Via Financial Times

Goldman Sachs has unveiled a Blackstone-like alternative investments group, previewing a key element of the strategic plan to be presented at the company’s much-anticipated investor day next month. 

In a memo to staff on Monday, David Solomon, Goldman’s chief executive, and his two top lieutenants described the Alternatives Capital Markets and Strategy Group as a “unique opportunity” to attract more funds from outside investors.

The alternatives platform will cover everything from the private equity, infrastructure and debt investments offered by Goldman’s merchant bank to the partnerships, co-investments and funds offered through Goldman’s investment management arm.

Attracting more third-party funds has been a key aim of Mr Solomon and his lieutenants, who have spoken about creating an investment business like Blackstone, perhaps the world’s most powerful alternative money manager.

Goldman executives hope that boosting its investing division will help lift its share price, now languishing near post-crisis lows on a price-to-book value basis.

The alternatives group will be run by Chris Kojima, who currently heads the Alternative Investments & Manager Selection Group, and Mike Koester, who is the chief commercial officer for Goldman’s merchant bank. Both men have been Goldman partners since 2008. 

One person familiar with the bank’s plans told the FT the new structure would help Goldman offer a more “holistic” service to its investors, ultimately leading to clients signing up to a broader array of products.

“It’s about bringing the entire firm (to clients),” a second person familiar with the plans said. “There’s a danger when some of these solutions are siloed, that you get siloed thinking . . . We’re now bringing this ‘one Goldman Sachs’ (approach).” 

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Mr Solomon, who is a year into his stewardship of Goldman, has invoked similar strategies at the company’s investment banking and trading divisions, encouraging his employees to think in terms of clients’ total relationships rather than individual business lines. 

The two people familiar with the bank’s plans would not disclose the level of assets under management in its alternatives businesses, beyond saying it is one of the top five in the market. More details on its size, and growth potential, are expected to be revealed at Goldman’s investor day on January 29. 

Goldman has promised that the investor day will reveal the results of a year-long “front to back” review of the company’s businesses and will chart its future strategy under Mr Solomon. Investors are hoping for more detail on the earnings outlook for Goldman’s newer ventures, including pushes into consumer banking and cash management, whose investment costs have been dragging down returns.