Goldman SachsBloomberg News
NEW YORK -- Goldman Sachs Group LP's 190 partners voted to sell shares to the public, more than tripling the value of their stakes in what could be the biggest stock sale ever by a financial company.
The 129-year-old firm's partners, who manage its investment banking, trading and research businesses, voted "overwhelmingly" in favor of the share sale, Goldman said in a statement today.The vote came after Jon Corzine and Henry Paulson, co-chairmen, reviewed details of the initial public offering with partners today.
"This gives them the opportunity to be stronger, bigger faster and better," said Michael Holland, who runs his own money management firm. "The access to stock lets them get involved in almost any business."
Goldman Sach Group's investors include Hawaii's Bishop Estate, which has paid about $500 million for an estimated 10 percent stake in the Wall Street powerhouse.
owns big stake
That investment is now estimated to be worth as much as $3 billion.
Estate officials were not available for comment this morning.
Goldman, considered Wall Street's most profitable firm, plans to register with the Securities and Exchange Commission to sell shares by the end of September. The firm could offer about $3 billion in stock, giving it a market value of as much as $30 billion, sources in the firm have said.
Instituto Nazionale delle Assicurazioni, Italy's government-run insurance company, sold $2.8 billion in stock in 1994 in the largest financial services stock offering to date, according to Securities Data Co. of Newark, N.J.
Going public would allow Goldman to use stock to fund acquisitions. In June, when the firm's executive committee approved drawing up the IPO proposal, Paulson singled out asset management as one area that would benefit by being public. The unit has grown to 1,000 people from 250 in about a year.
Selling shares would also provide permanent capital for years when profits dry up. "People felt that a more secure structure to sustain that kind of growth would be a public form," Paulson said in June. "It's nice to have an acquisition currency."
At Goldman's meeting today, partners got the most detailed account yet of how the firm will look, including a formula to measure the value of their stakes. Their stakes are expected to be worth $50 million to more than $100 million, based on a multiple of about 3.5 times the firm's equity capital.
That multiple takes into account the swoons in financial service company shares in the past month. Merrill Lynch & Co., the largest U.S. brokerage, fell 17 percent from its July 13 high, while Morgan Stanley Dean Witter & Co. dropped 13 percent since a July 17 top, as markets fell and companies delayed new securities sales.
Goldman's 11,500 employees will receive about $6 billion of equity, or about 20 percent of the company, according to sources at the firm. The stock will likely be restricted, meaning that employees won't be able to sell it for up to seven years or more, sources said.