(Reuters) - Goldman Sachs Asset Management said on Thursday it had raised over $700 million for a new fund that will work with external managers to identify investment opportunities in both public and private markets.

The fund, Union Bridge Partners I, will work together with private credit firms and hedge funds and is part of Goldman's $340 billion External Investing Group.

Union Bridge has already deployed 40% of the capital raised to companies across North America and Europe in sectors such as hospitality, software, fitness centers, and music royalties.

Wall Street banks are raising billions of dollars to regain lost ground in financing debt-backed deals after private equity firms and asset managers muscled into the business in recent years.

The asset management arm of Goldman Sachs ( GS ) is looking to expand its private credit portfolio to $300 billion in five years, Reuters reported earlier this month.

"We have seen a significant increase in the opportunity to partner with our external managers to provide flexible capital solutions to companies across public and private markets," said Philip Pallone, who leads the Union Bridge program.

Goldman raised the capital from institutions, private wealth clients, and family offices, apart from commitments from its own employees.