Goldman Sachs has just two weeks left atop the buyout throne, after which its $20 billion fund will be eclipsed by a $22 billion entry from The Blackstone Group. But Goldman isn’t sulking. Instead, it plans to form the largest-ever mezzanine fund.
Buyouts Magazine reported on its website that GS Mezzanine Partners is targeting $7 billion in equity commitments for its fifth fund, which would then be buttressed by another $5.5 billion in leverage. That alone would break records, but Goldman is apparently thinking bigger. The firm believes that it may be able to secure the entire $12.5 billion in equity, and would then add leverage on top – for a total of $18 billion!
For context, the current Goldman mezzanine fund was capped at just over $3.6 billion in equity, while Blackstone’s latest vehicle has just over $1.5 billion. Even the publicly-traded Apollo fund (Nasdaq: AINV) is well below the new Goldman target, with a market cap of just $2.3 billion.
Like with its buyout fund, a goodly portion of Goldman’s commitments will come from itself and its employees. But even if you strip those out, Goldman should end 2007 with more third-party mezzanine commitments than any other fund in history.