Goldman Sachs’ leveraged finance director Tom Connolly will reportedly leave his position to manage an in-house private equity debt fund.
Connolly will be replaced in the leveraged finance unit by Denis Coleman, co-head of Goldman’s loan capital markets, and Craig Packer, head of high-yield capital markets, according to a report in the Wall Street Journal. The Financial Times first broke the news of Connolly’s move, without citing sources.
Goldman could not be reached for comment. The investment bank houses multiple private equity platforms focussed on the middle market, infrastructure, real estate and secondaries, but lacks a dedicated distressed debt unit.
Connolly’s in-house transition illustrates private equity’s growing love affair with the debt markets as banks try to unload loans from their balance sheets.
As turmoil in the credit markets persisted past the subprime mortgage meltdown last August, more and more high-profile firms have snatched up heavily discounted debt, some of which originally financed the massive deals of the leveraged buyout boom.
In perhaps one of the best examples of that trend, KKR Financial, a listed investment fund of buyout giant Kohlberg Kravis Roberts, is considering purchasing the debt related to the firm’s own $21.6 billion acquisition of Alliance Boots last year. Both Citi and Deutsche Bank have sold various tranches of LBO-related debt to consortiums of private equity firms including Apollo Management.
Limited partners are also eager to profit from the trend. Last month, Oaktree Capital Management closed the largest-ever distressed debt fund on $10.9 billion.