Goldman (GS) Plans IPO Of Specialty Lending Unit

The Goldman Sachs Group, Inc. (GS - Analyst Report) plans to offer 6 million shares in the initial public offering of its specialty lending unit – Goldman Sachs BDC Inc. The financial bigwig said that it will list the unit’s shares on the New York Stock Exchange, under the ticker symbol “GSBD.”

The company also plans to offer an overallotment option to the underwriters, which will allow underwriters to buy up to an additional 900,000 shares of common stock. As per a filing of the company, the price per share is expected in the range of $20–$21, which is likely to raise $123 million at the midpoint.

Goldman Sachs BDC intends to utilize the proceeds of the offering for repaying a part of its debt under senior secured revolving credit facility.

Formed in 2012, Goldman Sachs BDC is a business development company investing mainly in middle-market companies in the country.  Since its inception till Dec 31, 2014, the company has originated over $1.27 billion in aggregate principal amount of debt and equity investments. It usually invests $5 million to $50 million in firms across different sectors with duration of 3 to 10 years.

The joint book running managers for the offering include Morgan Stanley (MS - Analyst Report), Citigroup Inc. (C - Analyst Report) and Credit Suisse Group AG (CS - Snapshot Report).

Amid heightened regulations in the financial sector and declining profits, we see Goldman’s latest move as a strategic one.

Goldman currently carries a Zacks Rank #3 (Hold).