Hedge fund listings: Goldman keeps private exchange plan under wraps
"We absolutely cannot talk about it," was the repeated response of Goldman Sachs to market reports that it is setting up a mini private exchange to enable alternative investment firms to list without the hassles of regulatory oversight.
According to a newspaper report, Oaktree Capital, an LA-headquartered alternatives firm with $42 billion in assets under management, will raise $700 million by selling a 13% stake on this new Goldman Sachs Tradable Unregistered Equity OTC Market, or GSTrUE as it will be more fondly known.
The idea that Goldman Sachs can develop a sufficiently liquid market has been doubted by some Wall Street participants. "I find this all quite bizarre," says a hedge fund manager. "How on earth are they going to provide enough liquidity? They’ll have to ensure liquidity in even illiquid markets, making them a market maker in Oaktree and any other company they list on this market. I doubt they can manage that on their own."
Better to collaborate
A New York-based lawyer says his investment banking clients are bemused that Goldman has attempted to do this on its own. "It would be so much easier to have done this in a joint manner in order to create a proper market, but they’ve gone and named it now," he says.