Goldman Sachs Merges 4 Private Investment Groups Worth $140B

The Goldman Sachs Group Inc., one of the largest investment banking enterprises in the world, is overhauling its private-investing strategy with the organization of a new division.

Analysts said Goldman will merge four separate private-investment groups into one unit in an attempt to generate more predictable income while making itself more attractive to investors, The Wall Street Journal reported. The new division will combine the separate units investing in private companies, real estate and other hard-to-access deals. It’s expected to have more than $140 billion in assets under its control.

Goldman hasn’t commented on the moves first reported by the Journal.

In May, however, Goldman President John Waldron said the plan to restructure Goldman’s private-investing strategy “will be a multiyear effort to evolve this business into more fee revenue and a more balanced business mix.”

The core of the new and as-yet unnamed division will be the company’s existing merchant-banking unit with some $100 billion invested in private assets. Joining the new division will be two other units.

One will be the "special situations group" described as an opportunistic portfolio of about $30 billion, plus Goldman's strategic investing group that makes smaller bets on financial technology startups. Both units are currently part of Goldman’s trading division and invest Goldman's own money.

The new division will also include the private-equity and real-estate groups now part of Goldman’s asset-management division. These units invest client money.

In addition to the major restructuring, Goldman also intends to raise new funds, especially in real estate, which it’s re-entering for the first time since the Great Recession of 2008. It might also do a fundraiser this year for a real-estate equity fund.

The fundraiser will raise money from outside investors, instead of Goldman using its own money as it had done in past private-equity ventures.

Goldman currently divides its operations into four sectors: investment banking, institutional client services, investing and lending, and investment management. The largest of those sectors is institutional client services, which serves institutional clients.