NEW YORK, N.Y. – A lending company launched by Goldman Sachs is falling in its stock market debut on Wednesday.
Shares in the company, Goldman Sachs BDC Inc., dropped 30 cents, or 1.6 per cent to $19.68 in morning trading on the New York Stock Exchange. They trade under the ticker symbol “GSBD.”
The public debut comes a day after Goldman Sachs Group Inc. sold 6 million shares in the company to investors at $20 per share, according to a filing with the Securities and Exchange Commission. The $120 million raised in the offering will be used to pay down the company’s short-term debt.
The Goldman unit is structured as a business-development company, or BDC. Like real-estate investment trusts, they must pay the bulk of their earnings to investors. That means investors wind up with the tax bill.
Specialty lenders such as BDCs have been growing in popularity, part of the rise in so-called “shadow banking.” In a report out earlier this month, analysts at Goldman said that the “twin forces of regulation and technology are opening the door for an expanding class of competitors to capture profit pools long controlled by banks.”
Goldman’s analysts estimate that these upstart lenders could take more than 7 per cent of big bank’s profits over the next five years, through offering loans to consumers, small businesses and students. In 2014, that would have worked out to $11 billion of the roughly $150 billion in profits.