Goldman Sachs to invest in 'Silicon London'

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The Independent Online

Goldman Sachs is positioning itself for a recovery in the European technology sector, predicting that London will be the centre of a new "Silicon Valley".

While its investment banking rivals are cutting back on technology analysts, Goldman is flying in tech experts from its US offices and hiring more analysts. It is also forging alliances with venture capitalists which specialise in technology.

Paul Harvey, co-head of Goldman's technology division, said: "From a financial market perspective, London will be the epicentre of a European 'Silicon Valley'. Europe didn't overspend on technology like the US did, so it is well placed to recover."

The division has been building relationships with around 30 big venture capital firms, including Apax Partners, Alchemy Partners and Schroder Ventures.

Saba Nazar, executive director of Goldman's technology banking division, said: "One of the lessons from the US is that some of the great tech companies were spotted early by some of the good venture capitalists. For us on the banking side, the venture capitalists will always provide a great source of introductions to good early-stage tech companies ... so when they are doing a big restructuring or financing, we are well placed to advise them."

Goldman hopes to be at the front of the queue when technology flotations become more frequent. Last year it handled many big public offerings, including Arc International and Bookham Technology.

An extra nine people are being brought in to its London technology division, bolstering numbers to 60. Two key players have been flown in from the US. Lawton Fitt has become co-head of European Technology, from her previous role as head of technology equity capital markets in the US. Semiconductor analyst Gunnar Miller has also come over.

Although Goldman doesn't split up the figures in its published accounts, technology, media and telecoms is thought to make up about a quarter of its revenues and, despite difficult market conditions, is not believed to be making a loss.

Goldman also believes that beefing up its technology team will benefit other sections of the investment bank.

"The technology division plays an important role within the firm," said Mr Harvey. "It provides business for the derivatives division because of the current volatility of the sector, and for the asset management division because of the new wealth it generates."

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