$3 billion is added to a Goldman Sachs hedge fund

NEW YORK - The Goldman Sachs Group Inc. said yesterday that it was leading a group of investors, including Maurice "Hank" Greenberg and Eli Broad, in sinking $3 billion into one of its biggest hedge funds.

The investment bank said its Global Equity Opportunities fund had "suffered significantly" as global markets sold off on worries about debt and credit. The fund lost about 28 percent in the last few weeks, dragging its value down to $3.6 billion, from about $5 billion last month.

Goldman Sachs will invest $2 billion. Other investors will contribute about $1 billion to the fund, whose computer-driven investment strategies were disrupted by triple-digit swings in the financial markets.

"This is not a rescue," Goldman chief financial officer David Viniar said. "Given the dislocation in the market, we believe this is a good investment opportunity for us and other investors."

Joining Goldman in injecting more capital were former American International Group Inc. chairman Greenberg and Broad, a California real estate developer who helped found SunAmerica and later sold it to AIG. The private-investment firm Perry Capital L.L.C., which is run by a former Goldman Sachs equity trader, also is among the investors.

Goldman said that two other hedge funds it managed - Global Alpha and the North American Equities Opportunities Fund - also had suffered during the market dislocation. The Alpha fund, for instance, has lost 27 percent of its value - more than half of that sum last week alone.

Viniar would not say whether Goldman was considering similar action for the other two funds, which combined are worth about $6.4 billion. He said Goldman had spent the last week reducing the risk and leverage for all three funds to stem losses.

The $2.7 trillion hedge fund industry uses money from wealthy individuals and institutions to make bets on stocks and other securities using sophisticated investment strategies.

Hedge funds have been routed in the last few months as Wall Street has become much more volatile. Quantitative funds such as Goldman Sachs', which rely on computer models to make investments, have taken a beating from triple-digit swings on Wall Street during the last few weeks.

Goldman, one of the world's premier financial companies, joins the Bear Stearns Cos. Inc. and France's BNP Paribas in revealing that its hedge funds have been slammed by the credit-market crisis. About $2 trillion is believed to be held in hedge funds globally.