Goldman aims to raise $6bn for hedge fund

Goldman Sachs is aiming to raise $4bn-$6bn for a new hedge fund as the investment bank tries to rebuild its reputation in the hedge fund business, it has told potential investors.

The new fund, run by bank partners Raanan Agus, former head of the proprietary trading desk, and Kenneth Eberts, former head of the US prop desk, will be the first from the bank to focus on picking shares, rather than using computerised, or quantitative, approaches.

If the new fund gets close to $6bn, it will be one of the biggest launches ever, rivalling the $6bn Convexity Capital, created last year by Jack Meyer, former head of the Harvard endowment.

Goldman’s fundraising goal is particularly aggressive because investors will not be able to withdraw their money for two years, a lock-up likely to deter many.

Goldman’s standing in the hedge fund industry took a body blow in August when three of its quant funds plummeted by as much as 30 per cent in two weeks amid a rout of the quant sector.

The bank stepped in with $2bn of its own money and $1bn from allies to shore up its Global Equity Opportunities fund, but declined to put new money into flagship fund Global Alpha.

Both have seen big withdrawals, with Global Alpha redemptions above $1.6bn.

According to marketing documents for Goldman Sachs Investment Partners, the new arm of the asset management division which will run the fund, Goldman was “looking to grow its hedge fund platform with a particular focus on fundamental equity strategies”.

“It is a classic prop-desk spin-off,” said one hedge fund investor who has seen the marketing pitch.

Goldman will create US and offshore versions of the fund, known as the Opportunistic Multi-Disciplinary Investment Fund, with a launch slated for January.

The fund aims to invest mainly in shares, taking long and short positions, with a focus on the US.

Before the bank’s quantitative funds began underperforming Goldman’s success in creating a highly profitable internal quantitative hedge fund business had prompted a race by rivals to buy their way into the industry.

However, Goldman has already begun diversifying from its reliance on quantitative hedge funds, raising $2.7bn for a credit fund called Liberty Harbor and $1.8bn for its Liquidity Partners recovery fund amid this summer’s turmoil. Goldman declined to comment.