The Goldman Sachs Group, Inc., or simply
Goldman Sachs (
NYSE:
GS) is one of the world's largest global
investment banks. Goldman Sachs was founded in
1869, and is headquartered in the
Lower Manhattan area of
New York City at 85 Broad Street. Goldman Sachs has offices in leading financial centers such as
New York City,
London,
Chicago,
Los Angeles,
San Francisco,
Frankfurt,
Zürich,
Paris,
São Paulo,
Bangalore,
Mumbai,
Hong Kong,
Beijing,
Singapore,
Salt Lake City,
Sydney,
Dubai,
Milan,
Melbourne,
Tokyo,
Taipei,
Moscow and
Toronto.
Goldman Sachs acts as a
financial advisor to some of the most important companies, largest governments, and wealthiest families in the world. It is a
primary dealer in the U.S. Treasury securities market. Goldman Sachs offers its clients mergers & acquisitions advisory, provides
underwriting services, engages in
proprietary trading, invests in
private equity deals, and also manages the wealth of affluent individuals and families.
History As of 2006, Goldman Sachs employed 26,500 people worldwide. It reported earnings of US$9.54 billion and record earnings per share of $19.69.
Corporate affairs Goldman Sachs is divided into three core businesses.
Businesses Investment Banking is divided into two divisions and includes
Financial Advisory (
mergers and acquisitions, investitures, corporate defense activities, restructurings and spin-offs) and
Underwriting (public offerings and
private placements of
equity, equity-related and debt instruments). Goldman Sachs is one of the leading investment banks, appearing in
league tables. In mergers and acquisitions, it gained fame historically by advising clients on how to avoid hostile takeovers. Goldman Sachs, for a long time during the 1980s, was the only major investment bank with a strict policy against helping to initiate a
hostile takeover, which increased Goldman's reputation immensely. This segment accounts for around 15 percent of Goldman Sachs' revenues.
Investment banking Trading and Principal Investments is the largest of the three core segments, and is the company's profit center. The segment is divided into three divisions and includes
Fixed Income, Currency and Commodities (trading in
interest rate and
credit products,
mortgage-backed securities and loans, currencies and commodities, structured and derivative products),
Equities (trading in equities, equity-related products,
equity derivatives,
structured products and executing client trades in equities,
options, and
Futures contracts on world markets), and
Principal Investments (merchant banking investments and funds). This segment consists of the revenues and profit gained from the Bank's trading activities, both on behalf of its clients (known as flow trading) and for its own account (known as
proprietary trading).
Most trading done by Goldman is not
speculative, but rather an attempt to profit from bid-ask spreads in the process of acting as a
market maker. Around 65 percent of Goldman's revenues and profits are derived from this area. Upon its IPO, Goldman predicted that this segment would not grow as fast as its Investment Banking division and would be responsible for a shrinking proportion of earnings. The opposite has been true, however, and resulted in
Lloyd Blankfein's appointment to President and Chief Operating Officer after
John Thain's departure to run the
NYSE and
John L. Thornton's departure for an academic position in China.
Trading Asset Management and
Securities Services is a rapidly growing business for Goldman as it gains market share. It is separated into two divisions, and includes
Asset Management, which provides large institutions and very wealthy individuals with investment advisory, financial planning services, and the management of
mutual funds, as well as the so-called alternative investments (
hedge funds,
funds of funds, real estate funds, and
private equity funds). The
Securities Services division provides
prime brokerage, financing services, and securities lending to mutual funds, hedge funds, pension funds, foundations, and high-net-worth individuals. This segment accounts for around 19 percent of Goldman's earnings.
As of 2006, the Goldman Sachs Asset Management
hedge fund is the largest in the
United States with $29.5 billion under management.
Asset management and securities services GS Capital Partners is the private equity arm of Goldman Sachs. It has invested over $17 billion in the 20 years from 1986 to 2006. One of the most prominent funds is the GS Capital Partners V fund, which comprises over $8.5 billion of
equity.
GS Capital Partners Cogentrix Energy (Energy)
American Casino & Entertainment Properties (Casinos)
Coffeyville Resources LLC (Refinery)
Myers Industries, Inc. (Plastic & Rubber)
USI Holdings Corporation (Insurance & Finance)
East Coast Power LLC (Energy)
Zilkha Renewable Energy (Energy)
Queens Moat Houses (Hotels)
Sequoia Credit Consolidation (Finance)
Shineway Group (Meat Processing)
Equity Inns, Inc. (Hotels)
Major Assets (GS Group) In December 2005, four years after its report on the emerging "
BRIC" economies (
Brazil,
Russia,
India, and
China), Goldman Sachs named its "
Next Eleven" list of countries, using macroeconomic stability, political maturity, openness of trade and investment policies and quality of education as criteria:
Bangladesh,
Egypt,
Indonesia,
Iran,
South Korea,
Mexico,
Nigeria,
Pakistan, the
Philippines,
Turkey and
Vietnam.
Corporate citizenship Joshua Bolten - current
White House Chief of Staff Erin Burnett - CNBC Host
Sacha Baron Cohen - Actor
Michael Cohrs - Head of Global Banking at
Deutsche Bank Jim Cramer - founder of TheStreet.com and Smartmoney.com, best selling author, and host of Mad Money on CNBC
Henry H. Fowler - 58th
United States Secretary of the Treasury (1965-1969)
Edward Lampert- Hedge Fund Manager of ESL Investments. Brought K-Mart out of Bankruptcy in 2003.
Ocado - 3 Founders of first UK online supermarket were all former Fixed Income Traders at Goldman Sachs London
George Herbert Walker IV - member of the
Bush family Robert Zoellick -
United States Trade Representative (2001-2005),
Deputy Secretary of State (2005-2006),
World Bank President Other Notable Alumni In 2005, the firm advised both the
New York Stock Exchange and
Archipelago, which owns an electronic trading platform, in merger talks. Controversy surrounded the deal as
John Thain, who heads the New York Stock Exchange, was a former Goldman Sachs Executive.
See also Bear Stearns Citigroup Banc of America Securities Credit Suisse Deutsche Bank JPMorganChase Lehman Brothers Merrill Lynch Morgan Stanley Raymond James UBS