Goldman Sachs Launches Private Markets Platform for Wealthy Clients

Goldman Sachs is entering the booming private markets arena with a new platform targeted at ultrahigh-net-worth (UHNW) and high-net-worth (HNW) clients, an internal memo said. Private equity, private credit, real estate and infrastructure - the traditional domain of large funds and institutional investors - will now be more accessible for Goldman Sachs’ eligible clients. The initiative is a nod to the increasing demand for alternatives among wealth-management clients, who are seeking to diversify beyond often volatile stock and bond markets and gain access to alternative classes offering the potential for long-term growth and uncorrelated returns.

Goldman's new offering would pool these asset types, making it simpler for private-banking clients to find, research, and invest in these assets, tapping into Goldman's wide network of money managers, dealmakers, and asset specialists.

Private markets have been growing at a rapid pace over the last decade, with companies remaining private for longer and a surge of growth in private credit. Meanwhile, institutional investors have significantly ramped up their allocations to infrastructure, real estate, and other alternative assets, providing lucrative opportunities for wealth managers, who aim to deepen client relationships by offering alternatives. In recent years, Goldman Sachs has accelerated its build-out of its wealth business to primarily serve affluent investors and the family offices they work with. While this will include the same kinds of private-market funds previously limited to institutions, industry professionals say that those sorts of private holdings carry inherent risks, are often less liquid, have higher minimum-investment thresholds and can be more complex to value than publicly traded assets.

“It’s still private.

You still have longer horizons and potentially less liquidity, but when clients are really focusing on trying to achieve certain goals and seeking long-term capital appreciation or a specific kind of risk profile, private markets can deliver that, and wealth managers need the capabilities to provide that for their clients,” one adviser told Bloomberg. Given the ongoing growth of private credit, the introduction comes at an opportune time as businesses turn away from bank loans. Investments in infrastructure are also in hot demand, as government entities around the globe invest heavily in areas like transportation and clean energy.

The platform would include technology tools aimed at simplifying research, tracking and client reporting of assets in alternative portfolios. The move signals Goldman’s desire to fortify its standing in global wealth management, even as investment banks and asset managers globally vie for a bigger slice of the alternative assets market. “Wealth managers are moving into the alternatives space rapidly because that’s where the growth and higher fees are,” an executive at a wealth manager told Bloomberg.

“They have to compete on products, and as wealthy investors demand it, alternatives must be an option for clients.”

Goldman, which in the first quarter posted a 22 percent increase in the revenues of its global banking and markets business as a result of strong performance from its securities and investment banking operations, is doubling down on its efforts to boost the size of its wealth-management business by serving richer clients and targeting their financial advisers, the internal memo indicates. The bank’s new move “highlights Goldman’s continued investment in growing our global wealth management capabilities and our ability to serve the evolving needs of our affluent clients in this dynamic investment environment,” the memo stated. “The new platform is a key step in providing a comprehensive and sophisticated suite of investment solutions for private market assets,” the bank added.