Goldman anticipates continuation fund boom with $15bn double raise

Goldman Sachs Asset Management, the third-biggest fundraiser according to the SI 50, is banking on better agreement around valuations to provide a boon in dealflow on the back of closing two of its flagship secondaries programmes.

The New York-headquartered firm collected $14.2 billion for its flagship Vintage IX fund and around $1 billion for its debut commingled Vintage Infrastructure Partners fund, according to a statement. Goldman also raised an undisclosed amount of co-investment capital on top of the final close figures.

“The opportunity set has never been bigger,” Harold Hope, GSAM’s global head of secondaries, told Secondaries Investor. Secondaries is “definitely resonating” as a strategy with investors, he said, adding that the Vintage team welcomed 30 new institutional investors to its platform with Fund IX.

It also included private wealth capital in both fundraises.

Both funds closed above target, the statement noted. Secondaries Investor understands Vintage IX’s target was $12 billion while Vintage Infrastructure Partners’ target was between $500 million to $700 million. The funds were raised without holding extensions on the fundraising period.

Bid-ask spreads are starting to narrow and better agreement on valuations should spur more GP-led opportunities, Hope added.

“As private equity-backed companies have continued to perform over the last 12-18 months, the managers have not been writing the values down, but they haven’t been writing them up as fast as the company performance has been increasing,” he said.

Private equity funds today are holding their assets at lower average EBITDA multiple than it was 12-18 months ago. Goldman has seen attractive continuation fund opportunities over the past 18 months that is hasn’t transacted on due to a valuation mismatch between it and fund sponsors, he said.

“The fact that valuations are effectively coming down on a multiple basis, is also helping to narrow the bid ask spread. That’s going to be particularly impactful in the continuation vehicle space… I would expect a lot of growth there over the next year.”

The double fundraise means Goldman has dedicated secondaries capital for private equity, real estate and infrastructure secondaries. The firm is raising its third dedicated real estate fund, Vintage Real Estate Partners III, which launched in August last year, according to Secondaries Investor data.

The firm is also considering private debt secondaries, with GSAM’s former chief investment officer of wealth and asset management Julian Salisbury telling Secondaries Investor in April that the strategy would be a “natural extension” of the firm’s offerings.

Goldman has been investing in infrastructure secondaries deals for 15 years, according to Hope. The Vintage team’s sourcing of infrastructure secondaries grew by more than 40 percent between 2021 and 2022, marking a record half year total in the first half of this year.

Raising a dedicated fund to the asset class was important to demonstrate that Goldman had specific expertise and capital to back such deals, Hope said.

Vintage IX is a 38 percent step-up from its predecessor which raised $10.3 billion in 2020, according to Secondaries Investor data. It will invest in continuation funds, traditional LP portfolios and preferred equity/structured transactions, Hope said.