Goldman forms private markets platform for wealthy clients

Goldman Sachs has formed an alternative investments platform aimed at wealthy clients and family offices seeking direct exposure to private companies, according to a Goldman memo reviewed by CNBC. The bank has arranged such investments for roughly two decades, and the new structure formalizes a business that has grown as large companies remain private for longer.

The platform combines Goldman’s existing alternatives business with two newly created teams, CNBC reported. One will focus on direct investments in individual private companies, while the other will help clients buy and sell those stakes through a secondary advisory business.

Kristin Olson, Goldman Sachs’ global head of alternatives for wealth, told CNBC that client attention has centered on large, fast-growing technology companies before they reach public markets. She said companies increasingly list only after reaching much larger valuations, meaning public-market investors may see a smaller share of the growth than earlier private backers.

Direct stakes, rather than pooled funds

The new platform reflects a distinction that matters for investors. A private equity or venture fund pools client capital and spreads it across a portfolio selected by a manager. Goldman’s new direct-investment effort instead gives eligible clients access to stakes in specific private companies, according to the memo cited by CNBC.

Olson said Goldman is generally not trying to place clients into the earliest-stage startups. The bank is concentrating on later-stage private businesses with products in market, substantial revenue and a clearer route toward profitability, she told CNBC. That approach still carries private-market risks, including limited disclosure, valuation uncertainty and fewer opportunities to exit compared with listed shares.

Goldman has previously arranged direct private-company investments for wealthy clients in companies including Facebook before its 2012 initial public offering, and later in SpaceX, Stripe and Canva, Olson told CNBC. She said demand for the asset class led Goldman executives to separate and expand the operation.

AI investment cycle adds demand

The platform also arrives during a surge of investor interest tied to artificial intelligence. Olson told CNBC that demand extends beyond major AI model developers to the infrastructure behind the technology, including data centers and related projects.

The announcement follows Goldman’s report of record quarterly revenue days earlier, CNBC said. Goldman executives cited AI-related activity across investment banking, trading and financing businesses, according to CNBC’s account of the results.

For Goldman, the move also fits a longer shift toward wealth and asset management, businesses Wall Street banks often view as less volatile than investment banking fees and trading revenue. CNBC reported that Goldman has spent years expanding those areas as part of its broader strategy.

The secondary advisory team addresses another feature of private markets: investors may need a negotiated transaction to sell before a company goes public or is acquired. Goldman plans to expand a marketplace for clients seeking to purchase or dispose of private holdings, and to advise clients exiting positions held outside the firm, according to CNBC.

Olson told CNBC that Goldman wanted to give the secondary business a clearer identity as client demand for private-company liquidity increased.

This story draws on original reporting from CNBC.