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Goldman to invest in hedge
NEW YORK - Goldman Sachs Group said Monday it is leading a group of investors including Maurice (Hank) Greenberg and Eli Broad in injecting $3 billion into a Goldman hedge fund that lost about 28 percent of its value last week.
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NEW YORK - Goldman Sachs Group said Monday it is leading a group of investors including Maurice (Hank) Greenberg and Eli Broad in injecting $3 billion into a Goldman hedge fund that lost about 28 percent of its value last week.
The investment bank said its Global Equity Opportunities fund, one of its largest hedge funds, "suffered significantly" as global markets sold off on worries about debt and credit, dragging its value down to $3.6 billion, from about $5 billion last month.
Goldman Sachs will invest $2 billion. Other investors will contribute about $1 billion to the fund, whose computer-driven "quantitative" investment strategies were disrupted by triple-digit swings in the financial markets.
"This is not a rescue," said Goldman Chief Financial Officer David Viniar in response to a question from an analyst. "Given the dislocation in the market, we believe this is a good investment opportunity for us and other investors."
Joining Goldman in the infusion were Greenberg, former chairman of American International Group, and Broad, a California real estate developer who helped found SunAmerica and later sold it to AIG. Hedge fund Perry Capital LLC is also an investor.
Goldman Sachs said two other hedge funds it manages -- Global Alpha and the North American Equities Opportunities Fund -- have also suffered during the market turmoil. The Alpha fund has lost 27 percent of its value this summer.
Viniar would not say whether the bank was considering similar action for the other two funds, which combined are worth about $6.4 billion.
The $2.7 trillion hedge fund industry uses investments from wealthy individuals and institutions to make bets on stocks and other securities using sophisticated investment strategies.
Hedge funds have been hit hard in the past few months as Wall Street has become much more volatile.
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