Goldman Sachs Group (NYSE:GS)'s asset management unit has raised more than $15B to invest in private fund stakes on the secondary market, with increased interest in this area even as overall fundraising experiences a slowdown. The firm's alternatives division has secured $14.2B for its Vintage IX strategy, which is set to invest in private equity funds from other investors. Vintage IX, the largest offering from the asset manager, is backed by institutional investors, high net-worth individuals, and Goldman Sachs employees.
In addition to the Vintage IX strategy, Goldman Sachs has also raised $1B for its Vintage Infrastructure Partners fund. This commingled fund is designed to buy stakes in private infrastructure vehicles. Both fundraising efforts exceeded their target levels.
The Vintage Funds program, established in 1998, currently manages assets of over $45B as of June 30. The program includes both the Vintage IX and Vintage Infrastructure Partners funds.
Secondary investment vehicles garnered $37.5B during the first half of 2023, surpassing the total funds raised during all of 2022 and 2021, according to market data firm Preqin. This growth occurred despite a 35% drop in private equity fundraising to $106.7B in Q2 2023, marking the lowest quarterly result in five years.
The first half of 2023 also saw 22 secondary funds raise a combined total of $34.9B. However, this growth was primarily driven by two Blackstone (NYSE:BX) funds that raised a record-breaking $24.9B in Q1, accounting for 71.3% of the total financing.
"In addition to this capital, we also raised committed co-investment capital, which gives us the flexibility to pursue a diverse opportunity set, including the largest deals in today's market," said Harold Hope, Global Head of Secondaries at Goldman Sachs Asset Management.
Secondary markets provide institutional investors with an avenue to sell their stakes in private market funds for cash. For buyout firms, these markets offer an opportunity to extend their investments in companies beyond typical holding periods. As exit routes for venture capital and private equity narrow due to macro uncertainties, allocators are increasingly considering secondaries as an alternative source of liquidity.
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