Goldman Sachs’ restructuring and distressed debt crew may not get the plaudits of their higher profile M&A or IPO bankers. Nevertheless they have pulled off a coup. Today Suncorp said it sold corporate and property assets mostly in Queensland, Victoria and New South Wales, for about $960 million. Goldman Sachs paid approximately 60 cents in the dollar for the portfolio whose face value was $1.6 billion.
It’s hard to assess whether Goldman Sachs got a great price for the Suncorp portfolio or whether the Brisbane-based company got the best possible price it could have. Goldman Sachs alone would have had to beat a range of its Wall Street competitors from investment banks to hedge and private equity funds for the portfolio. Still, the sale removes a headache for Suncorp chief executive Patrick Snowball.
In 2009, Suncorp decided to sell the assets of its former corporate banking, property investment, development finance and lease finance divisions. These assets were placed into an $18 billion portfolio. The portfolio had been reduced to $3.4 billion at the end of last year.
The market has rewarded Snowball’s last 12 months in charge of Suncorp with robust share price gains. The stock has surged 49 per cent in the last year compared with the 15 per cent gain in the S&P/ASX200 Index during the same period.
The latest Suncorp sale is one of the last big portfolios of distressed loans sold by a financial institution in the wake of the global financial crises. Goldman Sachs has won other Australian distressed debt auctions, notably BOS International’s sale of one of its portfolios last year, but perhaps never as big as that of Suncorp’s.
There have been questions about Goldman Sachs’ business in Australia following the departure of senior trading and investment banking personnel. Now the executives in charge of the firm’s business in Australia can point to some success. Goldman Sachs has also had success across the Tasman. It was a co manager of the IPO of Mighty River Power and has been invited to bid for the contract to manage the sale of another New Zealand government company. Today’s deal announced by Suncorp may have been a ‘win-win’ for the groups.
At 1010 AEST, Suncorp shares were down 28.5 cents, or 2.4 per cent, to $11.575. The S&P/ASX 200 Index had fallen 30.453, or 0.6 per cent, to 4694.