Goldman Sachs is on a roll after yesterday's $5 billion injection in the bank from Warren Buffett's Berkshire Hathaway, today announced that it is raising capital by selling $5 billion worth of common stock to the public.
It also said that it had sold double the amount of stock it had earlier planned to sell in a public offering yesterday after a $5 billion a cash injection from Warren Buffett. (See: Warren Buffett invests $5 billion in Goldman Sachs)
Goldman, managing its own offering, sold 40.65 million of shares at $123 each, raising $5 billion, twice the size of the public offering it had announced yesterday. . It has an over-allotment option of 6.1 million common shares which means, it could raise another $750.3 million.
Goldman said the offer is double the amount that it will raise as part of a plan to boost its capital cushion in the wake of the Wall Street crisis.
Warren Buffett's Berkshire Hathaway is buying $5 billion in preferred stock and will receive warrants to purchase an additional $5 billion worth of common shares over five years.
Goldman Sachs pronouncement to raise capital marks a turnaround as less than a year posted record profits but the bank later took a beating of $4.9 billion in losses from a decrease in trading and investment banking revenue.
U.S. stocks prices opened higher after Buffett's $5 billion investment in Goldman Sachs late on Tuesday, bolstering the confidence in the beleaguered financial sector.