Goldman Sachs’ share of IPO market dips in 2003

GOLDMAN Sachs Group Inc., the number one underwriter of equities worldwide during the past five years, lost market share in 2003 in the weakest year for initial public offerings in more than a decade.

Goldman, led by chief executive Henry Paulson, 57, had 11.7% of this year’s $209 billion market for IPOs and stock sales by companies that are already traded. That’s down from 14.3% in 2002 and 16% in 2001, data compiled by Bloomberg show.

Citigroup Inc., the world’s biggest financial services company, closed the gap in market share with Goldman, the third-largest securities firm by capital, to 0.5 percentage point from 5.3 percentage points two years ago.

Fees from IPOs, a business dominated by New York-based Goldman in the past decade, shrank to $2.3 billion, a third of the amount at the market peak in 2000.

“There will be more IPOs next year and business will be more diverse,” said Matthew Westerman, head of European equity capital markets at Goldman. “The backlog of deals is better.” IPOs generated about a quarter of earnings for the biggest securities firms before the collapse of the bull market in 2000.

They command the highest fees for securities underwriting, an average of 6.6% this year, compared with 3% for high-yield, high risk bonds and 0.9% for corporate bonds.

With global equity markets rising for the first time in three years, executives are, once again, considering IPOs.

Google Inc., the world’s most-used Internet search engine, may raise $2 billion or more in an IPO next year. Motorola Inc. plans to raise about $2 billion in an initial offering of a semiconductor unit.

Goldman Sachs is managing the Motorola offering, and is competing to be the underwriter for Google. In Europe, Goldman is one of six banks arranging next year’s sale of Belgacom.