Goldman Sachs Forecasts Alt Demand Will Outstrip Origination Supply

What's New

The biggest risk hiding in plain sight across private markets isn't a credit cycle or valuation correction. It's a structural mismatch between surging investor demand for alternatives and the finite supply of quality origination to fill it. In a conversation at the Goldman Sachs Alternatives Summit on the Alt Goes Mainstream podcast, Matt Gibson, head of Goldman Sachs Asset Management's Client Solutions Group, laid out how the firm is navigating this tension across institutional, insurance, and wealth channels while leveraging the "One Goldman Sachs" model to connect investment banking origination with its $542B alternatives platform.

Why It Matters

As retail evergreen vehicles scale rapidly alongside institutional drawdown funds and insurance SMAs, the risk of GPs "feeding the beast" with lower quality deal flow to satisfy capital commitments is becoming a live concern for sophisticated LPs. Gibson's warning that supply demand strain will intensify over the next three to five years suggests the industry is approaching an inflection where discipline in origination and capacity management will separate winners from firms that dilute returns chasing AUM growth.

Memorable Quotes

• On the supply crunch: "Demand is going to outstrip supply in certain strategies... I don't think people are focused on it enough yet." Gibson identifies what he sees as the most underappreciated risk in private markets: the gap between the capital flooding into alternatives from retail, insurance, and institutional channels and the finite pipeline of investable opportunities to absorb it.

• On the evergreen trap: "If a retail vehicle scales too quickly that's associated with the same pool of origination, you could have behavior where GPs feel like they have to feed the beast and do deals they otherwise wouldn't do." This captures the core tension of the wealth channel expansion: the same deal flow that serves institutional LPs is now being split across an expanding number of vehicle structures, creating potential conflicts.

• On building versus buying: "There's not a lot of things we don't have the capability to do. So the question becomes more, with an honest look inside, can we do it better on our own?" Gibson reframes the classic build vs. buy decision as less about capability gaps and more about speed and cultural fit, reflecting how platform firms are approaching strategic expansion.

• On knowing your client: "It really all starts with knowing your client at a PhD level because each client has different needs." Gibson argues that the proliferation of channels and structures makes deep client understanding more important than broad product proliferation, a point that cuts against the industry trend of launching products first and finding buyers second.

• On geopolitical complacency: "Geopolitical risk right now is something that all of our clients worry about, but doesn't seem to be priced into what anybody's doing." Despite tariff uncertainty, unresolved US China dynamics, and active conflicts, Gibson observes that markets are betting on benign outcomes and investors are largely proceeding without adjusting positioning.

Big Picture Drivers

• Channel convergence: Institutional, insurance, and wealth clients all want alternatives exposure, but each requires different packaging, risk profiles, and reporting, forcing GPs to balance customization with scalable product design.

• Origination as moat: Goldman's nexus between investment banking and asset management creates proprietary deal flow, particularly in private credit where failed M&A advisory mandates convert into direct lending opportunities with early or idiosyncratic access.

• LP consolidation: Institutional LPs are actively trimming GP relationships to concentrate commitments with fewer, broader platforms, rewarding multi strategy firms with better co invest flow, fee economics, and strategic partnership.

• Capacity discipline: The proliferation of evergreen funds, SMAs, and potential 401(k) access creates compounding demand against the same origination pools, requiring GPs to actively manage the balance between capital raised and investable pipeline.

• Platform integration: Goldman's 2020 decision to consolidate all alternatives under asset management proved strategically consequential, enabling unified product strategy and resource allocation decisions that were previously fragmented across divisions.

By The Numbers

• $542B: Goldman Sachs alternatives AUM, spanning private equity, credit, real estate, infrastructure, and secondaries.

• 400: Approximate number of clients attending the Alternatives Summit, spanning institutional, insurance, third party wealth, and internal wealth channels.

• 35 years: Duration of Goldman's alternatives investing track record, positioning the firm among the longest tenured multi strategy platforms.

• 3–5 years: Gibson's timeline for when origination supply demand strain will become materially visible across the industry.

• 21 years: Gibson's tenure in investment banking before moving to asset management, reflecting Goldman's deliberate strategy of rotating senior leaders across divisions to cross pollinate culture and capabilities.

Key Trends to Watch

• Co invest strain as early warning: Gibson flagged co investment allocation to institutional LPs as one of the first places supply demand imbalance will surface, making co invest capacity a leading indicator of broader origination stress.

• Insurance as growth frontier: Insurance companies globally remain significantly underallocated to alternatives, particularly private credit, representing one of the largest untapped demand pools that will further pressure origination supply.

• Pension regulation tailwinds: Markets like Australia, Korea, and Mexico are seeing regulation driven capital flows into pension systems that are creating structural demand growth for alternatives in regions beyond the US.

• Selective scale strategies: Goldman's deliberate choice to stay upper mid market in private equity while pursuing scale in credit and secondaries illustrates how sophisticated GPs are differentiating where size helps versus where it creates exit friction.

The Wrap

The private markets industry is entering a phase where the constraint is no longer demand or distribution capability but the quality and volume of origination to responsibly deploy accelerating capital inflows. GPs that can generate proprietary deal flow through integrated platforms, maintain discipline on deployment pacing across vehicle structures, and clearly communicate capacity management to LPs will build durable competitive advantages. Firms that chase AUM growth without matching it to origination capacity risk exactly the performance degradation that institutional LPs are already screening for.

Watch Full Episode: Goldman Sachs' Matt Gibson on Alt Goes Mainstream