Goldman Preparing for Bargain Hunt?

Brokerage giant Goldman Sachs Group Inc. is apparently hoping that many venture capital investors are eager to bail out of troubled investments at fire-sale prices.

Goldman has raised $1 billion to acquire stakes in venture capital and buyout partnerships, according to people familiar with the financing.

The new fund is an effort to profit from the bursting of the Internet bubble that Wall Street firms such as Goldman helped create, analysts say. The firm will buy stakes in companies at what it hopes will be sharp discounts to their true values, people familiar with the fund said.

The bet by Goldman is that other investors’ need for cash now will enable the firm to pick up bargains.

A Goldman spokeswoman declined to comment.

“It’s probably a good time” to scoop up the private-equity stakes, said Chris Wagner, investment officer for alternative assets at the Los Angeles County Employees Retirement Assn. “A lot of people are looking for liquidity.”

Investors such as pension funds and wealthy individuals are cutting back on venture investments because the plunge in stocks, especially tech issues, has nearly shut down the market for initial public stock offerings. IPOs are the preferred path for venture investors to cash out of their stakes at big profits.

As many as a third of U.S. venture capital firms will fail due to losses stemming from the collapse of Internet start-ups, according to a survey of Silicon Valley and East Coast venture capitalists released this week.