Leaked Info Shows Goldman Sachs Dumping $75 Million In Spotify Shares

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Construction on Goldman Sachs’ new London HQ (photo: David Holt July 17th CC 2.0)

Goldman Sachs has been one of Spotify’s biggest backers.  So why did they just drop $75 million worth of valuable pre-IPO shares?

When investors see a calamity ahead, they usually drop as many shares as legally allowed.  All of which raises some awkward questions about Goldman Sachs’ reported dump-off of $75 million worth of Spotify pre-IPO shares.

Sounds bad on its face.  But Goldman Sachs could be triggering the sale for a number of reasons, including something as benign as asset diversification or pre-IPO share allocations.  Either way, it doesn’t look like Goldman Sachs wanted to publicize this.

So what the hell is going on?

Just this morning, leaked information showed the sell-off, though Goldman is apparently still planning to guide Spotify’s IPO.  So they’re not out, and actually, Goldman itself is a pretty complex organization with different P&Ls and divisions.

Accordingly, here’s what we know so far:

• According to details leaked by SkyNews, the divestiture happened through Goldman Sachs Investment Partners (GSIP).  The report indicated that $75 million represents less than half of GSIP’s total Spotify ownership stake.
• Those divestitures happened through three key divisions:  Global Private Opportunity Partners II LP, Global Private Opportunity Partners II Offshore Holdings LP and ODM Investors LP, according to the SkyNews report.

We also know from sources that Spotify is considering an unconventional ‘direct listing’ on Wall Street.

That approach focuses on listing the company with existing investors, without courting newer buyers (at least initially).  That seriously cuts down on transactional fees, among other advantages.  Already, Spotify’s investor agreements are believed to give existing investors preferential treatment over outsiders.

As such, pre-IPO values of the stock are apparently hitting bubble-like valuations, which might explain the Goldman dump-off.  That’s part of a private shell-game, all based on supposed long-term valuations of the streaming platform.  Indeed, a pre-IPO sale might simply diversify the risk on Spotify, especially given serious profitability and legal concerns dogging the application.

Perhaps there’s one thing we can safely say at this stage: Goldman definitely isn’t doing this to lose money.  Which raises the question of whether other investors may trigger similar sell-offs.

That is, if they haven’t already.