Demand mounting for Goldman stock

Bishop Estate stands to
prosper in what is expected to be
one of the largest IPOs ever

New York Times

Estate's stake Kamehameha Schools/ Bishop Estate, which owns about 10 percent of the Wall Street firm, is selling about 9 million of its 30.1 million Goldman shares in the IPO. A $55 share price values Bishop Estate's current total investment at $1.65 billion, or about 3.3 times the estate's initial investments of $500 million since 1992. The estate will raise about $495 million if it sells 9 million shares at $55 each. Estate trustee Henry Peters told the Star-Bulletin last month that proceeds from the sale will go toward paying off debts and financing expansion at Kamehameha Schools. After the IPO, the estate will retain a roughly 4.7 percent stake in Goldman.

NEW YORK -- Goldman, Sachs & Co. initial public offering next week is expected to be a smashing success, with demand from fund managers and Internet investors far exceeding the number of shares scheduled to hit the market, sources say.

Goldman, a blue-chip investment bank, plans to list its shares Tuesday, formally ending its 130-year history as a private partnership and becoming the last major Wall Street firm to go public. The offering is at least eight times oversubscribed, people close to the underwriting said.

"This is not your usual IPO," said Randall Roth of Renaissance IPO Fund in Greenwich, Conn., which hopes to get some allocation of shares from Goldman's underwriters. "Everyone is into this, whether it's tech, growth, micro-cap or big-cap buyers. Even the day traders are interested in this one."

The final pricing of the shares will not take place until Monday night, just before the offering. But people close to the deal expect Goldman shares to sell at the top end of the range the firm projected, or $55 a share. If Goldman's underwriters sell an extra tranche of shares held in reserve, bringing the total offering size to 69 million shares, it would raise $3.8 billion, which would rank as one of the largest initial public offerings in history.

Even at $55, Goldman's share price relative to earnings would still be lower than its top rivals, Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co. Goldman's underwriters, led by Goldman itself, are determined to price shares at a slight discount to rivals. That is in part because Goldman's earnings are less diverse than those of Merrill and Morgan Stanley, meaning that Goldman might suffer more than its competitors if financial markets took a sharp dive. But Goldman has an almost mythical reputation in some circles. And some potential investors say it is a good buy at any discount to rivals.

Investor demand has been strong enough that Goldman can pick and choose the investors it wants to own its stock. Goldman has reserved a big chunk for its own best clients, including big pension and mutual funds that use Goldman services to trade stocks and bonds and its own network of wealthy private clients.

Goldman has largely snubbed the huge retail client base of Merrill Lynch, Morgan and Salomon Smith Barney, rival firms that are part of the Goldman underwriting syndicate. Individual investors would have a better shot of buying shares through two Internet brokerage houses, Wit Capital and E*Trade Group Inc., that were awarded an allocation by Goldman, underwriting sources said.

Price-fixing investigated Bloomberg News The Justice Department is probing allegations that securities firms illegally conspired to fix the fees they charge companies to underwrite initial public offerings. Confirmation of the investigation came after Goldman, Sachs & Co. -- which is planning an IPO of its own shares -- disclosed in a Securities & Exchange Commission filing that it had been subpoenaed yesterday. Lehman Brothers Inc. and Morgan Stanley Dean Witter & Co. also confirmed receiving civil subpoenas. A Goldman spokesman said the probe won't affect next week's IPO. The inquiry is a follow-up to private lawsuits that allege firms colluded to fix fees paid in connection with IPOs.