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Goldman IPO seeks $3.5B
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March 16, 1999: 2:58 p.m. ET
Bank says 69M shares could be sold at up to $50 apiece; earnings up 16%
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NEW YORK (CNNfn) - Goldman Sachs Tuesday outlined its long-awaited plans to go public in a $3.45 billion stock offering aimed at allowing it to do something it hasn't done in 130 years as a private firm on Wall Street -- make a major acquisition.
The firm also said profits rose 16 percent in the first quarter after weakness in global markets hurt Goldman's results late last year and caused its partners to delay its initial public offering (IPO), which was originally set for last August.
Goldman said the plan would give it publicly traded stock to use for acquisitions and for rewarding its employees, something it has not had since its founding as a private firm in 1869. Still, Goldman has managed to become one of Wall Street's most successful investment banks, though in recent years it has been nervously eyeing mergers between some of its biggest rivals.
"This change will allow us to secure permanent capital to grow; to share ownership broadly among our employees … and to permit us to use publicly traded securities to finance strategic acquisitions that we may elect to make in the future," Jon Corzine and Henry Paulson Jr., Goldman's co-chairmen, said in a statement. Corzine, 51, the main engineer of the IPO, will quit the firm after the offering, leaving Paulson in charge.
In a filing outlining the offering, Goldman said it expects up to 69 million shares to be sold at $40 to $50 apiece in the IPO, including 9 million additional shares for underwriters if demand is strong enough. The sale by Goldman Sachs Group Inc. would amount to about 11 percent of the New York-based firm, which has applied for the symbol GS on the New York Stock Exchange.
Wall Street analysts say the offering is sure to draw keen interest from investors. Goldman has been a top underwriter of corporate stock and debt and has advised companies involved in big mergers. The offering is expected to make millions for Goldman's partners and other top employees.
In its filing, Goldman said profits have grown 13 percent a year on average over the last 15 years. Last year profits fell, however, hurt by an 81 percent drop in the fourth quarter that Goldman blamed on global market turmoil. Goldman recovered along with the markets early this year, saying pretax profit rose to $1.19 billion in its first quarter, ended Feb. 26, from $1.02 billion a year earlier. Revenue grew 21 percent to $3 billion from $2.47 billion.
"The firm's trading business achieved a strong performance, recovering significantly in the first quarter of 1999 from the difficult conditions experienced in the second half of 1998," Goldman Chief Financial Officer David Viniar said.
In its filing, Goldman said investment banking generated 39 percent of revenue last year, trading 28 percent and asset management and securities services, 33 percent.
In the IPO, 42 million shares will be sold by Goldman and 18 million by existing shareholders including Sumitomo Bank. Goldman also has granted itself an underwriter's option for 9 million additional shares. 
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Goldman Sachs
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