FROM: Don Pierce, Chief Investment Officer
SUBJECT: Goldman Sachs Asset Management - Master Custody Account
RECOMMENDATION:
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Recommend that the Board approve the establishment of a Master Custody Account (MCA) with Goldman Sachs Asset Management, including a $200 million initial allocation, subject to completion of due diligence and legal documentation.
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BACKGROUND:
Starting in 2024, staff undertook an effort to broaden the SBCERA portfolio's capabilities in the European credit universe. This included an in-depth process to survey the market and identify target areas of interest. Beginning with 62 survey respondents, staff conducted focused diligence on 10 managers and identified 4 managers that aligned with SBCERA's objectives from a strategy and firm perspective.
Staff recommends that SBCERA establish a new Master Custody Account ("MCA") with Goldman Sachs Asset Management ("GSAM") with an initial focus on two main strategies forming the core of SBCERA's European credit allocation:
- Direct Investments - $100 million of the MCA (50%)
o Investments across GSAM's European credit platform including asset finance, senior direct lending, and mezzanine debt.
- West Street Strategic Solutions Fund II ("WSSS") - $100 million of the MCA (50%)
o Hybrid strategy focusing on capital preservation with structural protections and delivering returns by solving for complex capital solutions.
GSAM is the asset management division of Goldman Sachs ("GS"), a global investment bank founded in 1869 and headquartered in New York. The firm oversees $2.9 trillion including $132 billion in private credit. GSAM's European credit business has invested ?65 billion since 1996.
The MCA relationship will be headed by Mr. Beat Cabiallavetta, Partner and Global Head of Hybrid Capital. In addition, he is a member of the Asset & Wealth Management ("AWM") Private Credit Investment Subcommittee, AWM Private Credit Investment Committee, and AWM Private Corporate Investm...
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