00:00If you look at the Fed rate path, is it really shifting the perception, you know, is the monetary
00:05policy changing the way that private equity firms approach deal making, but also financing?
00:11Well, thank you for having me. I'm delighted to be here. Listen, I would say that throughout
00:152025, we've seen an increasingly supportive environment anyway. So, you know, we've seen
00:22M&A volumes up 40 percent. We've seen sponsor activity coming back in earnest. And we're
00:28seeing people being quite forward leaning anyway. So, of course, a rate cut will be
00:32supportive, further supportive of that. But I don't necessarily think it's going to fundamentally
00:36change the momentum we're seeing. If anything, it's going to continue to 26 and 27.
00:41Are you seeing, you know, some of the sponsors lean more into syndicated loans, right, rather
00:46than private credit these days?
00:48Yeah, I wouldn't necessarily say more into. I would say the private equity sponsors will
00:54take whatever financing solution suits their needs, suits the specific situation. You know,
00:59private credit is here to stay. I think it's a very flexible and attractive solution. But
01:04also syndicated loans might be the appropriate situation, depending on the situation. So I
01:11think we'll see both.
01:12Yeah. And where are we on private credit? Are we just going to see bumps along the road?
01:17I mean, there was a couple of, you know, there were a couple of days, like 10 days ago,
01:19where people were really worried about what it meant for the future.
01:23Yeah, I would say that the private credit market is a big, deep and sophisticated market at this
01:30stage. You know, at Goldman Sachs, we've had a private lending business for more than 30 years.
01:35The underwriting standards are solid. I think people have, you know, an ability to really assess
01:41risk in the appropriate way. So I think it is the natural sort of development when a market,
01:49you know, enters into some form of acceleration in activity. But I wouldn't necessarily say that
01:57there's any reasons to worry.
01:59Has anything changed, actually, in your space in the last, you know, 12 to 14 months? I know we try
02:04and figure out whether, for example, there's more time on credit and secondaries after, you know,
02:09Carlisle reported earnings last week. And again, we saw this slump in private equity arm, but the
02:14firm's credit and secondary was doing really good. Does that change the way you service them?
02:17What I would say, if you take a step back and think about the expansion of the broader
02:23alternative asset management industry, you know, from the end of the financial crisis
02:26leading up to 2022, there was a significant expansion driven by a shift from public to
02:33private. But also, I would say the velocity of money was accelerating throughout that time,
02:38you know, driven by falling interest rates, quantitative easing in connection with COVID,
02:43etc. That expansion came to quite an abrupt end beginning of 2022. And we've seen, you know,
02:50two, three years of unwind. I would say today, we're on a solid footing to look forward into. And
02:56that's why we're seeing some of this accelerating activity coming from a solid and healthy base.
03:02So, you know, secondaries, different, you know, continuation vehicles, IPOs, you know,
03:10sales and strategic, all these various things are contributing to what I would see, you know,
03:16this acceleration in activity. Secondary is a liquidity function of private equity.
03:20So that's what that is. And I also think it's a hallmark of a more sophisticated, mature industry.
03:25Where do you see the biggest, the most important deals? Or where are your clients looking at? Is
03:30it regionally? Or is it really industry based? What I'm really encouraged by? It's broad based.
03:36You know, you're really looking at a business today, which is, you know, we have activity in
03:41the US, obviously, but we also have activity in Europe, in Asia, in the Middle East. So that's
03:46from a regional perspective. We're also seeing activity, you know, in TMT, in infrastructure,
03:51in services, et cetera. The difference between 21 and today is that the activity is much more
03:57broad based. And therefore, I would say more sustainable in a way. So that's exciting.
04:03Is that surprising? I mean, again, there seems to be much more uncertainty out there, right? And so
04:08there were a lot of questions on whether a lot of the deals would be would be made in the future.
04:13But does this uncertainty have people worked around the uncertainty? So is this like the new normal
04:17or is it just cycles? Yeah, I think people have gotten used to seeing what gotten used to what I
04:24would say is they've they've factored that into their decision making. And, you know, one of the
04:29things you mentioned, I just want to pick up on, you know, in terms of, you know, we saw a lot, we saw
04:34less secondaries, i.e. private equity buying from private equity that has come back this year. And
04:39actually, more than a third of entries in Europe from private equity has been from another private
04:43equity sponsor. But I was in back to your point about uncertainty. I think it is part of the
04:47decision making. And you saw that actually throughout this year, where you've had more
04:52volatility than we've had in a long time. And actually, people adopted pretty quickly to that.
04:56And I mean, last month, we saw JP Morgan agree to put up the, you know, the full debt commitment for
05:01the $55 billion take private of electronics arts. There's probably no other firm that can do that in
05:08terms of that amount. What do you think it says between the push and pull in the battle between
05:12direct lenders and traditional Wall Street? I go back to the point that I made. It depends.
05:17It depends on the situation. And it depends on what does the company need, you know, relative cost
05:24and sort of structural benefits, et cetera. So I don't think it's either or. I think it's and and.
05:28What are you most excited about in the next 12 months?
05:312026.
05:33I'm excited about 2026.
05:35Exactly. Listen, I'm excited about the fact that our franchise today, I would say, is the strongest
05:41there has ever been based on a few things. One, our absolute and relative performance
05:47to the board based feature that I mentioned in terms of between M&A equity financing, but also
05:54some of our asset backed financing businesses. We created CSG beginning of this year and is working.
05:59You know, if anything, I think origination is going to be a strong competitive advantage for us.
06:04And we're excited about that. And then I would say, you know, we we are continuing to see
06:11activity from all bases, from all regions or sectors, et cetera. So that is I'm excited to take
06:18the team on the field, so to speak.
06:19That's that's work more. What does it mean for for jobs? Are you hiring?
06:24We're hiring. We're always in the market for the right talent. And, you know, if anything,
06:29I would say, you know, there's a lot of talk about AI and and what that's going to do to our industry
06:35and every industry. What I would say is, I think talent, there's also always a bid for talent and
06:41we're always in the market for talent. How much are you actually deploying AI or how much time
06:45are you thinking about how to how to deploy AI in the right way?
06:49We're spending a lot of time on it. And, you know, we announced when we announced our results,
06:55we announced this one GS 3.0. A lot of that is based on the opportunities that AI provides.
07:03And I would say, you know, the interesting thing, people are a lot focused on things like headcount,
07:07et cetera. I actually would turn it around. You know, if I think back to what I was spending my
07:12time on as an analyst starting at Goldman Sachs in 1996, you know, that was quite a lot of manual
07:17tasks, took a lot of time to go to the library, pick up the annual report. Today, that's done,
07:21you know, very quickly. I would say this is an opportunity for all our people to spend time
07:26on more high added value tasks.
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