While there have been reports that Goldman would spin off part of its proprietary trading unit or use capital to form a new entity centered on the business, such measures wouldn’t be in the spirit of the so-called Volcker Rule, which requires banks to make a clean separation from such businesses.
Goldman plans to eventually unwind the proprietary trading positions, this person said.
Looks like it’s the individual Goldman traders who are in talks with private equity, not Goldman itself. So an all-out sale of the Principal Strategies unit looks unlikely.
Goldman Sachs is in talks with a group of private-equity firms to sell its Principal Strategies unit, which conducts proprietary trading on behalf of the Wall Street titan, CNBC reports. Among those participating in the buyout discussions is KKR, the private equity firm that specializes in leveraged buyouts.
Meanwhile, Reuters is reporting that employees at Goldman’s Principal Strategies unit are in talks with KKR, as well as fellow private equity houses Perella Weinberg and BlackRock to join up with the firms.
CNBC says that the U.S. branch of Principle Strategies, which comprises less than 50 traders, may end up in the hands of KKR or a similar company. Bloomberg says that gobally the unit has between 65 and 70 members. The majority of traders in Principle Strategies’ Asia offices had reportedly planned to leave for a hedge fund run by PS chief Morgan Sze. Bloomberg subsequently said Sze was revising the details of that plan.
Thanks to the Dodd-Frank financial reform law, Goldman is now required to dispense with its proprietary trading operations under the so-called Volcker Rule. Proprietary trading is the practice of doing trades with a firm’s own capital, as opposed to trading on behalf of clients.
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