Goldman Sachs Group (NYSE: GS) had an initial offering Friday morning for one of its newest funds, Goldman Sachs MLP Energy Renaissance Fund (NYSE: GER). This will be the second MLP closed-end fund to launch within the past 12 months. The underwriters for the offering were Bank of America, Merrill Lynch, Morgan Stanley, UBS, Wells Fargo and Citigroup.
In the common share offering, the fund raised $1.4 billion and could raise up to $1.6 billion, should the underwriters exercise their options.
As implied by its name, this fund plans on investing in master limited partnerships (MLPs) and other energy investments. It will specifically focus on the midstream MLP investments, but it can also include other upstream or downstream investments across the energy value chain.
Kyri Loupis, Managing Director of GSAM and lead portfolio manager for the fund, commented on the fund saying:
We believe the US energy renaissance story is only in its early stages and we see multiple years of growth ahead. Our midstream MLP focus, combined with an opportunistic approach for selecting energy users and producers, can help make this fund more of a complete product for today’s environment.
The fund will be managed by Goldman Sachs Asset Management Energy and Infrastructure Team. This team is among the largest MLP investment groups in the industry, having managed approximately $14.1 billion in MLPs as of the end of August.
The MLP Energy fund opened at $20.00 and has traded within the range of $19.95 to $20.25. The fund has traded more than 1.7 million shares so far.
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This is not news that will move the needle for Goldman Sachs stock itself, but there is sector news here for MLP investors. When Goldman Sachs telegraphed that it was going to get more of an MLP strategy, it put a serious theoretical bid under the sector. After all, Goldman Sachs caters solely to institutions and high net worth individuals who invest millions of dollars with the firm. Many institutions and many wealthy individuals remain very underinvested and underexposed to MLPs, and their portfolio returns have suffered as a result.
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