Goldman Sachs just revealed it made a nice profit off Uber ahead of an IPO it hopes to help run
- Goldman Sachs on Wednesday disclosed its sale last year of a stake in Uber.
- It was part of CFO Stephen Scherr's extended explanation of the Wall Street firm's investing and lending segment.
- Goldman's fourth quarter results got a boost from the segment, which makes equity and debt investments in hundreds of companies and has historically been considered a "black box."
- Uber is considering an initial public offering this year, and may choose Goldman Sachs to help with the deal. It's already selected Goldman's chief rival, Morgan Stanley, to lead the IPO, according to reports.
Goldman Sachs may be angling for a key role in Uber Technologies' eventual IPO, but that doesn't mean it can't make a little money from the ride hailing app while it waits.
The Wall Street firm last year sold off part of its stake in Uber to a group of investors led by SoftBank, its chief financial officer disclosed on Wednesday. He didn't say how much Goldman had sold, or what stake remained, but it accounted for some of the $4.5 billion revenue generated from selling or valuing various equity investments that Goldman has made for its own account. Goldman CFO Stephen Scherr said some of that money came from sales, but also additional rounds of investment that pushed mark-to-market values higher.
"There are other situations in which there are incremental rounds of equity that comes into a particular name," Scherr said. One of two stakes that were "significant contributors" to 2018 results is "a name you no doubt know, which was Uber," Scherr told analysts.
SoftBank closed its investment in Uber in the first quarter of 2018, purchasing stakes from existing investors in a deal that gave the firm and its $100 billion Vision Fund a 15% stake in the ride-hailing company. The investment was made at a discount to its most recent valuation at the time, Reuters reported. Separately, SoftBank and other investors injected new money into Uber at a higher valuation.
"There was a transaction in the tender into SoftBank into which we and others participated," Scherr said. "That, too, contributed to an uplift in the P&L relating to that name."
While the sale occurred early last year, this looks to be the first time Goldman has disclosed it.
Goldman invested in Uber at a $200 million valuation back in 2011, the Wall Street Journal has reported.
Investments like those, as well as other debt investments or loans, helped the Wall Street firm deliver fourth-quarter results that exceeded analyst estimates. The investing and lending segment generated $1.9 billion in revenue in the three months through December, including $994 million from equity stakes. The segment contributed 23% to Goldman's $36.6 billion in full-year total revenue.
Goldman and other banks have long maintained a relationship with Uber, in part to strengthen ties to the startup ahead of its expected public offering. Goldman helped broker an investment in the company for its wealthy clients, and both Goldman and Morgan Stanley have underwritten debt deals for the Silicon Valley firm.
Morgan Stanley was selected by Uber to lead an initial public offering that may take place this year, Bloomberg reported last month. Goldman too is expected to play a role in the ride-hailing company's initial public offering, though it's still unclear what that may be.
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