By Gareth Vaughan
Wall Street investment banking behemoth Goldman Sachs is looking to buy the 55% stake in its Australian and New Zealand joint venture, Goldman Sachs & Partners, that it doesn't already own in a move that could see the local operations leverage a stronger balance sheet to expand into areas such as forex, derivatives, debt markets and corporate lending.
The Australian and New Zealand joint venture, formed in 2003, was formerly known as Goldman Sachs JBWere. An 80% stake in wealth management business JBWere was sold to BNZ's parent, National Australia Bank, in 2009.
The current talks, underway since last year, between the Goldman Sachs mother ship and Australasian partners are along the same lines as talks that have taken place every couple of years since the joint venture was formed covering all aspects of the joint venture. However, interest.co.nz understands this time around agreement from the local partners to sell their stake in Goldman Sachs & Partners to Goldman Sachs is possible with the discussion ultimately centred on valuation. There's no set timing on when the discussions are likely to conclude.
Any deal would require the support of 75% of the about 130 partners, just eight of whom are New Zealand based.
Interest.co.nz understands that full ownership by Goldman Sachs of the local operations would be likely to see increased balance sheet strength enabling the firm to expand in Australasia into areas where Goldman Sachs is a big player internationally potentially including forex, derivatives, debt capital markets and corporate lending.
The Australian newspaper has reported that the Goldman Sachs & Partners board, which includes eight Australian based directors among its 16 members, may recommend a deal within weeks. The Australian suggests tax and the composition of future bonuses have been sticking points.
A wholly owned business would bring the Australasian operations into line with Goldman Sachs in the rest of the world, give it full access to the Goldman Sachs balance sheet and allow the parent company to sell more products and services in Australasia. Goldman Sachs & Partners has a book value, or net assets, of A$780 million, The Australian says, adding "the real number" is likely to be closer to A$1.2 billion.
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