Kamehameha might sell 4 million Goldman shares
By Miles Weiss
Bloomberg News Service
Kamehameha Schools is considering selling nearly all of its remaining holdings in Goldman Sachs Group Inc. — as much as 4.1 million shares in a deal valued at about $371 million at the Wall Street investment bank's current share price.
The sale would leave the charitable trust with about 1.3 million shares in the New York-based firm, according to a filing this morning by Goldman with the Securities and Exchange Commission.
A unit of Japan's Sumitomo Mitsui Banking Corp. also may sell its holdings. If both agencies exercise their option to sell, the deal would be valued at about $1.27 billion of shares and would make the last of the investments they made when the securities firm was Wall Street's largest private partnership.
Goldman filed with the Securities and Exchange Commission to permit the sale of 14.1 million company shares held by Kamehameha Activities Association and SMBC Capital Markets Inc. Kamehameha invested in Goldman in 1992 and 1994. Sumitomo first acquired a stake in Goldman in 1986.
The investments by Kamehameha and Sumitomo Mitsui boosted Goldman's capital when the firm was closely held, and made the two institutions the largest outside investors in Goldman prior to its initial stock sale in May 1999.
The two sold 18 million shares in that offering and have sold more since then. The sale may raise the number of Goldman shares available for trading enough that the company will be eligible for inclusion in the Standard & Poor's 500 Index, investors said.
The increase in shares "is good for investors and for Goldman," said Christopher Perry, a money manager for Turner Investment Partners, which owned 485,060 Goldman shares as of Sept. 30. "The idea is that it could be an S&P 500 addition."
Inclusion in the S&P 500, the benchmark for U.S. stocks most commonly used by professional investors, will require index fund managers to buy the stock. More than $1 trillion is held in portfolios that track the index, according to S&P, a unit of McGraw Hill Cos. Executives at S&P who pick the members of the index didn't immediately return calls.
Goldman shares fell $1.25, or 1.4 percent, to $90.19. The shares have fallen 16 percent this year, compared to a 19 percent decline in the Bloomberg Wall Street Index and a 14 percent decline in the S&P 500.
If all the shares are sold, which isn't guaranteed, about 40 percent of Goldman's stock would be available for trading.
Sumitomo was the first outside investor in Goldman, injecting $500 million into the firm for a 12.5 percent stake in 1986. In 1992, Kamehameha invested $250 million, followed by another $250 million in 1994.
That gave the Hawaiian education trust a more than 10 percent stake in Goldman, which was a private partnership until its May 1999 initial public offering.
Goldman raised capital from outside investors in the early 1990s in part because senior partners, including some of the most experienced executives who led the firm to record profits, were retiring. Goldman had about $5 billion of capital at the end of fiscal 1993, not including $819 million reserved for taxes and payments to retiring partners.
Goldman now has about 479 million shares outstanding, giving it a market value of more than $45 billion.
