Goldman Sachs Group Inc., riding a rising market, is considering making a multibillion-dollar offering of its shares to investors as part of an effort to repay a $10 billion government loan, according to people familiar with the matter.
The move, which could be announced as early as next week, comes as the firm prepares to report solid first-quarter earnings Tuesday. Goldman executives haven't determined the exact size of the offering, but it is expected to be at least several billion dollars, these people say. They caution a final decision isn't made, and will be based partly on market conditions
In October, the Treasury Department forced the nation's largest banks, including those that didn't need additional capital, to take government funds. Goldman received $10 billion. The view was that infusing all banks with capital would help shore up the financial sector more quickly and avoid tarring some banks as weak.
But stock markets now have risen for five consecutive weeks, and shares of financial firms have helped lead the rally. Thursday, Goldman's shares rose $9.58 a share, or 8%, to $124.33 on the New York Stock Exchange, and are trading at their highest level since October.
Repaying the government is favored by Goldman's employees, eager for the paydays of the past; by investors, who applauded the firm's finance chief when he made the suggestion; and its executives, who believe the government's role will make it harder for the firm to compete.
Goldman has weathered the mortgage meltdown better than many rivals; it holds about $111 billion in cash and cash-equivalent securities. Goldman executives privately say the firm doesn't need new capital to pay back the loan but doing so would signal its financial health.
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