Goldman takes 5% loss in alternatives during Q4

The bank lost $3.9bn over the past year in its principal investment area, which includes alternatives. Goldman’s CFO said the company is well-capitalised and is being patient for good investment opportunities.

Goldman Sachs took a 5 percent loss in its alternative investments in the three months to the end of November, part of an overall $3.9 billion decline in its principal investment area in 2008.

The overall decline includes yearly-losses of $2.5 billion in corporate principal investments and $949 million for real estate principal investments, the bank holding company said during an earnings call yesterday.

Assets under management in the alternatives space declined from $154 billion in the three months to 31 August to $146 billion in the quarter to 30 November, according to Goldman’s earnings statement. Assets in the fourth quarter declined 3 percent from the same quarter last year.

For the fourth quarter, principal investments dropped $3.6 billion, with $2 billion losses in corporate investments and $961 million in real estate principal investments.

“If you look at where the [private investment area] was at the beginning of the quarter and the net change, it’s down about 15 percent,” David Viniar, Goldman’s chief financial officer, said during the earnings call. “Markets around the world were down more than that. Basically, we have very minimal to no exposure in some of the sectors hit the hardest like the financial sector, retail and autos, that’s not where our investments were.

“We’re not happy about it, but there’s no getting through a quarter like this without some losses in principal investments,” Viniar said. 

Goldman has several private investment units, including its private equity group, which makes fund of funds investments and co-investments, and GS Capital Partners, which targets investments of $200 million to $800 million in a range of industries in the US, Europe and Asia. GS Capital’s most recent fund, GS Capital Partners VI, closed on $20.3 billion last year.

Goldman also has an infrastructure investment group, units for real estate investments and a debt fund.