BX Blackstone Inc

By Liz Hoffman 

The two heads of Goldman Sachs Group Inc.'s flagship private-investing business quit Friday, the latest senior departures at the Wall Street firm and ones that threaten to undermine a big fundraising push.

Sumit Rajpal and Andrew Wolff jointly ran Goldman's $100 billion-plus merchant bank, which invests the firm's money and that of clients into deals. They were elevated last spring to help spearhead a big fundraising push, which aims to bring in another $100 billion over the next five years.

Both men were set to hit the fundraising trail later this month for the first plank, a planned $8 billion corporate-buyout fund, people familiar with the matter said. That effort will continue under fundraising chief Michael Koester, though executives are likely to face tough questions from investors about turnover at the top.

The resignations are a setback for Chief Executive David Solomon's plans to compete head-to-head in private equity with giants like Blackstone Group Inc. Seizing on growth in private markets, Mr. Solomon has combined disparate investing groups across the firm into a $320 billion colossus in buyouts, hedge funds, real estate and debt.

What was a trickle of senior departures last fall has picked up speed early in 2020. At least five partners quit this week and several more are set to follow, many in the firm's trading arm, people familiar with the matter said.

Some in the ranks have expressed unease about Mr. Solomon's agenda, which has brought sweeping change and a higher level of executive accountability to a firm unaccustomed to much of either. To those on the wrong side of it, the shift de-emphasizes activities like trading and engineering that have long been a core part of Goldman's DNA.

Mr. Rajpal joined Goldman in 2000 and was named in 2010 as one of its youngest-ever partners. He helped Goldman navigate changes to private-equity rules after the financial crisis, and has been behind some winning investments, including a deal for insurance group Hastings and a stake in credit-reporting bureau TransUnion that turned more than $1 billion in profit.

He had an early hand in building what is Goldman's consumer bank, pitching then-CEO Lloyd Blankfein in 2014 on the idea. Today Marcus, as the retail business is called, has $60 billion in deposits and $7 billion in loans.

Mr. Wolff, a Harvard-trained lawyer, has spent 22 years at Goldman, most of it tending to the merchant bank's overseas operations. He spent six years in Asia before relocating to London in 2012.

They stepped into the spotlight with a $7 billion buyout fund raised in 2017, Goldman's first since the financial crisis and a key test of whether the bank still had its mojo in merchant banking. That fund is about 80% invested and has early returns in the midteens, people familiar with the matter said.

It isn't clear what their next steps are. Departing Goldman partners who aren't joining rivals often stay on as advisers to the firm; those with competing offers are quickly cast off.

Write to Liz Hoffman at liz.hoffman@wsj.com

(END) Dow Jones Newswires

February 07, 2020 16:09 ET (21:09 GMT)

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