Please ensure Javascript is enabled for purposes of website accessibility

Goldman Preps Private Equity Unit for Public Debut Amid Golden Year

By The Daily Upside – Sep 6, 2021 at 8:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There's an old joke that a skateboard is a good investment because you can flip it (some grade-A dad comedy right there), but an even better...

For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. It's completely free and we guarantee you'll learn something new every day.

There's an old joke that a skateboard is a good investment because you can flip it (some grade-A dad comedy right there), but an even better investment is one where you can list it.

On Monday, Goldman Sachs said it will put its private equity unit, Petershill Partners, on the London Stock Exchange via an IPO at a $5-billion valuation.

London Calling

The first group of its kind, Petershill was set up in London by Goldman in 2007 to buy minority stakes in private equity, venture capital, and hedge funds — the idea being to profit from the recurring revenue of their management and performance fees.

Petershill now holds positions in 19 asset managers that sport $187 billion in combined assets under management, among them renowned hedge fund Caxton Associates and tech buyout specialist Accel-KKR. PE founders can unload their lucrative claims on those funds when looking to cash out and pick up that ski-in ski-out house in Aspen.

While Goldman is headquartered in New York, it chose to list Petershill in the land of savory pie and potted pork where it was founded. Sentimentality wasn't the deciding factor; London's had an impressive run of IPOs this year, with $12.8 billion raised through the end of July, the most in seven years. And it's provided a good home to private equity listings in particular:

  • British PE firm Bridgepoint raised $1.25 billion in a July IPO, and the stock is now trading 45% above its IPO price.

PE buyout deals totaled $354 billion in the first half of 2021, already blowing past 2020's full-year total of $257 billion, according to financial law firm White & Case. "The environment is quite fortuitous for private equity at the moment, especially with rates looking likely to stay lower for longer," Susannah Streeter, an analyst at Hargreaves Lansdown, told Reuters.

Valuation Salvation: Since last year's market sell-off, the five biggest listed U.S. private capital companies have tripled in combined value, with investors eyeing the huge fees they rack up from unlisted assets.

None

Invest Smarter with The Motley Fool

Join Nearly 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.