The private equity crisis is escalating, even Goldman Sachs has to "prove its innocence."

The private equity crisis is escalating, and Goldman Sachs is trying to reassure clients, stating that its largest private credit fund aimed at retail investors has relatively low redemption rates and software industry risk exposure. Wall Street Journal mentioned that on Friday, the U.S. banking sector experienced its worst decline of the year, with the KBW Bank Index dropping as much as 6% during the day, marking the largest single-day drop since the trade turmoil in April last year. Risks in the private credit sector have concentrated and exploded, with multiple funds facing liquidity issues. As the private equity crisis intensifies, Goldman Sachs stated in a detailed letter to investors on Thursday that the corporate software exposure of its Goldman Sachs Private Credit Company is approximately 15.5%, which is lower than its peers, and the redemption rate for the fourth quarter is 3.5%, below the industry average. This letter was further elaborated on during a conference call on Friday. Vivek Bantwal, Co-Head of Global Private Credit at Goldman Sachs Asset Management, stated: By diversifying funding sources, we can continuously deploy capital throughout the cycle. He also admitted: If we fully bet on retail channels, the pace of scale expansion would obviously be faster. This move aims to boost market confidence, as the U.S. credit market has deteriorated sharply since February. Particularly in the past few days, credit risk and equity risk have clearly decoupled. The corporate bond spread in the technology sector is at its widest level relative to the overall investment-grade market since 2007. Last month, a technology-oriented fund under Blue Owl Capital faced investor withdrawals, amounting to approximately 15.4% of its net assets, raising widespread concerns about this $1.8 trillion industry. Goldman Sachs' Underwriting Standards and Prudent Stance Goldman Sachs emphasized its underwriting standards in the letter, stating that it has not lowered credit thresholds in pursuit of asset scale. The company stated that its borrower portfolio relies less on annual recurring revenue (ARR) valuation logic and payment-in-kind (PIK) interest arrangements compared to most of its peers in the industry. These arrangements allow borrowers to use more debt to pay interest. Bruce Richards, Chairman of Marathon Asset Management, stated in an interview with Bloomberg Television this week that annual recurring revenue "makes the valuation multiples of related companies excessively high." Goldman Sachs' statement echoes this judgment, demonstrating its proactive avoidance of the aforementioned risks in asset selection The risk of disruption from artificial intelligence faced by corporate software borrowers is another focus of the current market's examination of private credit funds. JP Morgan's letter states: We do not underestimate the risk of AI disruption. At the same time, it points out that JP Morgan believes some companies will emerge victorious from the AI reshuffle, focusing on those that "embed into core business processes" and "possess proprietary data." Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk