Goldman Sachs & Co. said Monday that its partners voted to sell stock in the firm to the public, ending 129 years of a partnership structure as the firm moves to better compete with publicly traded rivals.
Goldman, the last big investment bank owned by the executives in charge of trading securities and advising companies, has rejected the idea six times in the last 20 years. Goldman said that at a meeting Friday and Saturday, its 190 partners expressed “overwhelming support” for going public.
The company plans to sell a stake of 10% to 15%, which would give it a market value of as much as $35 billion, more than Merrill Lynch & Co., the nation’s biggest brokerage. A stock offering would boost Goldman’s $6.5-billion capital base and give it a paper currency--stock--to make acquisitions. Goldman wants to sell the shares later this year.
Goldman said a detailed plan, which could provide for stock ownership for all 11,500 of its full-time employees, will be presented to the partners for a vote this summer.
“We need the financial strength, the relative cheapness and stability of public capital,” said Jon Corzine, co-chief executive. “Goldman Sachs is strong right now,” he said. “We would rather [go public] in periods of strength than in periods where we have fewer choices.”
Indeed, Goldman also said Monday that its second-quarter profit jumped 70% to $1.04 billion, from $610 million for the period a year earlier. It is the latest in a string of record results for the investment house, one of Wall Street’s biggest and most respected.
Analysts and investment bankers had said Goldman would be likely to go public in a bid to keep up with newly bigger competitors being formed by the flurry of mergers on Wall Street. The new companies include Morgan Stanley, Dean Witter, Discover & Co. and the financial services giant being formed by the merger of Citicorp and Travelers Group Inc.
Goldman did not say how its equity would be divided among its partners, directors, outside investors and employees.