Goldman Tops Expectations As Prime Brokerage Revenue Rises

Jun 18 2008 | 2:00am ET

Goldman Sachs’s prime brokerage and asset management divisions helped it top analysts’ second-quarter expectations on a busy day for the firm’s alternative investment units.

While net income at the Wall Street giant declined 11%, the $2.09 billion in earnings easily bested analysts’ estimates. Revenue from securities services—which includes Goldman’s prime brokerage—soared 30% to $985 million, while that from its asset management group—including its hedge funds—rose 10%. Assets under management at the firm rose to $895 billion.

Meanwhile, the firm’s London-listed fund of hedge funds vehicle raised another US$221.3 million yesterday. Goldman Sachs Dynamic Opportunities, which debuted on the London Stock Exchange two years ago, now manages some $840.2 million. The fund, which has returned 1.3% this year, invests in about 20 well-known hedge fund managers, and is the second-largest listed fund of funds on the LSE.

Finally, Goldman reached a decision on how to restructure a $7 billion structured investment vehicle formerly run by hedge fund Cheyne Capital Management. The firm and auditor Deloitte & Touche, which has been working on the reorganization since the fund defaulted in October.

Under the plan—which may become a model for winding down other troubled SIVs—Goldman and Deloitte will sell some of its assets in an auction, which will be sued to value the remaining assets of the former Cheyne Finance. The auction is to be held during the first three walks of July.

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