Goldman Sachs to launch new infrastructure fund

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Goldman Sachs to launch new infrastructure fund

According to sources, Goldman Sachs is considering launching a new infrastructure fund and could begin the fundraising process before the end of the year.

Goldman Sachs Infrastructure Partners closed two infrastructure funds in 2006 and 2010, GS Infrastructure Partners I (GSIP) and GS Infrastructure Partners II respectively. GS Infrastructure Partners I raised US$6.5 billion while GS Infrastructure Partners II raised US$3.1 billion.

The primary focus for those funds was on investment opportunities with the following parameters:

  • Sectors including transportation infrastructure (such as airports, ports, railways and roads) and utilities infrastructure (such as electricity, gas and water networks and conventional/ renewable contracted power generation),
  • Global mandate across OECD countries, and
  • Target investment sizes ranging from $100 million to $500 million of GSIP capital per investment, with the ability to do larger transactions with additional partners.

The new fund is expected to have the same investment policy as the two previous funds.

The firm could find problems on the way due to a federal regulation known as the "Volcker Rule". It restricts banks from owning more than 3% of an infrastructure fund or any other private equity-type fund. Before this restriction, Goldman Sachs would generally invest about 10% of the capital of its infrastructure funds and between 30% to 35% of its private equity funds.

According to Reuters the bank could make use of a loophole in the Volcker Rule to invest any amount of its own money in infrastructure assets by using use a fund that dos not include outside investors.

There is no target size or fundraising start date confirmed for the fund yet.

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