Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Goldman Sachs has slashed the investment minimum by 90 per cent for a new alumni vehicle that will put money into the Wall Street bank’s private market funds.
The bank is fundraising for its 1869 programme, which takes its name from the year Goldman was founded, and follows a similar fund raised in 2022, according to people briefed on the matter.
The latest vehicle, like its predecessor, is a fund of funds that will invest across multiple private market vehicles managed by Goldman’s asset management division.
However, this time Goldman has reduced the investment minimum from $250,000 to $25,000. A little over half of former Goldman partners invested in the original 1869 fund, the people said, raising about $1bn.
The new fund comes as Goldman is boosting its exposure to the private investment industry, which has boomed into a dominant force on Wall Street.
Ex-partners will benefit from reduced fees in the new fund, paying a 0.63 per cent management fee and a 6.3 per cent performance fee to invest, which is a 50 per cent discount to what the bank would typically charge for similar funds, the people added.
Goldman declined to comment.
Goldman chief executive David Solomon has put the bank’s asset management division at the heart of his strategy. Investors value these businesses highly for their regularly recurring management fees, a contrast to Goldman’s more volatile trading and investment banking division.
Goldman Sachs Asset Management has $3.1tn in assets under supervision, with about $336bn of that in alternative investment funds such as private equity, real estate and so-called secondary funds, which buy up unwanted holdings from investors seeking to cash out.
The New York-based bank’s share price is up about a third over the past six months. Like other Wall Street giants, its share price jumped following Donald Trump’s re-election, in anticipation of a wave of deregulation and a boom in dealmaking.
The 1869 programme is part of an effort under Solomon to cultivate deeper ties with Goldman’s alumni network, with employees often leaving the bank for senior positions at clients such as hedge funds or private equity, or in government.
Notable Goldman partner alumni include Gary Cohn, a former economic adviser to Trump, ex-Australian prime minister Malcolm Turnbull and Jim Esposito, president at trading firm Citadel Securities.
Although Goldman ceased being a formal partnership after it went public in 1999, it still selects new partners every two years and the title remains a sought-after one on Wall Street due to its status and perks. In November the US bank named 95 new partners, the biggest class since 2010.
Consultant McKinsey is another company with a sprawling alumni network that is offered access to a dedicated investment manager, helping them stay connected to the firm.
MIO, McKinsey’s in-house asset manager, has grown to manage $23bn in assets and now its parent is considering spinning it off and has hired boutique investment bank Ardea Partners for a strategic review. MIO has been dogged by years of controversy over potential conflicts of interest with McKinsey’s consulting work.
