NEW YORK, May 17 (Reuters) -

U.S. investment bank Goldman Sachs ( GS ) is muscling into

the lending market for private equity and asset managers,

planning an overseas expansion as it helps fill a void left by

turmoil at regional banks and the sale of Credit Suisse.

The Wall Street bank and rivals JPMorgan Chase ( JPM )

and PNC Financial Services ( PNC ) are stepping up in this $800

billion to $1 trillion market as private equity deal activity is

expected to pick up due to record-high fund-raising. Such loans

are asset-based and short-term, lowering their risk.

Goldman last year bought a portfolio of loan facilities

valued at $15 billion from the failed Signature Bank during an

auction by the Federal Deposit Insurance Corp (FDIC).

"The focus is to lend to large alternate asset managers,

private equity sponsors," Maheshwar Saireddy, Goldman Sachs' ( GS )

global head of mortgage and structured products, told Reuters.

"One of the big initiatives we've been working on is to

create more stable revenue in our global banking and markets

businesses," he said.

After bolstering the U.S. business, Goldman plans to expand

in Europe, the UK and Asia, and has added staff in Dallas and

Bangalore to service these loans, Saireddy said. He did not

disclose the expansion's timing.

The Signature portfolio included loans to private-equity

firms and venture capital funds, a key part of its client base,

to manage their working capital, known as capital call

facilities or subscription line loans.

A subscription line, also called a credit facility, is a

loan taken out mostly by closed-end private market funds,

secured against the commitments of a fund's investors. It must

be repaid over a defined period.

Saireddy said asset-secured lending helps the firm build a

growing financing business in fixed income, currency and

commodities (FICC) and equities.

"We've grown our deposit base tremendously over the past

five to seven years," Saireddy said. "And as our deposits are

growing so we are trying to line up assets to match those

deposits."

In the first quarter, Goldman Sachs ( GS ) posted record FICC

financing revenues of $852 million.

PE ACTIVITY

To be sure, loans to private equity firms dry up in years

when the firms reduce activity, as in 2022 and 2023 when the

Fed's monetary tightening led to a drop-off in dealmaking.

Citigroup ( C/PN ) reduced lending in this market, it said on

an earnings call last July, citing an effort to improve returns.

The bank declined to comment.

But the market for subscription line financing was

under-served after the collapse of lenders such as Silicon

Valley Bank and Signature and the sale of Credit Suisse to UBS

last year, allowing new players to step in, analysts say.

"Given the supply and demand dynamics where demand has grown

significantly, supply hasn't kept up in the last two years,

we're seeing some additional banks coming into this space," said

Greg Fayvilevich, Fitch's global head of funds group told

Reuters.

JPMorgan Chase ( JPM ) stepped up lending after its acquisition of

First Republic Bank last year.

"We are committed to being the leading financial partner to

funds of varying stages and their principals as they fuel the

world of high-growth investments," said Jeff Kaveney, head of

JPMorgan Private Bank's fund banking group, which services

private equity and venture capital funds and their principals.

PNC, a large regional lender based in Pittsburgh,

Pennsylvania, acquired last year a portfolio of capital

commitments facilities from Signature.

Capital constraints at some banks are attracting relatively

new players into the market including non-bank lenders, said

Rory Callagy, associate managing director with Moody's Private

Credit team.

Alternative investment manager Ares is working closely with

banks to help free up their capacity to provide subscription

line loans, one source familiar with the matter said.