Goldman Sachs 2012 Annual Report Download - page 129

Notes to Consolidated Financial Statements
Investments in Funds That Calculate Net Asset
Value Per Share
Cash instruments at fair value include investments in funds
that are valued based on the net asset value per share
(NAV) of the investment fund. The firm uses NAV as its
measure of fair value for fund investments when (i) the fund
investment does not have a readily determinable fair value
and (ii) the NAV of the investment fund is calculated in a
manner consistent with the measurement principles of
investment company accounting, including measurement of
the underlying investments at fair value.
The firm’s investments in funds that calculate NAV
primarily consist of investments in firm-sponsored funds
where the firm co-invests with third-party investors. The
private equity, credit and real estate funds are primarily
closed-end funds in which the firm’s investments are not
eligible for redemption. Distributions will be received from
these funds as the underlying assets are liquidated and it is
estimated that substantially all of the underlying assets of
existing funds will be liquidated over the next seven years.
The firm continues to manage its existing funds taking into
account the transition periods under the Volcker Rule of
the U.S. Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act), although the rules have
not yet been finalized.
The firm’s investments in hedge funds are generally
redeemable on a quarterly basis with 91 days’ notice,
subject to a maximum redemption level of 25% of the
firm’s initial investments at any quarter-end. The firm
currently plans to comply with the Volcker Rule by
redeeming certain of its interests in hedge funds. The firm
redeemed approximately $1.06 billion of these interests in
hedge funds during the year ended December 2012.
The table below presents the fair value of the firm’s
investments in, and unfunded commitments to, funds that
calculate NAV.
As of December 2012 As of December 2011
in millions
Fair Value of
Investments
Unfunded
Commitments
Fair Value of
Investments
Unfunded
Commitments
Private equity funds 1$ 7,680 $2,778 $ 8,074 $3,514
Credit funds 23,927 2,843 3,596 3,568
Hedge funds 32,167 — 3,165 —
Real estate funds 42,006 870 1,531 1,613
Total $15,780 $6,491 $16,366 $8,695
1. These funds primarily invest in a broad range of industries worldwide in a variety of situations, including leveraged buyouts, recapitalizations and growth
investments.
2. These funds generally invest in loans and other fixed income instruments and are focused on providing private high-yield capital for mid- to large-sized leveraged and
management buyout transactions, recapitalizations, financings, refinancings, acquisitions and restructurings for private equity firms, private family companies and
corporate issuers.
3. These funds are primarily multi-disciplinary hedge funds that employ a fundamental bottom-up investment approach across various asset classes and strategies
including long/short equity, credit, convertibles, risk arbitrage, special situations and capital structure arbitrage.
4. These funds invest globally, primarily in real estate companies, loan portfolios, debt recapitalizations and direct property.
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