Goldman Sachs to Buy Stake in Wit

Goldman Sachs Group, Wall Street’s largest investment banking partnership, said Monday that it will buy a 22% stake in Wit Capital Group Inc., an online broker that helps companies sell stock on the Internet.

Terms weren’t disclosed for the purchase of Wit common stock and warrants. The two companies plan to work together on initial public offerings, although the relationship won’t be exclusive, they said in a statement.

Goldman’s investment comes after the firm last month set up a committee to build an Internet strategy before its initial stock sale later this year. Potential investors are looking for signs that Goldman is incorporating the Internet in its business, as are publicly traded rivals Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co., analysts said.

“Not having an Internet presence would put Goldman at a disadvantage” when it comes to share price, said John Keefe, an independent securities analyst at Keefe Worldwide. “They want to have it as something people throw into their valuation of the company.”

In January, Goldman bought about 25% of the Archipelago electronic network for trading Nasdaq stocks. Archipelago is also one-quarter-owned by E-Trade Group Inc., the third-largest online broker.

“Wit Capital is both an attractive investment for Goldman Sachs and an important part of our ongoing commitment to supporting the Internet and other new technologies in our business,” Henry Paulson, Goldman’s co-chairman and chief executive, said in a statement.

New York-based Wit has helped distribute shares online in more than 50 stock sales, including those of EarthWeb Inc., Tweeter Home Entertainment Group Inc. and Cleveland Indians Baseball Co. The company also is building a research arm, led by former Merrill Lynch analyst Jonathan Cohen.

Wit is also planning to go public. Earlier this month, it filed with the Securities and Exchange Commission for an $80-million initial stock sale expected in the second quarter.