Goldman Sachs has created a private markets platform for wealthy clients and family offices who increasingly want direct stakes in fast-growing private companies.
According to a memo seen by CNBC, the alternative investments platform combines the bank’s existing alternatives business with two newly-established teams.
CNBC said the new teams will focus on direct investments in private companies, rather than broader private equity funds, and on helping clients buy and sell those stakes. Goldman said it will steer clear of early-stage ventures, instead focusing on more mature companies with strong existing attributes — with client interest heavily concentrated in AI names.
According to the firm, the idea is to identify the most promising companies, such as the next SpaceX or Facebook, before they become household names.
It comes amid a longer-running trend of private companies choosing to stay private for longer, with SpaceX being the standout case. Targeting a US$1.77 trillion valuation upon its 12 June listing, the company raised US$75 billion to become the largest public debut in history.
A series of mega-IPOs are also expected from other AI giants later this year, including Claude chatbot maker Anthropic, last valued at US$965 billion, and ChatGPT maker OpenAI, last valued at US$852 billion.
For Goldman Sachs, which held the lead-left position on SpaceX’s record-setting IPO, the size of these listings indicates that investors need pre-IPO exposure to reap much of the gains.
“Companies are going public at a trillion dollars,” Kristin Olson, Goldman Sachs’ global head of alternatives for wealth, told CNBC. “If you haven’t participated along the way, you’re clearly missing a big part of the growth cycle.”
Those comments also follow a share slide for the Elon Musk-owned space tech company since its debut, falling 1.5 per cent last week to close at US$134, below the IPO price it set just weeks earlier on the Nasdaq. The free-fall has left the ETFs quickly launched to track it, along with the many retail investors who flooded in for exposure, nursing considerable losses.
As well as the trend of the most successful startups staying private for longer, the platform launch signals Goldman’s ongoing push deeper into wealth and asset management, seen as offering steadier revenue than investment banking and trading.
The announcement also coincides with the news of record performance for the investment bank in Q2 of this year.
Goldman Sachs reported record revenue of US$20.3 billion, record fees, record assets under management (AUM) of over US$4 trillion, as well as record earnings per share (EPS) of US$20.98. As of 24 July AEST, the company’s share price is up some 28 per cent year-to-date.
As noted by several publications, Goldman’s role as the lead underwriter on SpaceX formed an important part of its Q2 blowout. It has also structured secondary offerings for prominent companies including Google parent Alphabet.
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