(Bloomberg) — Goldman Sachs Group Inc. Chief Executive Officer David Solomon said that while retail investors have been worried about private credit — and the sector will continue to cause some concern — his bank has few issues in the space and continues to see it as attractive.
“We recognize that the private-credit industry has been an area of increased focus in recent months,” Solomon said on an earnings conference call Monday. “I think there’s going to continue to be some noise around the retail space.”
The biggest U.S. banks have rapidly grown their lending to non-bank financial institutions — a group that includes private-credit shops as well as private equity, hedge funds, mortgage lenders and more — over the last decade. In aggregate, the top 25 US banks had $1.25 trillion in loans to that category on their balance sheets as of March 25, according to Federal Reserve data.
A Goldman Sachs private-credit fund said investors sought to pull just under 5% of their cash in the first quarter, narrowly escaping a broader exodus that has forced peers to cap withdrawals. The $15.7 billion Goldman Sachs Private Credit Corp., which manages a so-called non-traded business development company, met redemption requests in the first quarter amounting to 4.999% of its outstanding shares, according to a filing a week ago.
Read More: Goldman Private Credit Fund Dodges Exodus With 4.999% Pulled
“This continues, with any sort of a medium-term or longer-term view, to be a very, very attractive platform for us,” Solomon said Monday.
Banks have been seeing private equity firms — often key clients for dealmaking and initial public offerings — take a step back. Goldman said Monday that, during the first quarter, sponsor activity didn’t accelerate as much as expected. But if markets start to steady, that could boost the outlook for those types of clients, Solomon said.
“While market conditions tempered execution for IPOs and sponsor activity broadly, we believe that activity levels will rebound once conditions stabilize,” he said.