Goldman to offer PE investments to employees?

Wealthy employees of Goldman Sachs could be about to become even better off still.

According to an article in The Times last week, Goldman is seeking to raise $1bn (525m) from its employees as part of the financing for a new $10bn private equity fund.

Returns on private equity can be considerable. When Barclays Private Equity floated UK car insurer the Admiral Group last year, for example, it netted a return equal to 12 times its original investment. Goldmanites who put their money into the firm's fund could therefore do rather well.

JP Morgan famously allowed its employees to co-invest in a technology fund during the dot com boom of 2000. But Carl Sjostrom, a partner in KPMG's executive compensation practice, says it's unusual for banks to allow non-senior staff outside their private equity divisions to contribute money to funds.

"Returns on private equity have been very attractive and this could be a lucrative opportunity for employees at Goldman Sachs," he told eFinancialCareers.com. "It will also put more pressure on Goldman's private equity managers to do a good job - their colleagues are going to be watching them."

Goldman Sachs declined to comment. A source close to the bank said the story in The Times was unfounded.