July 1 (Reuters) – Goldman Sachs’ private credit fund said on Wednesday that investors sought to repurchase roughly 3.24% of its total shares in the second quarter, extending its streak of lower redemptions compared to most of the other players of the private credit industry.
The bank’s fund, GS Credit, once again outperformed the sector that has been grappling with elevated redemption requests, driven by investor fears that AI could weaken the earnings of software companies and their ability to repay loans.
Here are some details:
• Goldman said second-quarter repurchase requests were below its 5% quarterly repurchase cap and were fulfilled in full.
• Business development companies (BDCs) typically channel investor capital into private loans, making them a key part of the private credit industry.
• “Across the largest non-traded BDC managers reporting second quarter activity to date, peer repurchase requests have generally ranged from approximately 10% to nearly 17% of shares outstanding,” Goldman said in a letter to shareholders.
• The Goldman fund generated roughly $275 million of gross inflows during the second quarter, it said.
• Several analysts and technology companies have argued that concerns about AI’s impact on the software sector are overblown, saying established companies have businesses, proprietary data and customer relationships that will be difficult to displace.
• “We continue to believe that incumbency moats — mission-critical workflows, proprietary data, deep domain expertise, regulatory complexity, and customer trust — remain powerful sources of defensibility,” Goldman said.
• Reuters reported in April, citing a source, that a large share of the fund’s investors came through Goldman’s private wealth channels, where clients have been long-term investors in private credit and are better positioned to endure illiquidity.
(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli)
Comments