Goldman Sachs Forms New Division for Mega Deals

(Reuters) – Goldman Sachs is establishing a new team aimed at enhancing its focus on funding mega deals and offering loans to corporate clients. This initiative seeks to increase its stake in the profitable private credit market.

New Division: Capital Solutions Group

The new division, named Capital Solutions Group, will be incorporated within the investment bank’s global banking and markets unit, broadening its range of services for corporate clients. Goldman announced this on Monday.

Significant Demand for Private Credit

CEO David Solomon remarked, “There is significant demand from our investing clients for private credit and private equity,” indicating that the growth of private assets represents one of the most significant structural trends in finance.

Private Credit Market Growth

Banks have been eager to leverage the growing appeal of the private credit sector, now nearing a $2 trillion market. Notably, in September, Citigroup and Apollo Global collaborated on a $25 billion private credit and direct lending program.

Private credit involves loans made by non-bank lenders, often to high-risk borrowers or companies intending to execute large buyouts using debt. These loans are typically processed more quickly and serve as a crucial funding source for borrowers deemed too vulnerable.

Merging Business Elements

Goldman’s new division will integrate aspects of its financing group, financial sponsors team, and segments of its fixed income, currency, commodities, and equities operations.

Goldman has appointed insiders Pete Lyon and Mahesh Saireddy as co-leaders of the division. Both will also be members of Goldman’s management committee.

Goldman shares saw a slight decrease in premarket trading. The bank’s plans for the new unit were initially reported by the Wall Street Journal earlier in the day.