Goldman Isn’t Taking Chances on Its Private Equity IPO

Goldman Isn’t Taking Chances on Its Private Equity IPO

Goldman Sachs Group Inc. is wisely playing safe with the landmark initial public offering of its Petershill Partners Plc private-equity business. The valuation range mimics July’s successful listing of Bridgepoint Group Plc, a stock that’s already up over 50%. But investors eyeing a piece of this IPO shouldn’t assume it’s a giveaway on the same scale.

The stock market is in thrall to the private equity industry. The attraction is getting a slice of the management fees on the ever bigger funds focused on private assets such as leveraged buyouts, real estate and infrastructure. A scarcity of publicly-traded firms means IPOs get lapped up.

Goldman and Petershill must nevertheless tread extremely carefully. Petershill is not a simple buyout shop. It’s a holding company for minority stakes in 19 alternative asset managers currently owned by clients of Goldman’s asset management unit. The IPO provides them with only a partial exit. Goldman also has a strategic interest in this stock performing well far beyond day one. It will continue to manage the Petershill portfolio and may want to launch similar vehicles to bring private assets to market.