GS Goldman Sachs Group Inc

By Yuliya Chernova 

A unit of Goldman Sachs Group Inc. is acquiring a small stake in venture-capital firm General Catalyst for roughly $200 million, according to a person familiar with the situation.

Goldman's stake in General Catalyst will be in the high single-digit percentages, another person added.

The deal, which is being done through Goldman's Petershill unit, would entitle the investment bank to a portion of the profits the venture-capital firm generates through carried interest and management fees, but it doesn't give Goldman influence over the firm's operations or special access to portfolio company information, some of the people said.

General Catalyst's current holdings include stakes in Airbnb Inc., Stripe Inc. and Oscar Health Insurance Corp., among others.

It isn't clear whether the deal has been completed. None of the founders of Cambridge, Mass.-based General Catalyst are expected to leave the firm as a result of the deal, one of the people said. The capital will be reinvested in the firm in some fashion, the people added.

Goldman will be making payments over the next few years, one of the people said.

This deal is unusual in the venture-capital world but such deals have become more common among buyout funds.

Goldman raised $2.5 billion earlier this year for Petershill to buy minority stakes in asset managers. It owns a less than 10% stake in Accel-KKR, and a 15% stake in Harvest Partners.

Goldman Sachs representatives have said previously that the firm may decide in the future to take a portfolio of private-equity-firm stakes public.

Bloomberg and Axios earlier reported that Goldman was planning to buy a stake in General Catalyst.

As of March 2018, General Catalyst co-founders Joel Cutler and David Fialkow, as well as Managing Director Hemant Taneja, each owned between 25% and 50% of General Catalyst Group Management Holdings, the firm's management company, according to regulatory filings.

The firm has expanded its head count in recent years and now has 13 managing directors, according to its latest fund filings.

In general, firms that sell stakes in their management companies use the proceeds for purposes such as funding new initiatives, enabling owners to partially cash out their stakes, and facilitating generational transitions. Such deals put a price on the management company of private-equity firms, which can help founding general partners with a transition in the future.

Write to Yuliya Chernova at yuliya.chernova@wsj.com

(END) Dow Jones Newswires

December 03, 2018 20:56 ET (01:56 GMT)

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