Goldman Sachs expands private credit reach with Kennedy Lewis stake

Goldman Sachs’ asset management arm has bought a stake in private credit specialist Kennedy Lewis Investment Management, as it looks to expand its reach in a fast-growing corner of markets.

The bank’s Petershill Partners private equity unit on Tuesday agreed to buy more than 20 per cent of Kennedy Lewis, valuing the firm at more than $1bn, according to two people with knowledge of the matter.

The Goldman unit is buying the stake from Italian asset manager Azimut, which will exit from Kennedy Lewis.

The move comes as Goldman attempts to build up its asset management business and deepen its reach into alternative investments including private credit to provide a counterbalance to its highly cyclical investment banking and trading businesses.

Kennedy Lewis was founded in 2017 by David Chene, who previously worked at CarVal Investors, and former Blackstone executive Darren Richman.

The firm, which takes its title from the pair’s middle names, has grown rapidly since its founding. It now manages more than $14bn, hunting for deals in esoteric corners of debt markets.

“We are honoured to welcome Petershill as a passive investment partner,” Chene and Richman said in a statement. “Their experience and track record of supporting marquee alternative asset managers will be helpful to us as we continue to grow.”

Kennedy Lewis was approached by multiple suitors during the process, underscoring interest in private credit by alternative asset managers, one person added.

As part of the deal, Petershill will buy both a 20 per cent stake in Kennedy Lewis’ management company, and part of the business that collects incentive fees from its funds.

Last year the firm partnered with investment giant KKR to acquire a $7.2bn loan portfolio from Canadian bank BMO, buying up debts at a time that many lenders in North America were cutting their risk appetites. It also stepped in to lend to film and imaging company Kodak in 2021.

Goldman has focused its growth efforts on asset management after abandoning a push into consumer lending and Main Street banking. The bank had $2.8tn in assets under supervision at the end of 2023, including $450bn in alternatives.

Last year, Marc Nachmann, who heads the asset and wealth division, told investors that it could provide one-third of the bank’s net revenues by the end of 2025. The bank is specifically focusing on private credit as one of its major engines of growth.