market is high.

Greenpark Capital recently added to its secondaries buyout team, preparing for what it anticipates could be up to $30 billion in closable deal flow this year. Coller Capital expects to begin raising its sixth private equity secondaries fund this year. Houlihan Lokey, an international investment bank, announced it was starting up a secondaries advisory practice in March, led by Jeff Hammer and Paul Sanabria, two former Bear Stearns manaing directors.

The secondaries market is full of opportunities if firms can get creative with how they structure deals, according to David De Weese, partner with secondaries firm Paul Capital.

“At the moment, there is more private equity in the hands of institutions who are motivated to sell it than there is capital with secondary funds to buy it,” De Weese said.

Not every institution feeling liquidity pressure needs to sell, and are reluctant to sell at current pricing, De Weese said. Some financial institutions, on the other hand, need to generate liquidity quickly.

Paul Capital, which raised $1.65 billion for its ninth fund in April 2008, has been doing various types of transactions, including picking up unfunded commitments from pensions that need to rebalance their portfolios. Paul’s fund is about half invested, De Weese said.