Goldman partners to defy critics

GOLDMAN Sachs will confront its critics head on this Tuesday, when it files the paperwork and reveals details of its $2bn-$3bn (pounds 1.25bn- pounds 1.87bn) initial public offering, according to people close to the firm.

"Goldman is not going to back away from the importance of its trading business even though its competitors are saying the firm's focus on trading makes earnings volatile," said a source. "They plan to use the money raised to grow their M&A and fund management businesses even faster. [That growth] should stabilise earnings."

Goldman will also announce results for its first fiscal year quarter and is expected to report pre-tax profits above $1bn. This would be a rebound from its worst quarter since 1994, when the hits it took in last year's financial crisis forced it to withdraw its original plan for an initial public offering of shares last autumn.

Analysts expect Goldman's shares to be valued in line with competitors Morgan Stanley Dean Witter and Merrill Lynch (trading at slightly over three times book value) giving Goldman - with equity of $6.3bn - a value of $20-$24bn, substantially lower than the $30bn before Russia's default and the hedge fund LTCM's collapse last year.

"I think their IPO will go smoothly. I think it will come fast. The irony is that, after all the turbulence, they're still going to get a very good price," said a competitor.

The firm is expected to begin promoting its shares in April and come to market in May. Investors will be looking for a breakdown of the firm's profits on Tuesday, and will compare trading and M&A profits against those of Morgan Stanley.

In contrast to Goldman, whose profits plunged 81 per cent in the three months between September and November 1998, Morgan Stanley reported a rise in profits in the fourth quarter of 1998 of 51 per cent.

Investors will also be assessing the effect on Goldman's culture of its transition from being a private partnership for 130 years to a corporation. The firm last week appointed partner David Vinear its chief financial officer.

On Thursday it announced that Morgan Stanley investor relations chief John Andrews was to be its first investor relations director.

"The corporate structure is likely to make the firm slightly sounder," said Robin Monro-Davies, managing director of the credit rating agency IBCA.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy