Goldman Sachs Secures $1B Private Credit Deal With Abu Dhabi's Mubadala To Capitalize On Surging Interest In Asia-Pacific Market

In a strategic move to expand its private credit business in Asia, Goldman Sachs Group Inc GS has secured a $1 billion deal with Mubadala Investment Co., a sovereign wealth fund based in Abu Dhabi.

What Happened: The $1 billion deal will enable Goldman to pursue private credit deals in the Asia-Pacific region, with a particular focus on India, reported Bloomberg. This partnership follows a similar mandate Goldman received from the Ontario Municipal Employees Retirement System in September.

James Reynolds, head of direct lending at Goldman’s asset management unit, explained that some investors are seeking more exposure across the private credit asset class. The $1.7 trillion private credit market has seen significant growth over the past five years, attracting investors looking for higher returns.

"What these markets need is a blossoming, growing private equity industry," Reynolds said. "We want to partner up with investors who want to have Asia exposure and they want to go with a platform that has experience and track record."

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Goldman’s move into the Asia Pacific private credit market is a notable shift, as this market is less developed than those in North America and Europe. The firm’s asset management unit’s credit business in Asia is co-run by Som Krishna.

Investors in the Middle East had long been uninterested in private debt due to its low yields, falling short of their return objectives. However, recent increases in interest rates and overall market expansion have prompted a change in attitude, according to the report.

Why It Matters: This recent development is part of Goldman’s broader strategy to expand its presence in the alternative investment space. Earlier in January, the firm’s asset management arm closed its West Street Life Sciences I fund above its fundraising target with $650 million in equity commitments, representing the first in the firm’s life sciences investing strategy and one of the largest ever first-time private life sciences growth funds.

Goldman’s Asset & Wealth Management division also saw a significant increase in revenue in Q4 2023, reaching its $225 billion alternative fundraising target. Despite a 24% year-over-year dip in net income for fiscal 2023, the fourth-quarter net income was up 51% to $2 billion.

Private credit collaborations have surged in the Middle East in the last year. Barclays is seeking a partnership with AGL Credit Management, backed by funding from the Abu Dhabi Investment Authority, while Mubadala has already inked agreements with Ares Management Corp. and Blue Owl, according to the report.

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