Goldman Sachs is raising $25bn across two new funds aimed at easing liquidity pressures for private equity firms and their portfolio companies, according to a report by Bloomberg.

The bank’s asset management division is pitching a $10bn hybrid capital fund combining debt and equity to provide flexible financing to sponsor-backed companies. The structure allows portfolio companies to create dividends for upstream distribution, helping GPs return capital to investors.

Goldman is also seeking $15bn for the latest vintage of its flagship secondaries fund, which will acquire private equity stakes and continuation vehicles, enabling firms to extend ownership and restructure assets.

“There’s a lot written about continuation vehicles but not about the hybrid-capital side,” said Marc Nachmann, Head of Asset and Wealth Management at Goldman Sachs. “Hybrid solutions allow portfolio companies the creation of dividends upstream. That’s why we see hybrid capital as pretty interesting right now.”

Goldman raised a similar $15bn hybrid vehicle in 2021 and is building on its $151bn private credit portfolio, targeting $300bn by 2028. The strategy underscores growing demand for alternative financing as roughly 45% of buyout holdings breach leverage caps, limiting traditional dividend recaps and exits.

Competitors are also active in the space: Carlyle’s AlpInvest has raised more than $4bn for its portfolio finance platform, while Eldridge Capital is fundraising for a comparable strategy.

Nachmann added that tougher market conditions may force private equity firms to focus more on improving company productivity. “It is a good thing for the economy to improve the productivity and the return on capital in the existing asset,” he said.

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