Goldman Sachs Cancels IPO

Goldman Sachs Group, blaming a bear market that has devastated bank and securities company stocks, on Monday canceled plans for an initial public offering.

Executives of the biggest and richest investment banking partnership “decided today to withdraw” the IPO plan “after giving full consideration to the volatile state of the global financial markets and the disproportionately negative impact on the financial services sector.”

Just two months ago, the offering had been expected to give the investment bank a $30-billion market value.

Since June, when Goldman’s executive committee decided to go public, shares of rivals such as Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co. have fallen as much as 40%, Goldman’s third-quarter pretax profit dropped 19% and Standard & Poor’s Corp. cut its outlook for Goldman’s credit rating to “negative” from “stable.”

The 129-year-old firm, after rejecting the idea of going public seven times in the last 30 years, had decided it needed shares to pay for acquisitions and compensate employees.

Then Russia’s default and ruble devaluation sent global markets tumbling, causing hundreds of millions of dollars in trading losses for securities firms. Goldman partners began talking about postponing the IPO earlier this month.

“You don’t unveil your Rembrandts when the art market has fallen by 40%,” said Donald Coxe, chief strategist for Harris Investment Management in Chicago. “Given what’s happened to brokerage stocks, there was no way this was going to fly.”

Goldman said it will elect a new group of partners next month. Its executive committee “may propose a new plan” for an IPO “when markets and other conditions improve,” co-Chief Executives Jon Corzine and Henry Paulson said in a statement. Any new plan would require approval from the firm’s 189 partners.