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Alternative Investment

Goldman to trim underperforming £48bn investment book amid profit crunch

WALL STREET titan Goldman Sachs could shift billions of dollars worth of underperforming private equity and real estate investments that have dogged its finances, its top money manager hinted yesterday.

In an interview with Reuters, Julian Salisbury, chief investment office of asset and wealth management at the firm, said the bank will “see a meaningful decline” in its alternative $59bn (£48bn) investment book.

“It’s not going to zero because we will continue to invest in and alongside funds, as opposed to individual deals on the balance sheet,” he added.

Alternative investments are typically money stored away in private equity funds, private credit vehicles and real estate.

The bank is looking to raise money from third party investors to create funds to invest in alternative assets instead of relying on its own balance sheet. This means while the alternative investments themselves will sit elsewhere, Goldman’s real exposure to the assets will not shrink.

The company is aiming to raise around $225bn (£181bn) to inject into alternative assets by 2024 as a part of long-term plan to shift them off its balance sheet.

In last week’s earnings, Goldman said gross third party alternatives fundraising topped $70bn (£56bn).

The move has been given added impetus by Goldman posting one of its worst set of results in recent memory.

It missed targets by a large margin, plagued by the global deal making environment being rocked by central banks hiking interest rates, making it nore expensive to finance deals.

The lender is also sacking 3,000 bankers as it looks to trim costs.

(c) 2023 City A.M., source Newspaper

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