Goldman Sachs NZ's earnings soar on asset sales

Andrew Barclay, Chief Executive of Goldman Sachs NZ, New Zealand Herald Photograph by Sarah Ivey

Goldman Sachs New Zealand Holdings, the local unit of the Wall Street investment bank, posted a 63 per cent per cent jump in revenue in 2013, a boom year for market activity that saw it win a share of deals including the floats of Z Energy, Meridian Energy and Synlait Milk, Tower's asset sales, Harvard University's forest sale and the selldown of Air New Zealand.

Revenue climbed to $49.9 million in calendar 2013, the highest in four years, from $30.1 million in 2012. Profit tripled to $15.95 million as it held the gain in operating expenses to 8.8 per cent.

Goldman Sachs NZ managed to win a share of the biggest New Zealand deals last year, including the relatively low-key selldown by Harvard University's endowment fund of its stake in the 170,000 hectare Kaingaroa forest in the central North Island to 28.8 per cent from 60 per cent, a transaction believed to have been valued around $1 billion.

It was one of the lead managers in Meridian Energy's IPO, which will net $1.88 billion for the government once the second installment is paid in 2015, and helped manage the government's selldown of its holding in Air New Zealand to 53 per cent from 73 per cent, raising $365 million. The Treasury also hired Goldman Sachs to assess Kiwibank's capital needs early in 2013.

Outside of the public sector, it helped Tower sell its funds, life and health units and was joint lead manager in the $75 million IPO and listing of Synlait Milk and the IPO of Z Energy, which raised $840 million for owners Infratil and the New Zealand Superannuation Fund. Goldman Sachs subsequently helped Australia's Retirement Villages Group sell its 37.7 per cent stake in Metlifecare to Infratil and the NZ Super Fund for about $274 million.

The performance of Goldman's local unit was probably even rosier because it also garnered overseas work, such as on Olam International's South American farms, generating fees that weren't included in the local accounts.

Fees and commissions comprise the bulk of Goldman Sachs NZ's revenue, while investment income slipped to $2.2 million from $2.8 million. Salaries and bonuses were the company's biggest expense in 2013, rising to $13.5 million from $13 million in 2012. Employee incentive plan costs were little changed at $3.57 million.

New York-based parent Goldman Sachs Group lifted net income by a more modest 8 per cent to US$8.04 billion last year as a surge in fees from underwriting made up for weaker trading revenue.