Goldman Prepping $10B Hedge Fund Launch

Dec 17 2007 | 1:37pm ET

In spite of the awful performance of its flagship hedge fund, investors don’t seem to be forsaking Goldman Sachs’ hedge fund products. The Wall Street giant is preparing what could be the biggest launch in the history of the industry.

Goldman Sachs Investment Partners—the firm’s first fully-fledged long/short equity fund—could debut on Jan. 1 with as much as $10 billion, easily surpassing the record set last year by Menlo Park, Calif.-based Makena Capital Management, whose first fund raised $7 billion at launch. They will be assisted by more than 40 staffers from the prop. desk.

GSIP is headed by Raanan Agus, the former chief of Goldman’s proprietary trading desk, and Kenneth Eberts, who ran the firm’s U.S. investments.

According to a marketing document obtained by Bloomberg News, the two-times-levered fund will invest three-quarters of its assets in long/short equity and 5% in event-driven. The fund will also put 10% each into corporate credit and private equity side-pockets for illiquid investments. Most of the investments will be in the U.S., though as much as 30% will be dedicated to Asia.

According to back-testing done by Goldman, the fund would have returned about 18% annualized since 2004. GSIP will charge a 2% management fee and 20% performance fee.


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