Goldman Sachs just netted a big profit in one of its most promising businesses.
The investment bank took minority stakes in prominent hedge funds, including Winton Capital and Capula Investment Management, through its Petershill I fund in 2007.
Goldman said Monday in a letter to investors in Petershill that it is selling the minority stakes to Affiliated Managers Group, and expects a two-and-a-half gross return on its investment.
The bank expects to make up to $835 million from the sale, according to the investor letter.
The sale represents a win both for the Petershill fund, which has delivered a 15% annualized cash yield since its inception, and for Goldman Sachs Asset Management (GSAM), the business Petershill is a part of.
GSAM has become a much bigger part of Goldman Sachs over the past six or seven years, and now makes up around 18% of revenues, up from 5% in 2009. The firm counts that group as one of its most promising, even if it doesn’t get much analyst attention.
Gary Cohn, president and chief operating officer at Goldman Sachs, spoke about the business at the Deutsche Bank Global Financial Services Investor Conference. He said:
We continue to expand our franchise and finished the first quarter with record assets under supervision of $1.3 trillion. Over the past three years, we’ve had great success growing our assets under supervision; we have produced $150 billion in organic active net long-term inflows, which is among the best performances in the industry.
The firm plans to continue investing in hedge funds and expand its stakes business, according to a spokesman.