US investment banking giant Goldman Sachs last night said it had teamed up with other investors to provide a $3 billion bail-out of a hedge fund it manages.
Goldman said it was injecting the cash into its Global Equity Opportunities (GEO) hedge fund after recent financial market volatility had a sharply negative impact on the fund's performance.
'Given the market dislocation, the performance of GEO has suffered significantly. Our response has been to reduce risk and leverage,' Goldman Sachs said.
The bank, formerly run by US Treasury Secretary Henry Paulson, said it was clubbing together with other investors to pump funds into the troubled hedge fund. It provided $2 billion of the injection.
The GEO fund, which invests in global equities, was valued at around $5 billion at the start of the year, but Goldman president and co-chief operating officer Jon Winkelried said it had lost about 30% of its value, or $1 billion, before the bail-out.
The Goldman executive said most of the losses had occurred in recent weeks as fears about the US housing market and tightening credit have rattled world stock markets.
