By Saeed Azhar, Niket Nishant and Manya Saini
NEW YORK (Reuters) -Goldman Sachs announced a raft of leadership changes as it created a new division to focus on financing large deals and providing loans to corporate clients, looking to capitalize on the lucrative private credit market.
The new Capital Solutions Group will be part of Goldman's global banking and markets unit, and expand its services for corporate clients, the Wall Street giant said on Monday.
"There is significant demand from our investing clients for private credit and private equity," CEO David Solomon said in a statement. He said the growth of private assets was "one of the most important structural trends taking place in finance."
The bank made a bet back in 2021 on lending to private funds, which recently helped drive record revenues in fixed-income financing.
The fund finance unit, lends money secured by different types of assets to private equity and other funds. Such assets, however, can be hard to value and trade, and some loan products are yet to be tested in a downturn, making lending against them risky.
"They are seeing the rapid growth of private credit, some of which is replacing traditional bank financing, and are trying to get a share of that action," said Stephen Biggar, an analyst at Argus Research.
Banks have rushed to capitalize on the growing appeal of the private credit industry, which has expanded into a nearly $2 trillion market. Most recently, in September, Citigroup (NYSE:C) and Apollo Global partnered for a $25 billion private credit and direct lending program.
Private credit refers to loans provided by non-bank lenders, which are typically made to risky borrowers or companies looking to finance mega buyouts with debt.
These loans can be processed quicker, and are an important source of funding for borrowers deemed too vulnerable.
Goldman's new division will combine elements of its financing group, its financial sponsors team and parts of its fixed income, currency and commodities and equities businesses.
It tapped insiders Pete Lyon and Mahesh Saireddy to be the co-leaders of the new venture. Both will also join Goldman's management committee.
Goldman shares slipped in afternoon trade.
The bank's plans for the new unit were first reported by the Wall Street Journal earlier in the day.
Here is an overview of leaders taking over the business lines within the new unit:
Unit Executive Title
Credit & Asset Christina Minnis Global head
Finance
Financial and Rob Pulford and Global co-heads
Strategic Jonathan Barry
Investors Group
(FSIG)
Investment Grade Eric Jordan and Global co-heads
Capital Markets Alessandro Dusi
and Derivatives
Equity Capital David Ludwig Global head
Markets (ECM)
EMEA and Asia Mike Marsh and Li Marsh will serve
Pacific Zheng as head of Capital
Solutions in EMEA
and Zheng in Asia