Trustee calls
Goldman deal
valuation
conservative

Bishop Estate's investment
return should exceed
forecasts, Peters says

Governor:Trustees should quit

Holt ordered to drug treatment

By Rick Daysog
Star-Bulletin

Bishop Estate stands to triple the value of its investment in Goldman Sachs Group L.P. when the investment banking firm goes public in the next few months. But that's the conservative estimate.

Yesterday, Goldman, Wall Street's richest private partnership, said it plans to raise $3.45 billion in what's touted as the second-largest initial public offering ever.

The proposed $40 to $50 a share offering price means that the estate's 30.1 million shares in Goldman Sachs will be worth as much as $1.5 billion, or more than three times the estate's $500 million investment in the 130-year-old firm.

"Clearly, Goldman is the creme de la creme of the market place," Bishop Estate trustee Henry Peters said.

"At the end of the day, I think all of Hawaii will be proud of this investment."

Peters said that Goldman's strategists were conservative in their valuation of the company, noting that competitors like J.P. Morgan & Co. and Merrill Lynch & Co. are trading at higher multiples of their earnings. Wall Street analysts have previously valued the estate's interest in Goldman Sachs at $2 billion to $3 billion.

Under the IPO, the estate will sell about 9 million shares, or about a third of its stake, to the public investors for as much as $450 million. The sale of the shares will leave the estate with about 21.9 million shares, or about 4.7 percent of Goldman.

Proceeds from the offering will be used to pay down debt and finance the expansion of educational programs at the estate-run Kamehameha Schools, Peters said. Under its expanded Go/Forward initiatives, the estate has announced plans to expand its elementary schools on Maui and the Big Island to include high school programs.

Founded in 1884, the estate is a nonprofit charitable trust established to educate children of native Hawaiian ancestry. The trust, the state's largest private landowner, initially invested $250 million in Goldman Sachs in 1992 but doubled that investment to $500 million two years later.

At the time, Goldman was in need of fresh capital after more than 40 partners retired, taking their holdings with them. The retirements coincided with a 74 percent drop in the company's income.

The public offering comes as Bishop Estate's trustees are under intense scrutiny from state and federal investigators. Attorney General Margery Bronster's suit to temporarily remove four of the estate's five trustees for allegedly mismanaging the trust is headed to trial later this month while the Internal Revenue Service is winding down its four-year audit of the estate.

Peters said the Goldman deal shows that Bishop Estate is on solid financial ground and that trustees are expanding the estate's assets, not mismanaging them.

"At the end of the day, we will compare our portfolio with anybody's in this town," Peters said.

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