Goldman NY Proprietary Traders Consider PE Move

(Reuters) — Members of Goldman Sachs Group Inc’s New York Principal Strategies team are in talks with several groups, including KKR, Perella Weinberg, BlackRock Inc and Carlyle Group, to possibly join one of the firms, a source familiar with the matter said.

Goldman’s proprietary trading desk has been in limbo as the firm works to comply with the “Volcker rule,” which limits the extent banks can bet with their own capital.

The source spoke on the condition of anonymity because the talks are not public. Goldman, Kohlberg Kravis Roberts and Co LP, Perella Weinberg and BlackRock declined to comment. Carlyle was not immediately available.

It is not surprising that a wide group of firms would bid for the services of Goldman’s proprietary traders, with new regulations forcing the company’s hand, a former Goldman managing director said.

“If I had a private equity fund, I would no doubt be trying to buy into this,” he said, but added: “If (the traders) don’t get a deal done quickly, this asset will decay to zero. They are not stupid.”

Goldman has said proprietary trading accounts for as much as 10 percent of its revenue. But some analysts believe that figure is based on a narrow definition of that kind of trading.

As banks have started restructuring to comply with the Dodd-Frank financial reform law signed in July, Goldman’s plans have drawn particular attention because the firm generates so much of its revenue from trading its own money.


Bob Howard, who heads the Principal Strategies team’s U.S. business, is leading the talks with the interested firms.

The firms that the source says want to hire Goldman’s trading talent have varying reasons to be interested.

KKR, one of the largest private equity firms in the world, has diversified away from being a pure buyout shop. It has a capital markets division that arranges debt and equity financing for deals and underwrites securities offerings.

It was not immediately clear which part of KKR’s business the Goldman traders would join.

Perella Weinberg Partners is a privately owned corporate advisory and asset management services firm.

BlackRock is the world’s largest money manager, managing more than $3 trillion in client assets and monitoring trillions of others.

Carlyle is a Washington-based private equity firm with more than $90.5 billion assets under management, which it invests in leveraged buyout deals, real estate and growth capital.

Goldman’s Principal Strategies group is housed within the equities division and led by Hong Kong-based Morgan Sze.

Bloomberg reported on Friday that Sze might set up a fund with a smaller team focused on Asia.