Goldman Sachs Collects $4 Billion for Infrastructure Deals
The asset manager raised $1.5 billion more than for a predecessor vehicle as investors sought to cash in on decarbonization and digital transformation trends
Goldman Sachs Group’s asset management business has collected $4 billion to invest in midsize infrastructure assets, as investors look to take advantage of a favorable political and economic climate for the sector.
Goldman Sachs Asset Management closed West Street Infrastructure Partners IV at the fund’s target and has already committed $2.3 billion across eight investments, the New York-based manager said. Goldman Sachs oversaw a total of more than $2.7 trillion in assets as of June 30.
So far investments in the new fund include Synthica Energy, a Cincinnati-based developer of renewable gas plants, Verdalia Bioenergy, a developer and operator of European biomethane plants, and Gridstor, a developer and operator of utility-grade battery storage projects in the U.S., Goldman said.
The new fund attracted capital mainly from institutional investors, with the balance made up by high-net-worth investors, Goldman and its employees, the bank said. The fund’s predecessor, West Street Infrastructure Partners III, closed in 2017 with $2.5 billion, a spokesman confirmed.
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Goldman said it is investing the fund across infrastructure subsectors that include energy transition, digital infrastructure, transport, logistics and social infrastructure.
The infrastructure asset class stands to benefit from broad economic trends, including the transition to a lower-carbon economy, digital transformation and shifting demographics, “each of which requires very significant mobilization of private capital,” said Goldman’s Co-Head of Infrastructure Scott Lebovitz in a statement announcing the close of the fund.
Private infrastructure investors in the U.S. also stand to benefit from a roughly $1 trillion infrastructure law passed in 2021 to repair the nation’s aging roads and bridges, upgrade the electrical grid and expand broadband internet access.
Around $7.8 billion had been invested across 1,462 projects since the law was enacted in November 2021, according to data published by the Department of the Interior.
Goldman is looking to use the new fund to back what are called value-add infrastructure investments, namely businesses with long-term cash flows and strong market positions, and that deliver assets and services viewed as critical to society.
Value-added investing involves acquiring assets and growing their revenues through investment and operational improvements. It is a higher-risk and higher-returning strategy than core infrastructure, which targets assets such as utilities in developed countries with long-term supply contracts already in place.
Goldman’s infrastructure investment team has deployed approximately $16 billion since inception in 2006, the bank said. The team is led by Lebovitz, Global Co-Head Tavis Cannell and Chief Investment Officer, Infrastructure Philippe Camu.