Goldman Sachs (GS) is looking for private equity bargains. The giant Wall Street firm is launching a $5.5 billion fund to buy stakes in private equity funds from investors who can't wait any longer to turn them into cash.
It's a move well suited to these credit-constrained times. Private equity funds aren't like bank accounts; investors can't just make a withdrawal when they need to pay the bills. And some institutional investors like pensions and endowments can only invest a limited portion of their capital in private equity. With the value of their other investments falling, they're finding that they need to sell now even if they'd prefer not to. With its new fund, Goldman Sachs plans to buy up these unwanted stakes in PE funds.