Yahoo Finance Is Goldman Sachs Mulling the Spin-Off of Fintech App Simon?
Goldman Sachs GS might spin-off Simon — its online platform for retail bond investors — to benefit from the company’s internal technology, while retaining a minority stake. The app, which was rolled out three years back, is currently valued at about $100 million, per The Wall Street Journal.
The platform has greatly helped retail brokers who invest on behalf of their clients. It helps them know about the structured investments online, saving time that would otherwise been wasted by discussing about the products over telephone.
Due to prolonged low interest rates and high stock market gains in recent years, structured notes linked to stock indexes have acted as alternatives for bonds. However, due to complex nature of these investments, clients were unaware of some hidden risks which led many big brokerage houses under the regulators’ probe on allegations, and ended up with paying fines and penalties. Such biggies include Bank of America BAC and UBS Group AG UBS.
Per a London-based data provider, around $55 billion worth structured notes were sold in the United States in 2017 compared with $37 billion in 2016.
The deal, expected to be finalized in coming weeks, has bidders for stake, including JPMorgan JPM, Barclays BCS), Wells Fargo (WFC), HSBC Holdings (HSBC), Credit Suisse Group AG (CS) and insurer Prudential Financial (PRU).
Notably, in recent years, Goldman has opened up with its technology software with clients and competitors, which was safeguarded by the bank since decades. Further, the licensing of SecDB — the bank’s trading and risk-management system — along with diversifying internal chat tools and email apps into independent companies, have been initiated by Goldman.
Furthermore, seeking stake holders in the app is expected to increase the usage of the app. Notably, a rival structured notes sales platform — Luma — was announced by Morgan Stanley (MS) and BofA in July.
Over the past few years, Goldman has been undertaking several initiatives to become technically advanced. These include its online personal loan providing platform, Marcus, secure messaging service across the Wall Street through Symphony and the upcoming robo-advising service. These strategic moves are likely to bolster Goldman’s performance, over the long run.
Shares of Goldman have gained 3.8% over the last three months, outperforming the industry’s decline of 5.4%.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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