Goldman Partners Gain $1.24 Billion in Sale

This is how the rich get richer.

Brokerage giant Goldman Sachs Group Inc. on Tuesday sold $3.99 billion of its shares in a public offering, generating $1.24 billion in cash for current partners and enabling its biggest institutional shareholders to reduce their stakes.

The firm sold 40 million shares at $99.75, slightly below Tuesday’s closing stock price on the New York Stock Exchange. The stock (ticker symbol: GS) had risen $1.94 to $100.63 in regular trading.

The sale marked the first time Goldman’s partners could cash in some of their chips after the firm ended 130 years as a private partnership with its May 1999 initial public offering.

Jon Corzine, former Goldman Sachs co-chairman and now the Democratic candidate for the U.S. Senate in New Jersey, raised $41 million selling 411,668 shares.

Goldman managed the sale as a single offering to limit the decline as insiders and other shareholders trimmed their stakes. The firm in its prospectus also warned that “future sales of substantial amounts of common stock in the public market” could hurt the stock.

More than 300 million shares will become available over the next five years, beginning in 2001. But for now, “there’s no problem placing 40 million shares because there are a lot of reasons for people to buy it,” said Andy Absler, analyst at Scudder Kemper Investments.

The offering increased by about 50% the number of Goldman shares held by the public, to about one-quarter of the total. Only about 17% of Goldman’s shares were publicly held, compared with 80% or more at rivals Morgan Stanley Dean Witter and Merrill Lynch.

More than 160 current partners and retired partners registered to sell shares in the offering. Current partners sold 12.4 million shares, representing at most 10% of their holdings. Retirees sold 4 million.