Goldman Sachs Misses Out On Big Alibaba Payoff
International Business Times
Published Jun 12, 2014 12:23AM ET
Goldman Sachs Misses Out On Big Alibaba Payoff
By Maria Vultaggio - Goldman Sachs (NYSE:GS) will not benefit when Alibaba sells its stocks to the public, even though the Wall Street bank was one of its first investors, the New York Times reported on Wednesday night.
The company sold its stake in Alibaba in 2004 and earned $22 million, which was nearly seven times its original investment, but it is also one of the banks underwriting the company's initial public offer, or IPO, which is expected to be the biggest public offer by a company ever.
Though Goldman Sachs definitely benefited from selling its stake in the company in 2004, it stood to make much more if it had waited another decade. Instead of making nearly seven times over their investment, Alibaba’s value exploded, and Goldman Sachs could have made 30 times their original deal.
Goldman Sachs denied comment to the New York Times.
Though Goldman Sachs doesn't stand to benefit by Alibaba going public, there are two other companies that could rake in millions.
In January 2000, Japanese technology group SoftBank, along with its founder Masayoshi Son, invested $20 million in Alibaba. For a time, the two dominant shareholders in the company were SoftBank and Goldman, but since Goldman sold its shares in 2004, SoftBank now holds a 34 percent stake, the Times reported, citing a company filing.
GGV Capital, a Silicon Valley venture capital firm, eventually invested $7.8 million into the company, with principal founder Hany Nada being quoted by the Times as saying their company made “30 times” its original investment, which leaves them with an average return of $200 million.
The list of lead underwriters, according to the Times, are: Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Citigroup. And, according to the Guardian, Credit Suisse could make more than $100 million from the IPO, which is expected to raise more than $20 billion.
Follow me on Twitter @mariamzzarella
Get The News You Want
Written By: International Business Times
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.