The private equity fund that was involved in the trade was GS Capital Partners III which was founded in 1998 as a $2.78 billion fund. In 2000, the Goldman Sachs fund entered the Village Voice Media “trade”. However, in 2006, New Times Media bought out Village Voice Media and Goldman still maintained a 16% portion of the business.
Twelve years later, the investment bank decided enough was enough and they signed an agreement on March 30th to sell its remaining stake of the company back to the parent company. As I mentioned earlier, the fund will see most of its $30 million investment disappear.
Welcome to our latest issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Point72 Asset Management losing about 10% in January, Millennium Management on a hiring spree, and hedge fund industry's assets under management swell to nearly Read More
As if this was not enough for Goldman Sachs, a report was released last week that one of Village Voice Media’s websites, Backpage.com is heavily involved in human trafficking as well as 70% of online prostitution advertising. Oops! Perhaps, this is the reason that the investment bank has been looking to sell this stake “for awhile now”. Goldman already has enough scrutiny issues, it does not need anymore.
However, this does beg the question of how did they not know that until recently? If you are investing in a start up, it is probably wise to see what kind of companies they are acquiring because in this case, it looks bad for everyone involved.
This story broke in a column of the New York Times by Nicholas D. Kristof who essentially brought to light the website and Goldman’s connection to it. On April 1st the writer wrote that the investment bank had been selling off its stake since he had reported the story.
This little leak has now reached the Senate with Senators calling for Backpage.com to close its human trafficking pages and other adult classifieds.
Goldman really goofed on this one if what NY Times writer, Kristof said was true that he brought the topic to light and Goldman began selling. Goldman’s private equity fund should have picked up on that sooner and taken a strong stance against it. It should be interesting to see how and if Goldman reacts to this and furthermore what Occupy Wall Street’s response will be.