Goldman Sachs (GS) Raising Money For A Distressed Debt Fund

Goldman Sachs (NYSE: GS) is looking to launch a new global fund that will invest in the debt of troubled companies and the FT is reporting it is looking to raise several billion dollars from external investors. The fund will be run by Goldman Sachs private equity arm and will invest in stressed and distressed debt.

Goldman Sachs does have other funds that can invest in distressed debt. Actually, last summer Goldman Sachs raised a $10 billion fund to invest in loans backing leveraged buyouts. There is also GS Liquidity Partners III, which buys various kinds of debt in distressed companies.

Goldman Sachs is raising this external money as more companies continue to default on debt. Goldman Sachs recently asked investors to its $20 billion private equity fund for approval to move much of its remaining uninvested money into distressed debt. Of the $9 billion remaining in the PE fund, Goldman plans to allocate $4.5 billion to stressed and distressed investments and increase open market purchases of both debt and equity securities from 10 to 25% of total commitments.

Goldman has already invested $2 billion in the PE fund, including an additional $500 million injected recently.

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