Goldman Sachs has held a final close on its latest debt fund targeting the top of the capital structure, which is likely among the top 10 largest year-to-date closes.
The New York-based firm’s Merchant Banking Division wrapped up its Broad Street Senior Credit Partners II at $4.4 billion. That total consists of $1.75 billion in limited partner commitments and $2.65 billion of committed long-term leverage, said Tom Connolly, global head of the private credit group.
He noted Goldman is the largest single investor in the fund, comprising 24.9 percent of limited partner commitments. The limited partner base consists of high-net-worth individuals sourced from Goldman Sachs’ US private wealth management clients as well as the firm’s partners and employees.
The firm has a history of allocating substantial amounts of capital to its funds. Goldman made a $1.7 billion balance-sheet commitment to Broad Street Real Estate Credit Partners III, which has $6.6 billion in deployable capital and held a final close in January 2018. In addition, Goldman its employees committed $200 million to that vehicle.
Goldman has more than $20 billion available for investing in first lien senior secured corporate assets, Connolly said. Broad Street Loan Partners III, which invests alongside the SCP fund series, held a final close in 2017 on $9.8 billion, including committed long-term leverage.
SCP II will continue the firm’s strategy of backing an array of transactions in North America and western Europe for both private equity-backed and non-private equity-backed companies, Connolly said. The deals include leveraged buyouts, refinancings and acquisitions. The fund will target companies with EBITDA in excess of $50 million, he said, though the average EBITDA has been around $150 million.
“We’re late in the cycle, but no matter what part of the credit cycle we’re in, we always have to select the companies we lend to very carefully,” he said. The vehicle will target net returns in the 10 percent area, Connolly added.
The fund is one of the largest fundraises this year in terms of limited partner commitments. Senior debt raised the most of all private debt strategies in the first quarter, collecting $14.22 billion of the $32.6 billion raised.
SCP II is the sixth largest of the top 10 funds raised in the first three months of the year, though several firms like Intermediate Capital Group, which locked down €4 billion for European mezzanine investing, have held large closes in the second quarter.