Goldman Sachs is looking to become a major player in the rapidly expanding world of private credit financing.
The investment banking giant announced this week that it plans to deepen its presence in the private credit market by establishing the capital solutions group within its global banking and markets unit. Goldman is also building up the alternatives investment team within its asset and wealth management division.
The newly created capital solutions group, which will be led by Pete Lyon and Mahesh Saireddy, will combine Goldman’s financing, origination, structuring and risk management solution activities. The group will merge the firm’s current capabilities within its financing group, financial sponsors coverage from investment banking and coverage of alternative management firms from FICC and equities.
Goldman will also create an alternatives origination group within capital solutions to focus on sourcing across investment grade credit, leveraged loans, real estate, infrastructure, other asset-backed finance and private equity.
Goldman Chairman and CEO David Solomon said in a statement that the firm is leveraging its strengths to take advantage of “one of the most important structural trends taking place in finance: the emergence and growth of private credit and other asset classes that can be privately deployed.”
Additionally, Vivek Bantwal, global head of the financing group, will move to asset & wealth management and co-head global private credit with Goldman’s global head of direct lending James Reynolds. They will oversee Goldman’s effort to grow its $145 billion private credit business.
Goldman Sachs has taken several steps to combine its investment banking arm with its markets businesses. The firm has also combined multiple investing businesses in asset management to produce a globally scaled platform. Moody’s SVP David Fanger said that this move from Goldman “to increase coordination and enhance their focus on these markets is consistent with” its long-standing strategy to expand “both its underwriting and advisory business with private equity sponsors and the companies they control, and in growing its alternatives asset management platform.”
This move from Goldman highlights the growing dominance of non-bank lenders in corporate finance and comes at a time when more traditional banks are partnering with — and competing against — private credit firms like Apollo and Ares. Goldman’s new group faces competition — after all, Citi and Wells Fargo have already partnered with other private credit funds, and J.P. Morgan has also been making moves to beef up its private credit offerings. But Goldman benefits from having both an investment banking arm and private credit business.
Investor interest in private credit has skyrocketed in recent years, with the asset class having brought in nearly $2 trillion of investor capital by the end of 2023. Morgan Stanley estimates that the private credit market could grow to nearly $3 trillion by 2028. This has led asset managers to make a concerted push to expand their offerings.