Goldman seeds €1.4bn credit fund with Pantheon, Temasek backing

The strip sale is the latest example of an asset manager using the secondaries market to build third-party AUM.

Goldman Sachs Asset Management, the third-biggest fundraiser in the secondaries industry according to SI 50, has completed a credit secondaries transaction to free up the bank’s balance sheet capital.

Pantheon’s private credit business and Singapore’s Temasek co-led the transaction, according to a statement shared with Secondaries Investor. The deal establishes West Street European Middle Market Credit Fund, which raised €1.35 billion from strategic investors, secondaries investors and Goldman Sachs employees.

The vehicle is seeded by a strip of Goldman’s investments in mid-market European loans held on its balance sheet and also contains a primary capital commitment. Goldman will “retain a material percentage” of assets held in the fund, which focuses on direct origination of senior loan investments in PE-backed companies in EMEA, according to the statement. The fund represents the first vintage of Goldman’s European Middle Market Credit Fund.

The process was carried out without an intermediary, Secondaries Investor understands.

The deal is the latest example of an asset manager leveraging the secondaries market to attract new third-party investors. In 2020, a group of investors led by Montana Capital Partners and Singapore sovereign wealth fund GIC acquired an $875 million strip of assets off the balance sheet of China Ping An Insurance Overseas and used it to seed two private equity funds, Secondaries Investor reported at the time.

Goldman established its private credit business in 1996 and has been investing in mid-market private credit using its balance sheet capital since 2004, according to the statement.

“The EMMC fund is an attractive opportunity for our clients to be immediately invested in a portfolio of seasoned assets and continue to scale into future opportunities in European middle market credit,” James Reynolds, global head of direct lending within Goldman Sachs Alternatives, said in the statement.

Pantheon closed its second credit secondaries fund, Pantheon Credit Opportunities II, on $590 million against a $350 million target last May, according to Secondaries Investor data. The firm is in market with its third credit secondaries fund targeting $750 million.

Pantheon has committed over $4 billion to 100 private credit investments since 2018, according to the statement. The firm manages or advises on $6.7 billion of private credit assets.

Building up secondaries expertise across different asset classes is one of Pantheon’s main growth areas, the firm’s upcoming chief executive Kathryn Leaf told Secondaries Investor in a recent interview. Besides credit, the firm has also invested in private equity, infrastructure and real estate secondaries.

– Madeleine Farman contributed to this report.