Goldman Sachs plans to float the assets of its Petershill Partners unit. They are thinking about this with the hope to cash in on a private equity boom, with an IPO valuing the investment vehicle at more than $5 billion. Petershill, which takes minority stakes in alternative assets managers including private equity, venture capital and hedge funds. This will be a standalone company that is to be operated by the Goldman Sachs Asset Management team.
$750 million of new shares as well the existing to give Petershill a free float of 25%. This can make it eligible to get in FTSE indices. Goldman Sachs declined to give an estimated market value. The listing will take place around a month from now. The U.S. bank chose London to list because Petershill was founded over there. The sources also said that the financial centre’s vibrant capital markets offer a strong fundraising opportunity. The London Stock Exchange has had a strong run of initial public offerings (IPOs) in the first half of this year. Many new companies raising $12.77 billion in the first seven months of 2021, which will be the highest in over seven years.
Last year the private equity funds have soared in value. This is because the money pours in from investors looking for higher returns when interest rates are low. British buyout firm Bridgepoint listed in London during July month. And then, France’s Antin Infrastructure Partners launched its own IPO recently. Such companies are offering an attractive hedge against the traditional stock and bond markets for the investors. They are also giving them access to private deal activity. Susannah Streeter, an analyst with Hargreaves Lansdown, said that the environment is quite fortuitous for private equity at this moment, mainly with rates looking likely to stay lower for longer.
PE firms have also been swooping on UK assets. In alternative asset management the Petershill business takes advantage of its relationship with Goldman Sachs to source attractive acquisitions. Profits from Petershill will go to its institutional investors. In the meantime, Goldman Sachs will earn an operator fee for managing the company. Petershill itself has no fixed assets, but holding positions in 19 alternative asset managers. It is now shifting its focus on the effects of the pandemic by investing in areas such as healthcare, balance sheet repair and environmental, social and governance.