Goldman Sachs (GS) has launched a new division, Capital Solutions Group, to benefit from the growing private credit market, which provides loans to corporate clients. To form this new unit, the firm is merging three key teams: financial sponsors, global financing, and segments of Goldman Sachs’ FICC (Fixed Income, Currencies, and Commodities) financing team.
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The financial sponsors team focuses on providing investment banking services to private equity firms, while the Global Financing Group specializes in sourcing capital for various deals, such as leveraged loans and asset-backed finance. In addition, the FICC financing team provides collateralized loans to other lenders, including private credit funds.
To lead this new division, Goldman Sachs has appointed Pete Lyon and Mahesh Saireddy as co-heads. Both will also join the firm’s management committee. Notably, The Capital Solutions Group will be integrated into the company’s Global Banking and Markets segment.
Goldman Sees Potential in Private Credit Market
The rise of private credit has been fueled by regulatory changes and increasing investor demand, prompting banks like Goldman Sachs and JPMorgan Chase (JPM) to revise their strategies. Goldman Sachs anticipates that rising capital demand will drive growth in private equity and corporate investments, particularly within the technology and infrastructure sectors.
Investors should note that the rapid expansion of the private credit market, which surpassed $2 trillion by 2023-end, has attracted other financial institutions as well. In September 2024, Citigroup (C) and Apollo Global (APO) announced a $25 billion partnership in this space.
Is GS a Good Stock to Buy Now?
Turning to Wall Street, GS stock has a Moderate Buy consensus rating based on 12 Buys and five Holds assigned in the last three months. At $635.44, the average Goldman Sachs price target implies a 12.88% upside potential. Shares of the company have gained 15.6% over the past six months.
