Goldman Sachs Capital Partners
Encyclopedia
Goldman Sachs Capital Partners is the private equity
arm of Goldman Sachs
, focused on leveraged buyout
and growth capital
investments globally.
The group, which is based in New York, New York, was founded in 1986. GS Capital Partners has raised approximately $39.9 billion since inception across seven funds and has invested over $17 billion. On April 23, 2007, Goldman closed GS Capital Partners VI with $20 billion in committed capital, $11 billion from institutional
and high net worth
investors and $9 billion from Goldman Sachs
and its employees. GS Capital Partners VI is the current primary investment vehicle for Goldman Sachs to make large, privately negotiated equity investments.
has historically invested capital in a variety of businesses alongside its investment banking clients. In the early and mid-1980s, Goldman was a slow entrant into the financing of leveraged buyout
s and junk bonds and preferred to focus on its traditional mergers and acquisitions
advisory business. Beginning in 1983, however, Goldman began making longer-term equity investments in private equity transactions that came through its investment banking and other clients.
Goldman Sachs Capital Partners was founded in 1986, at the same time that similar groups were founded at other investment banks including Lehman Brothers Merchant Banking, Morgan Stanley Capital Partners and DLJ Merchant Banking Partners
. Goldman established investment partnerships that allowed its clients to participate alongside the firm in private equity transactions.
s, insurance companies, endowments
, fund of funds
, high net worth individual
s, sovereign wealth fund
s and other institutional investors.
As of the end of 2008, GSCP had completed fundraising for seven investment funds with total committed capital of approximately US$39.9 billion:
Source: Preqin
, The Carlyle Group and TPG Capital. Since the raising of its Goldman Sachs Capital Partners 2000 Fund, GS Capital Partners has completed some of the most notable leveraged buyout
s:
In addition to its successful buyout transactions, Goldman was involved in the high profile failed buyout of Harman International Industries
, an upscale audio equipment maker. On April 26, 2007, Harman announced it had entered an agreement to be acquired by GS Capital Partners and Kohlberg Kravis Roberts. As the financing markets became more adverse in the summer of 2007, the buyout was on tenuous ground. In September 2007, Goldman and KKR backed out of the $8 billion buyout of Harman. By the end of the day, Harman's shares had plummeted by more than 24% on the news.
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
arm of Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, focused on leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
and growth capital
Growth capital
Growth capital is a type of private equity investment, most often a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.Companies...
investments globally.
The group, which is based in New York, New York, was founded in 1986. GS Capital Partners has raised approximately $39.9 billion since inception across seven funds and has invested over $17 billion. On April 23, 2007, Goldman closed GS Capital Partners VI with $20 billion in committed capital, $11 billion from institutional
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...
and high net worth
High net worth individual
A high-net-worth individual is a person with a high net worth. In the private banking business, these individuals typically are defined as having investable assets in excess of US$1 million. As explained below, the U.S...
investors and $9 billion from Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
and its employees. GS Capital Partners VI is the current primary investment vehicle for Goldman Sachs to make large, privately negotiated equity investments.
History
Goldman SachsGoldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
has historically invested capital in a variety of businesses alongside its investment banking clients. In the early and mid-1980s, Goldman was a slow entrant into the financing of leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
s and junk bonds and preferred to focus on its traditional mergers and acquisitions
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
advisory business. Beginning in 1983, however, Goldman began making longer-term equity investments in private equity transactions that came through its investment banking and other clients.
Goldman Sachs Capital Partners was founded in 1986, at the same time that similar groups were founded at other investment banks including Lehman Brothers Merchant Banking, Morgan Stanley Capital Partners and DLJ Merchant Banking Partners
DLJ Merchant Banking Partners
DLJ Merchant Banking Partners is a private equity investment firm focused on leveraged buyout transactions. The firm is currently an affiliate of Credit Suisse and traces its roots to Donaldson, Lufkin & Jenrette, the investment bank acquired by Credit Suisse First Boston in 2000...
. Goldman established investment partnerships that allowed its clients to participate alongside the firm in private equity transactions.
Investment funds
Since 1992, GSCP has raised third party capital as well as investing on behalf of Goldman, its clients and its employees through institutional private equity funds. GSCP's third party investors include pension fundPension fund
A pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
s, insurance companies, endowments
Financial endowment
A financial endowment is a transfer of money or property donated to an institution. The total value of an institution's investments is often referred to as the institution's endowment and is typically organized as a public charity, private foundation, or trust....
, fund of funds
Fund of funds
A "fund of funds" is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investing is often referred to as multi-manager investment...
, high net worth individual
High net worth individual
A high-net-worth individual is a person with a high net worth. In the private banking business, these individuals typically are defined as having investable assets in excess of US$1 million. As explained below, the U.S...
s, sovereign wealth fund
Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
s and other institutional investors.
As of the end of 2008, GSCP had completed fundraising for seven investment funds with total committed capital of approximately US$39.9 billion:
| Fund | Vintage Year | Committed Capital ($m) |
| GS Capital Partners | 1992 | $1,104 |
| GS Capital Partners Asia | 1994 | $300 |
| GS Capital Partners II | 1995 | $1,750 |
| GS Capital Partners III | 1998 | $2,780 |
| GS Capital Partners 2000 | 2000 | $5,250 |
| GS Capital Partners V | 2005 | $8,500 |
| GS Capital Partners VI | 2007 | $20,300 |
Source: Preqin
Preqin
Preqin is a research and consultancy firm focusing on alternative asset classes. The company covers private equity, real estate, infrastructure, and hedge funds and is headquartered in London, UK, with additional offices in New York and Singapore. Preqin maintains a number of publications and...
Investments
GS Capital Partners emerged in the late 1990s as one of the largest private equity investors globally competing and partnering with the largest independent firms, Kohlberg Kravis Roberts, The Blackstone Group, Bain CapitalBain Capital
Bain Capital LLC is a Boston-based private equity firm founded in 1984 by partners from the consulting firm Bain & Company. Originally conceived as an early-stage, growth-oriented investment fund, Bain Capital today manages approximately $65 billion in assets, and its strategies include private...
, The Carlyle Group and TPG Capital. Since the raising of its Goldman Sachs Capital Partners 2000 Fund, GS Capital Partners has completed some of the most notable leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
s:
| Investment | Year | Company Description | Ref. |
| Burger King Burger King Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain... | 2002 | In July 2002, GS Capital Partners, together with TPG Capital and Bain Capital Bain Capital Bain Capital LLC is a Boston-based private equity firm founded in 1984 by partners from the consulting firm Bain & Company. Originally conceived as an early-stage, growth-oriented investment fund, Bain Capital today manages approximately $65 billion in assets, and its strategies include private... , announced the high profile $2.3 billion leveraged buyout of Burger King Burger King Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain... from Diageo Diageo Diageo plc is a global alcoholic beverages company headquartered in London, United Kingdom. It is the world's largest producer of spirits and a major producer of beer and wine.... . However, in November the original transaction collapsed, when Burger King failed to meet certain performance targets. In December 2002, the consortium agreed on a reduced $1.5 billion purchase price for the investment. The consortium had support from Burger King's franchisees, who controlled approximately 92% of Burger King restaurants at the time of the transaction. Under its new owners, Burger King underwent a major brand overhaul including the use of The Burger King The Burger King The Burger King was a character created as the advertising mascot for the international fast-food restaurant franchise Burger King who became famous in numerous television commercials, including the Burger King Kingdom. The first iteration of the King was part of Burger King sign at the first store... character in advertising. In February 2006, Burger King announced plans for an initial public offering Initial public offering An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises... . | |
| SunGard SunGard SunGard is a multinational company based in Wayne, Pennsylvania, which provides software and services to education, financial services, and public sector organizations. It was formed in 1983, as a spin-off of the computer services division of Sun Oil Company, during a period of low crude oil... | 2005 | GS Capital Partners was one of seven private equity firms involved in the buyout of SunGard SunGard SunGard is a multinational company based in Wayne, Pennsylvania, which provides software and services to education, financial services, and public sector organizations. It was formed in 1983, as a spin-off of the computer services division of Sun Oil Company, during a period of low crude oil... in a transaction valued at $11.3 billion. GSCP's partners in the acquisition were Silver Lake Partners Silver Lake Partners Silver Lake is a US-based private equity firm focused on leveraged buyout and growth capital investments in technology, technology-enabled and related industries... , Bain Capital Bain Capital Bain Capital LLC is a Boston-based private equity firm founded in 1984 by partners from the consulting firm Bain & Company. Originally conceived as an early-stage, growth-oriented investment fund, Bain Capital today manages approximately $65 billion in assets, and its strategies include private... , TPG Capital, Kohlberg Kravis Roberts, Providence Equity Partners Providence Equity Partners Providence Equity Partners is a global private equity investment firm focused on media, entertainment, communications and information investments... , and The Blackstone Group. This represented the largest leveraged buyout completed since the takeover of RJR Nabisco RJR Nabisco RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co... at the end of the 1980s leveraged buyout boom. Also, at the time of its announcement, SunGard would be the largest buyout of a technology company in history, a distinction it would cede to the buyout of Freescale Semiconductor Freescale Semiconductor Freescale Semiconductor, Inc. is a producer and designer of embedded hardware, with 17 billion semiconductor chips in use around the world. The company focuses on the automotive, consumer, industrial and networking markets with its product portfolio including microprocessors, microcontrollers,... . The SunGard transaction is also notable in the number of firms involved in the transaction, the largest club deal Club deal A club deal, in finance, refers to a leveraged buyout or other private equity investment that involves several different private equity investment firms. Club deal can also be referred as syndicated investment.... completed to that point. The involvement of seven firms in the consortium was criticized by investors in private equity who considered cross-holdings among firms to be generally unattractive. | |
| Alltel Wireless | 2007 | GS Capital Partners and TPG Capital announced the acquisition of Alltel Wireless in a $27 billion buyout in May 2007. The transaction was approved by the Federal Communications Commission and closed on November 16, 2007. However just over six months later, on June 5, 2008, Goldman and TPG agreed to sell Alltel to Verizon for slightly more than it had paid for the company amidst a deteriorating economic outlook. | |
| Biomet Biomet Biomet, Inc. is one of the world leading medical device manufacturer located in the Warsaw, Indiana business cluster. The company specializes in reconstructive products for hips, knees and shoulders, fixation devices, orthopedic support devices, dental implants, spinal implants and operating room... | 2007 | GS Capital Partners, The Blackstone Group Blackstone Group The Blackstone Group L.P. is an American-based alternative asset management and financial services company that specializes in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions ,... , Kohlberg Kravis Roberts, and TPG Capital acquired the medical devices company for $11.6 billion. | |
| TXU TXU Energy Future Holdings Corporation is an electric utility company headquartered in Energy Plaza in Downtown Dallas, Texas, United States. The company was known as TXU until its $45 billion leveraged buyout by Kohlberg Kravis Roberts, Texas Pacific Group and Goldman Sachs... | 2007 | An investor group of GS Capital Partners, Kohlberg Kravis Roberts and TPG Capital completed the $44.37 billion buyout of the regulated utility and power producer. The investor group had to work closely with ERCOT ERCOT The Electric Reliability Council of Texas formed in 1970, is one of eight Independent System Operators in North America, and is the successor to the Texas Interconnected System... regulators to gain approval of the transaction but had significant experience with the regulators from their earlier buyout of Texas Genco Texas Genco Texas Genco is a major power generation firm, active in the deregulated Texas electricity market and owns several major power plants in the Houston area that serve area power needs.... . TXU is the largest buyout in history, and retained this distinction when the announced buyout of BCE Bell Canada Bell Canada is a major Canadian telecommunications company. Including its subsidiaries such as Bell Aliant, Northwestel, Télébec, and NorthernTel, it is the incumbent local exchange carrier for telephone and DSL Internet services in most of Canada east of Manitoba and in the northern territories,... failed to close in December 2008. The deal is also notable for a drastic change in environmental policy Environmental policy Environmental policy is any [course of] action deliberately taken [or not taken] to manage human activities with a view to prevent, reduce, or mitigate harmful effects on nature and natural resources, and ensuring that man-made changes to the environment do not have harmful effects on... for the energy giant, in terms of its carbon emissions from coal power plants Fossil fuel power plant A fossil-fuel power station is a power station that burns fossil fuels such as coal, natural gas or petroleum to produce electricity. Central station fossil-fuel power plants are designed on a large scale for continuous operation... and funding alternative energy Alternative energy Alternative energy is an umbrella term that refers to any source of usable energy intended to replace fuel sources without the undesired consequences of the replaced fuels.... . |
In addition to its successful buyout transactions, Goldman was involved in the high profile failed buyout of Harman International Industries
Harman International Industries
Harman International Industries is an American-based international audio and infotainment equipment company. The company designs, manufactures and markets audio and infotainment products for the car, the home, theatres and venues, as well as electronics for audio professionals...
, an upscale audio equipment maker. On April 26, 2007, Harman announced it had entered an agreement to be acquired by GS Capital Partners and Kohlberg Kravis Roberts. As the financing markets became more adverse in the summer of 2007, the buyout was on tenuous ground. In September 2007, Goldman and KKR backed out of the $8 billion buyout of Harman. By the end of the day, Harman's shares had plummeted by more than 24% on the news.
External links
- Goldman Sachs Capital Partners (company website)