TLDR:
- Goldman Sachs is expanding its private equity credit lines as dealmaking picks up
- The Wall Street bank is venturing into the lending market for private equity and asset managers, filling a void left by regional banks and the sale of Credit Suisse
In a move to tap into the $800 billion to $1 trillion market, Goldman Sachs is expanding its portfolio of loan facilities valued at $15 billion, acquired from the failed Signature Bank. The focus is on lending to large alternate asset managers and private equity sponsors. The bank plans to expand its business in Europe, the UK, and Asia, and has bolstered its staff to service these loans in various locations. The primary goal is to create stable revenue in the global banking and markets business.
Asset-secured lending helps Goldman Sachs build its financing business in fixed income, currency, commodities, and equities. Despite previous years where private equity loans dried up due to reduced activity, recent market conditions are attracting new players like JPMorgan Chase and PNC Financial Services into the space. JPMorgan Chase, after acquiring First Republic Bank, is committed to being a leading financial partner to high-growth investments, while PNC, based in Pittsburgh, acquired a portfolio of capital commitments facilities from Signature.
Market dynamics have led to an under-supply of loan facilities in recent years, creating an opportunity for new entrants and non-bank lenders to meet the growing demand. The overall goal for banks and alternative investment managers like Ares is to increase their capacity to provide subscription line loans to private equity and venture capital funds.
Source: 1330 & 101.5 WHBL
