Goldman Sachs Group Inc. has raised $4.5 billion for its new private-equity fund, nearing the low end of its goal, with additional fundraising expected early next year.
The Wall Street firm has gathered $4.5 billion in commitments since the summer and made its first capital call to investors this week, according to people familiar with the matter. Goldman is expecting a final close in the first half of 2017, though it isn't clear whether the fund will hit its hard cap of $8 billion.
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The Wall Street Journal reported in July that Goldman was seeking to raise between $5 billion and $8 billion for a corporate-buyouts fund -- its first since the financial crisis -- and was targeting an initial close by the end of the year.
That is a fraction of the $20 billion Goldman raised for its last buyouts fund, in 2007. And the new pot will include just a token amount of Goldman's own capital, to comply with postcrisis regulations that sought to force banks out of risky investing.
The fund's smaller size was in part an acknowledgment of scaled-back ambitions in the wake of new rules. Some worried that without the same "skin in the game," Goldman would struggle to attract investors.
Even the fund's name -- West Street Capital Partners -- bears the fingerprints of regulators. It is named after Goldman's Manhattan headquarters to comply with a postcrisis rule that prevents private-equity funds from bearing the parent bank's name.
Most banks spun off their private-equity arms in the wake of the Volcker rule, which banned banks from investing their own money and slapped heavy capital charges on illiquid portfolios. Goldman held on more tightly, betting that it could navigate the new rules.
That persistence may pay off. The West Street initial close hits as the Trump administration promises to roll back postcrisis regulation. If the Volcker rule, which limited banks to investing just 3% of the money in private-equity funds, is repealed, Goldman has the right to effectively invest more of its money in the fund, according to people familiar with the matter.
That would amplify the bank's own potential profits. Goldman itself used to contribute up to one-third of the capital of its buyout funds.
The fund has already committed to several investments, including a takeover of Norwegian boating-equipment maker Navico Holding AS and the purchase of $1.8 billion in preferred securities that will finance Bass Pro Shops's $4.5 billion takeover of Cabela's Inc.
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