Goldman Sachs takes PE crown

Global ranking sees the embattled firm's private-equity arm rising to top spot

May 2, 2010 @ 12:01 am

By Hilary Potkewitz

While executives of The Goldman Sachs Group Inc. were getting grilled on Capitol Hill about deals involving mortgage-related securities, another division of the company quietly made headlines of a different sort.

Thanks to the firm's Principal Investment Area, the world's most controversial bank is now also the world's largest private-equity firm.

In a ranking of global private-equity firms, Goldman surpassed 800-pound gorillas such as The Carlyle Group, Kohlberg Kravis Roberts & Co. and Apollo Global Management LLC to take first place, according to Private Equity International, a trade publication. It uses a proprietary ranking methodology based on data from buyouts, growth equity, venture capital, control-oriented distressed investing and mezzanine debt.

Goldman's jump to first place was fueled by two impressive feats: The closing of a $13 billion mezzanine debt fund in 2008 and the closing of its $20.3 billion PE fund, GS Capital Partners IV, in 2007. It was also helped along by the financial crisis, which hurt private-equity firms with large investments in troubled banks.

The top spot on last year's list was held by TPG, the private-equity firm formerly known as Texas Pacific Group. TPG's fall in the rankings was largely due to its ill-fated lead role in a $7 billion investment in Washington Mutual just months before the federal government stepped in and seized the bank in September 2008.

Goldman has raised about $54.5 billion over the past five years for private-equity investment, compared with Carlyle's $47.8 billion and KKR's $47 billion. TPG, which raised $45.1 billion, and Apollo, with $43.7 billion, made up the top five biggest firms.

Goldman declined to comment.

Hilary Potkewitz is a reporter at sister publication Crain's New York Business.

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