Bloomberg News
NEW YORK - Goldman Sachs Group is going online.
As part of an effort to drum up interest in the sale of about $4.5 billion of its stock, Goldman told potential buyers it will test the GS.com brokerage this month and will offer it to customers in the fourth quarter.
The move, more than a year after Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co. introduced their Internet brokerages, reflects an effort to attract more retail customers - especially executives at the businesses that Goldman brings public. The service will be open to clients with at least $5 million, analysts say. The firm has catered to those with at least $25 million.
"GS.com is clearly a major initiative for them," said Kevin Shields, an analyst at First American Asset Management, who attended Goldman's sales presentation in Minneapolis last week.
As they did a year ago, Goldman chief executive Henry Paulson and other top officials have emphasized the firm's leading position in the busiest parts of the securities business: merger advisory and equity underwriting.
Goldman is the No. 2 merger adviser this year and the No. 2 initial public offering underwriter for software, networking, computer-related, and other technology companies, as it was last year. Taking so many tech firms public means the investment bank has relationships with newly wealthy entrepreneurs, many of whom want help in managing their money.
Clients will be able to use GS.com to check their portfolios, manage risk, and access information. The brokerage, which also will feature a 24-hour call center, will be offered as an additional service to current Goldman clients, as well as a stand-alone for less-wealthy investors.
To cater to the wealthy, Goldman hired Dan Fitzpatrick from J.P Morgan & Co. in May to build a group to handle trusts and estate planning. Goldman's high-net-worth business is one part of its asset management unit, which is expected to be "marginally" profitable by yearend, said Paul Stocking, an analyst at American Express Financial Advisors.
The shares are expected to be priced today, marking the first chance that Goldman partners will have to divest stock gained in the May 1999 IPO. The firm is selling 40 million shares - and 6 million more if demand warrants it - to increase the amount of publicly traded stock. It hopes to sell the shares without lockup restrictions in an orderly fashion to avoid a big decline.
The sale could bring in as much as to $4.5 billion, if all 46 million shares are sold at $98.50, Friday's closing price.
After the sale about one-quarter of Goldman's shares will be in the public's hands, compared with more than 80% at Merrill Lynch and Morgan Stanley.
