Goldman Sachs has held a first close on its latest mezzanine fund, the follow-on vehicle to its predecessor, which raised $8 billion.
The New York-based firm locked down $730 million for GS Mezzanine Partners VII, according to regulatory filings with the US Securities and Exchange Commission.
The investments for Goldman Sachs’ mezzanine strategy can run from $100 million to more than $500 million in companies, which can have an enterprise value from $500 million to over $5 billion, according to the firm’s website. The investment bank finances leveraged buyouts, recapitalisations, restructurings and refinancings, among other transactions, mainly for businesses located in the Americas and Europe.
The firm, which did not immediately respond to a request for comment, is back in the market after a string of large mezzanine funds held final closes late last year and early this year.
Four of the 10 largest funds raised in 2016 were mezzanine funds, which, according to PDI data, included Highbridge Principal Strategies – Mezzanine Partners III at $6.6 billion; GSO Capital Opportunities Fund III at $6.5 billion; Blackstone Real Estate Debt Strategies III at $4.5 billion; and Carlyle Energy Mezzanine Opportunities Fund II at $2.77 billion.
Together, those funds brought in $20.37 billion, or almost 41.75 percent, of the $48.79 billion raised for mezzanine and subordinated debt in 2016, PDI data showed. The nearly $50 billion number consisted of almost 44 percent of the total private debt capital raised last year.
A few large fundraises spilled over into this year, with Crescent Mezzanine Partners VII and Prudential Capital Partners V holding final closes in January, raising $4.6 billion and $1.8 billion, respectively, though the capital raised this year for mezzanine is much smaller. Those two funds made up 40 percent of the $16.01 billion mezzanine capital raised in the first half of the year, which comprised 26 percent of all the private credit money raised in the first six months.
Given the much smaller percentage raised for mezzanine capital this year, fundraising for that strategy is likely to come in much lower this year. There are few funds currently in market with multibillion-dollar goals targeting investments lower in the capital stack, according to PDI data.