Goldman Sachs starts private markets platform for wealthy clients

Goldman Sachs (GS) has formed a new platform designed to help rich clients and family offices invest in direct stakes of fast-growing private companies, according to a memo reviewed by Seeking Alpha.

The Wall Street firm's stock rose 2.6% in late Tuesday afternoon trading.

The platform focuses on direct investments in individual private companies, rather than through private equity funds. It also will help clients to buy and sell those stakes, the memo said.

Called the alternative investments platform, the new group consists of Goldman's existing alternatives business and two newly established teams — the existing Alternative Capital Markets and the newly formed Private Company Investments team and the Secondary Advisory Group. 

The PCI team combines the fiduciary single-asset investment business that was formed in ACM and the self-directed family office-focused direct investment business established within Apex. 

"We continue to see meaningful opportunities to scale our Apex business, which partners with advisors to deliver specialized coverage of the firm’s premier and sophisticated family office clients globally," the memo written by John Mallory and Nishi Somaiya, co-heads of Goldman Sachs Wealth Management, and Kristin Olson, global head of Alternatives for Wealth at Goldman.

The move brings two trends together. Goldman (GS) has been building its wealth and asset management business for years because it's expected to provide steadier revenue than trading and investment banking. Meanwhile, startups are staying private longer, growing to much larger sizes before going public.

"Companies are going public at a trillion dollars," told CNBC in an interview. "If you haven’t participated along the way, you’re clearly missing a big part of the growth cycle."

"These changes reflect the significant growth our business has experienced over many years and position us to capture future growth while continuing to deliver a leading investment platform for our clients," the three executives wrote in the memo.