Goldman Sachs is launching a new division to help it compete better with private credit firms on financing large deals and lending to corporate clients.
The Capital Solutions Group will combine and grow the firm’s suite of financing, origination, structuring and risk management solution activities in its global banking and markets division.
The firm is also expanding its alternatives investment team in its asset and wealth management unit.
“Our strategy and core franchise strengths position Goldman Sachs to operate at the fulcrum of one of the most important structural trends taking place in finance: the emergence and growth of private credit and other asset classes that can be privately deployed,” said David Solomon, chairman and chief executive of Goldman Sachs.
Read more: Private credit firms and banks competing for talent
“There is significant demand from our investing clients for private credit and private equity – from investment grade and leveraged lending to hybrid capital and asset-backed finance as well as equity,” Solomon said. “Our One Goldman Sachs approach allows us to channel the growing synergies between our clients in Global Banking & Markets and those in Asset & Wealth Management.”
The Capital Solutions Group will combine elements of the firm’s financing group, financial sponsors coverage from investment banking and coverage of alternative management firms from its fixed income, currency and commodities and equities businesses.
Goldman is also creating an alternatives origination group within Capital Solutions to focus on sourcing across investment grade credit, leveraged loans, real estate, infrastructure, other asset-backed finance and private equity.
Goldman has made two internal promotions to lead the new Capital Solutions Group, Pete Lyon and Mahesh Saireddy, who will both join the firm’s management committee.
Meanwhile, Vivek Bantwal, global head of the Financing Group, will move to Asset & Wealth Management and partner with James Reynolds, global head of direct lending, to co-head Global Private Credit.
“Together, they will lead the firm’s effort to grow our scaled private credit business, which already has approximately $145bn (£119.2bn) in total alternative assets,” Goldman said. “Their aim will be to create superior returns for our investing clients, benefitting from our exceptional sourcing capabilities in Global Banking & Markets.”
Banks have increasingly been making efforts to tap into the booming private credit sector.
Moody’s research, released last October, found that banks are increasingly funding private credit, with most of their lending going to the sector’s largest managers.
Banks’ exposure to the sector grew by 18 per cent annually, on average, from 2021 to 2023, reaching $525bn in loan commitments by the end of 2023.
While Goldman is developing its own capabilities, other large banks have opted to partner with private credit firms.
Last September, Apollo and Citigroup unveiled a $25bn direct lending partnership, designed to “significantly enhance access for corporate and sponsor clients to the private lending capital pool, at a scale and size which can provide funding certainty in strategic transactions”.
Read more: Marathon AM and Webster Bank form private credit joint venture
