Goldman Executives Discuss Going Public

Goldman Sachs Group’s 190 partners could be worth an average of $76 million each if the nation’s biggest investment banking partnership sells shares to the public.

A decision on a sale is “quickly coming to a head,” Chairman and Chief Executive Jon Corzine told employees in a conference call Monday. “Our first-half results, as well as second-quarter earnings, are at record levels. This has been a truly exceptional period.”

Goldman, which earned a record $1.02 billion before taxes for the fiscal first quarter ended in February, would probably be worth more than $25 billion as a public company, analysts and former partners said. Current partners would hold equity worth about $76 million on average after taking into account outside partners and rewards for other employees.

“Greed always plays a part in all decisions, but I don’t think that’s the only reason,” said Raphael Soifer, an analyst at Brown Bros. Harriman in New York. “If they went and did it, it would say to me that they want to make acquisitions.”

Top executives of the 129-year-old firm discussed an initial public offering at meetings Friday and Saturday, people familiar with the firm said. Partners will talk about going public at their annual meeting June 12 and may vote on an IPO.

Selling shares would give the firm currency other than cash to use for acquisitions. That’s how the majority of bank and brokerage takeovers have been structured. Travelers Group Inc. and Citicorp, for example, are merging in a $71-billion stock swap that will create the world’s biggest financial services company.

Goldman partners have said they don’t need to go public. The firm earned $3 billion for the fiscal year ended in November. That’s more than double in three years.

This year looks even better. Goldman’s profit from equities this year already exceeds 1997’s full-year results, Corzine told employees. Revenue from European and Asian equities is double what it was at this time last year, and trading for the firm’s own account “has never been stronger,” he said.

Still, with $6.3 billion in capital, Goldman may not have enough cash to buy a large mutual fund company or investment bank, many of which are being purchased for four times capital or more.