Morning Coffee: The British ex-Goldman Sachs partner profiting from David Solomon's mistakes. Bank cuts jobs before bonuses
Before he left Goldman Sachs in July 2023, Julian Salisbury, the British man once lauded as the highest earning person at Goldman Sachs, seemed to reach the limit of his abilities.
Salisbury, who also likes to let it be know that he could have been a professional slalom canoer but didn’t want to live in a van, earned $35m at his peak, when he was chief investment officer of Goldman’s asset & wealth management business. But as is often the case with good players, Salisbury was then promoted to be a manager, and in that he seemed to fail.
Business Insider notes that following his promotion, Salisbury went from managing a team of “several hundred people” as a talented investor, to “a division of about 5,000 people” as the man in charge of asset & wealth management. Salisbury “struggled” and left, joining investment firm Sixth Street in a role he’s more comfortable with – as (co) chief investment officer again.
In this new role, Salisbury – and Sixth Street – stand to profit from one of Goldman Sachs CEO David Solomon’s most conspicuous mistakes: Greensky.
The Wall Street Journal reported yesterday that Goldman Sachs is in “advanced talks” to sell Greensky to Sixth Street for circa $500m, which is roughly $1.2bn less than the amount Goldman Sachs paid for it a mere 18 months ago. Salisbury presumably thinks this is a good price. Greensky has been squeezed by rising interest rates, but the Financial Times points out that it could nonetheless be a good buy for Sixth Street because would give it the ability to directly originate a range of home improvement loans, which credit investors like because homeowners traditionally carry high credit scores.
Solomon clearly wasn’t the sole perpetrator of the Greensky purchase, but Business Insider says Solomon pushed for the deal despite opposition at the time from several of Goldman’s partners, who expressed concerns about the price Goldman was paying.
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To Solomon’s credit, he recognized the mistake and is now cutting his losses. However, Business Insider suggests the error could have repercussions beyond a $1.2bn writedown. "It's kind of embarrassing when you are showing up to a client pitching for M&A business, position yourself as the best M&A advisor, pointing to these credentials, and our own deals have been an absolute mess," one ex-partner said. "The number of jokes clients make, and there is some truth, why hire you to do M&A if you can't even do your own M&A."
Separately, the autumn equinox is upon us, which means darkening nights, approaching bonuses, and pre-bonus job cuts.
The first big bank to announce bonuses is always Royal Bank of Canada, which goes first in late November. There have been times in the recent past when the bonuses paid by RBC have been woefully small, so it might be good news for people who keep their jobs there that RBC is now cutting 1,000+ people to help it deal with “a challenging economic environment.”
Those cuts so far include several traders and a leveraged finance saleswoman.
Meanwhile…
Phillip Gillespie, a 40-year-old ex-Goldman Sachs and JPMorgan trader and former CEO of crypto exchange B2C2 is accused of ‘excessive drinking, taking cocaine and hallucinogens’ and having a relationship with a 19 year-old intern. The intern said she had been growing her professional career and was deeply saddened by the “personal attacks against Phil.” (Bloomberg)
Diego Megia, one of Millennium’s senior rates traders, is leaving to start his own fund. (Xwitter)
Goldman Sachs raised a $15bn fund to buy stakes in other private equity funds. The initiative is being managed by Harold Hope, the firm’s global head of secondaries. “We’ve been a bit more biased towards buying traditional LP (limited partner) portfolios and we’ve been able to price them at an appropriate discount,” said Hope. (Financial Times)
Mike Mayo met with Adebayo Ogunlesi, the lead director on Goldman’s board and concluded that David Solomon is safe – for the moment. “Our meeting with the board’s lead director leads us to conclude that the CEO will stay in his role for at least the medium term. We agree with his view that the strategy is now on course, and it comes down to execution.” (Bloomberg)
Apollo Global Management wants to raise $2.5bn to lend to large corporate borrowers in private markets. (Bloomberg)
German bankers are optimistic. Ingrid Hengster, chief executive officer for Germany at Barclays, told Bloomberg’s Future of Finance conference in Frankfurt that she was “quite bullish” about mergers and acquisitions. Wolfgang Fink at Goldman Sachs says investors are interested in IPOs and deals again. (Yahoo)
MBAs in America are mostly interested in earning more money. (Bloomberg)
If only you had saved $100 a month and invested in the stock market where it had earned a 7% return from the age of 25, you would have $1m by the age of 65. (Bloomberg)
A reminder that Warren Buffett lives in a house that he bought in the ‘50s. drives a modest car, eats McDonald's for breakfast in the mornings and borrowed furniture when his children were born. (Business Insider)
You’re better off pairing boots with a blazer than a pair of sneakers. Sneakers (AKA trainers) will make you look like a failed crypto millionaire. (NYMag)
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