Quiver Quantitative - Goldman Sachs (NYSE:GS) is making strategic moves within its asset management division, particularly in the private credit unit, to bolster its position in the growing $1.6 trillion market. In a decisive effort to double the size of its $110 billion private credit business, Goldman has initiated a significant reshuffle among its senior executives. The move underscores the bank's commitment to expanding its footprint in the alternative investment space, a sector it deems to possess the greatest potential.
Greg Olafson, previously co-president of alternatives at Goldman, is set to lead this ambitious drive as the new global head of private credit. This shift allows Olafson to leverage his expertise fully in a domain that has been a cornerstone of Goldman's strategy. Alongside Olafson, James Reynolds and Kevin Sterling, currently co-heads of private credit, will assume new roles to spearhead different segments of the private credit division. Reynolds will take charge as the global head of direct lending, focusing on the largest portion of private credit, which involves debt financing for below-investment-grade companies. In contrast, Sterling will become the global head for investment-grade private credit and asset finance.
Goldman's approach to private credit distinguishes it from Wall Street peers like JPMorgan Chase & Co (NYSE:JPM), Barclays (LON:BARC) (BCS), and Citi (C). Unlike its competitors, Goldman has nurtured a substantial private credit arm since before the 2008 financial crisis, strategically placing it within its asset-management wing. This structure has allowed Goldman to raise third-party capital effectively, avoiding the reliance on its balance sheet. The recent executive restructuring is part of Goldman's broader strategy to maintain its lead in this burgeoning market and to adapt to the rising competition from new asset classes that challenge traditional leveraged finance businesses.
However, this reshaping of Goldman's private credit unit comes amidst a wave of high-profile departures from its asset management arm. Notable exits include Julian Salisbury, who moved to Sixth Street, and Mike Koester, co-founder of 5C Investment Partners. Despite these changes, Alex Chi and David Miller will continue in their roles as co-heads of Americas Direct Lending and co-CEOs and co-presidents of the BDC complex. Beat Cabiallavetta also remains as the global head of hybrid capital, indicating a blend of continuity and change in Goldman's strategy.
This article was originally published on Quiver Quantitative