Goldman Sachs‘s earnings during the second quarter of this year were driven by “significantly” higher performance fees from sales of stakes held in the investment bank’s 2009-vintage secondaries fund.
Secondaries sales from the firm’s $5.5 billion Vintage Fund V helped drive net revenues in the bank’s investment management division up 20 percent on the same period last year, Goldman Sach’s executive vice-president and chief financial officer Martin Chavez said on a Q2 earnings call Tuesday.
“Harvesting” from Vintage Fund V had triggered a “significant” upsurge in what the group calls incentive fees, which came in at $316 million, Chavez said. This figure is almost four times the $81 million in performance fees posted by the private equity side of the firm for the same period last year.
Overall, the investment management division booked net revenue of $1.84 billion.
Goldman has previously bought stakes held in secondaries funds. In 2016, it emerged as the buyer of a tail-end portfolio of stakes from Partners Group‘s 2007-vintage secondaries fund worth around €800 million, as well as a second portfolio worth under $1 billion held in another Partners Group vehicle.
On the financial advisory side, Goldman posted its highest volume in a decade, advising on 125 deals – a 37 percent increase on the first quarter, reflecting stronger M&A. Chavez said the firm will continue to hire new bankers and expand its client coverage.
Non-compensation expenses rose 24 percent to $2.66 billion, with the banking giant setting aside more cash to deal with payments flowing from litigation and regulation.
The firm also announced that David Solomon will take over from Lloyd Blankfein as president on 1 October this year and will assume the role of chairman in 2019.
Goldman Sachs’s AIMS unit is investing Vintage VII, which raised $7.12 billion last year.