Goldman May Boost IPO by 10% to as Much as $3.8 Bln, People Familiar Say
Goldman to Boost IPO by as Much as 10%; Could Raise $3.8 Bln
New York, April 8 (Bloomberg) -- Goldman Sachs Group LP, the biggest investment banking partnership, may boost its initial stock sale by 10 percent to as much as $3.8 billion, because shares of its rivals are surging, said people familiar with the firm.
Goldman could sell its stock for as much as $55 a share, compared with the range of $40 to $50 it set when it applied last month for permission to raise money from the public, the people said. At the higher price, Goldman would have a market value of about $26 billion.
The 130-year-old firm can raise the price because shares of brokerage firms are rallying as investors forecast higher earnings on Wall Street. Merrill Lynch & Co., the biggest U.S. broker, gained 11 percent this month. Citigroup Inc., the world's largest financial services firm, rose 13 percent.
''If Goldman can't (sell) higher here, then people at Goldman have lost their moorings,'' said Donald Coxe, chief strategist at Chicago-based Harris Investment Management, which owns shares of Morgan Stanley Dean Witter & Co., the biggest U.S. securities firm by equity capital.
Officials at Goldman declined to comment.
Goldman is selling as many as 69 million shares, or 14.7 percent of the firm. The sale would be the second largest IPO in the U.S.
At $55, Goldman shares would be 19.7 times the firm's 1998 earnings per share. Merrill, the biggest securities firm by capital, trades at 28.1 times 1998 profit, while Morgan Stanley Dean Witter shares are valued at 16.7 times last year's income.
Goldman won't set a price until the sale, probably in May.Speculation about more costly shares is ''just a talking point,''said John Keefe, an independent securities analyst.
Last June, Goldman partners voted to go public and canceled in September after markets plunged and securities firms' stocks fell more than 60 percent from their highs.
(Courtesy:Bloomberg) |
