March 27 (Bloomberg) -- Goldman Sachs Group Inc., the world's largest securities firm, may raise more than $20 billion for its sixth leveraged-buyout fund, beating Blackstone Group LP to form the biggest pool of private-equity capital.

Chief Executive Officer Lloyd Blankfein told shareholders at Goldman's annual meeting today that the fund will manage ``about $19 to $20 billion of assets, maybe a little bit less, maybe a little more.'' That's more than double the $8.5 billion Goldman Sachs Capital Partners closed in 2005, a record at the time.

Blackstone, which already manages the world's largest LBO fund, is facing the competition from Goldman as it seeks to raise $4 billion in an initial public offering. New York-based Goldman, the No. 1 adviser to private-equity firms, isn't one of Blackstone's six IPO underwriters.

``We happen to have as a firm a terrific relationship with Blackstone,'' Blankfein, 52, said at Goldman's Old Slip offices in New York, explaining why the firm wasn't picked. ``It's impossible for us to be in every piece of business.''

Buyout funds are growing in both number and size, fueled by low borrowing costs and investor demand for alternatives to stocks and bonds. Blankfein, who succeeded Henry Paulson as chairman and CEO last year, has expanded in principal investing and asset management. Only JPMorgan Chase & Co. manages more money in hedge funds than Goldman.

Staff Profits

Employees at Blackstone, founded in 1985 by Stephen Schwarzman and Peter G. Peterson, generate almost nine times more earnings than their counterparts at Goldman. Each of New York-based Blackstone's 770 workers produced an average of $2.95 million in net income last year, compared with a mean of about $360,000 at Goldman.

``They have been leaders in identifying new trends, and clearly this is where they feel their profit margins have the most growth opportunity,'' said Douglas Ciocca, a portfolio manager at Financial Advisory Service Inc., about the buyout fund. ``But this is risky if it decreases their liquidity.''

Ciocca helps manage $650 million, including Goldman shares, in Leawood, Kansas.

Goldman, whose buyout funds include money from its top employees, typically invests alongside its private-equity clients. Last month, Goldman advised Kohlberg Kravis Roberts & Co. and Texas Pacific Group and participated as a co-investor on the $31 billion takeover of TXU Corp., the biggest-ever LBO.

Office Trust

That transaction would top the $20 billion that Blackstone paid last month for Equity Office Properties Trust, the largest U.S. owner of office buildings. Goldman acted as one of Blackstone's advisers on that takeover.

Also at today's meeting, shareholders voted to re-elect all 13 board members and voted down two proposals by activists that the company opposed. Those proposals called for more disclosure about Goldman's charitable donations and about its policies on economic, social and environmental sustainability.

Voting on a third shareholder proposal was extended until April 11 because of a delay in providing details to investors. Shareholder activist Evelyn Y. Davis wants the company to stop issuing stock options.

Blankfein said the firm needs the flexibility to use both restricted stock and stock options to reward employees. ``We think it's important to have both tools available to Goldman Sachs in what is a very heated market for talent,'' he said.

Stock Split

Goldman has no plans to split its stock, Blankfein said in response to a question from Davis. The firm's stock, which closed yesterday at $211.73, is one of only about a dozen U.S. companies whose shares cost more than $200 on U.S. exchanges.

``We just don't think it accomplishes much to give people twice as many shares worth half as much,'' he said, adding that the firm won't rule out a split someday.

Goldman reported a 70 percent increase in net income last year to $9.54 billion.

The company's shares fell $1.86, or 0.9 percent, to $209.87 at 4:01 p.m. in New York Stock Exchange composite trading. They've gained 5.3 percent this year.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

Last Updated: March 27, 2007 17:36 EDT