Can Goldman's Expansion in Private Equity Credit Set New Growth Path?

The Goldman Sachs Group, Inc. GS is making efforts to ramp up its lending services to private equity and asset managers, and aims to expand internationally, which will likely support its growth over the long run.

In sync with this, in January 2025, Goldman unveiled several initiatives to expand its business in private credit, private equity and other asset classes, and better serve its corporate and investor clients. The company is establishing the Capital Solutions Group to expand and integrate its full range of financing, origination, structuring and risk management solution operations in the Global Banking & Markets business.

Goldman is extending its private equity credit services internationally, focusing on regions such as Europe, the U.K. and Asia. To support this expansion, the firm has increased staffing in locations like Dallas and Bangalore, aiming to better serve private equity and venture capital clients with capital call facilities and subscription line loans.

GS’s efforts will enable it to provide clients with access to differentiated sourcing and investing capabilities across opportunities in private credit and private equity. Management expects to witness high-single-digit annual growth in private banking and lending revenues over time.

Private Credit Expansion Efforts By GS Peers

Rapid growth of private credit is attracting not just GS but also peers JPMorgan JPM and Citigroup C.

Since 2021, JPMorgan has deployed more than $10 billion across above 100 private credit transactions, leveraging its extensive client base and vast origination platform. In February 2205, JPMorgan announced an additional $50-billion allocation toward direct lending, solidifying its presence in the lucrative private credit market. JPM’s partnerships with multiple co-lenders have strengthened its position, bringing in an additional $15 billion in capital. By integrating private credit solutions within its existing banking relationships, the company is well-positioned to capitalize on the convergence of syndicated and direct lending markets, offering clients greater flexibility and financing options.

Citigroup and Apollo Global Management have inked a deal for a subsidiary of Citigroup and certain affiliates of Apollo to establish a revolutionary $25-billion private credit, direct lending program. The program will initially focus on North America, potentially expanding to additional geographies. With a scope and size that may guarantee finance for strategic transactions, the program aims to greatly expand corporate and sponsor clients' access to the private lending capital pool. Through the program, Apollo's scalable, substantial capital base will be combined with Citigroup's broad banking client reach, origination and capital market capabilities.

Goldman’s Price Performance, Valuation & Estimates

GS shares have gained 13% year to date compared with the industry’s growth of 12.3%.

Price Performance

From a valuation standpoint, Goldman trades at a forward price-to-earnings (P/E) ratio of 13.64X, below the industry’s average of 13.94X.

Price-to-Earnings F12M

The Zacks Consensus Estimate for GS’s 2025 and 2026 earnings implies year-over-year increases of 8.9% and 13.4%, respectively. The estimates for 2025 and 2026 have been revised downward over the past 30 days.

Estimates Revision Trend

Goldman currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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