Raising Capital

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Goldman Sachs 2011 Annual Report

For Prada, the time had come to capitalize on

the power of a global brand
In 2010, Prada, one of the world’s most recognizable fashion brands, knew it was time to go public, and that the place to do it was Hong Kong. The reason for choosing Hong Kong was simple: Asia, with its fast-growing economies, had become Prada’s biggest growth market. By 2010, Asia had rivaled Europe and had outpaced North America, accounting for 43 percent of Prada’s annual sales.
With Goldman Sachs’ London investment banking team working with the family-owned company, Prada began preparing to go public in 2007. Postponed by the global financial crisis, the IPO was moving forward again in 2011, with Goldman Sachs as lead underwriter. As the IPO approached, work on the complex transaction stretched across continents and disciplines. While our London team worked with the company on capital markets strategy, our Hong Kong investment banking team took responsibility for deal execution. In marketing the offering worldwide, Goldman Sachs helped Prada present its story to more than 250 leading investors. The IPO raised $2.5 billion. It was the largest consumer goods IPO ever in Hong Kong, and the largest IPO to date of any global luxury brand. The offering enabled Prada to reduce its debt while funding future growth across China and the rest of Asia. By 2015, China alone is estimated to comprise 20 percent of the world’s luxury goods market. Prada is now positioned to make the most of this opportunity, and reinforce its image as one of the world’s most recognizable fashion brands.

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Raising Capital

Anatomy of an IPO
For private companies, “going public” is a landmark event. An IPO serves several purposes: raising capital to fund growth and acquisitions, enabling founders and investors to realize the value of the company they have built, and enhancing management’s ability to attract, retain and incentivize employees through equity ownership.

As lead underwriter, Goldman Sachs plays a critical role in executing an issuer client’s IPO, including:

Explaining the IPO process. Organizing a syndicate of banks to manage the offering and coordinating diligence on the issuer.

Helping determine the size and composition of the offering and the most appropriate listing venue.

Assisting the marketing of the offering to global institutional, high-net-worth and retail investors in a coordinated “road show” hosted by management. Building a “book of demand.” Underwriting the shares at a price agreed between the syndicate and the issuer client. in consultation with the issuer client.

Allocating shares to participating investors, Providing liquidity in the secondary market.

Focus on...

a year of offerings despite volatile markets

#1 Globally in IPOs

In 2011, Goldman Sachs led the world in IPO activity, with a majority of offerings coming from Asia and Europe.

2011 Goldman Sachs IPO Deal Volume, by Domicile of Issuer
Source: Thomson Reuters

Asia and Europe 58%

Americas 42%

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Goldman Sachs 2011 Annual Report

Goldman Sachs London Prada Deal Team left to right: Amedeo Cesco, Paolo Zannoni, Denni Manzatto, Eoghainn Calder, Antonino Mattarella, Antonio Gatti, Matthew Westerman, Anna Skoglund, Francesco Papa, Giuseppe Pipitone Goldman Sachs Hong Kong Prada Deal Team left to right: Christy Kwan, Steven Barg, City Chan, Lisa Feng, Linda Fu, Charlotte Yeow, Sindy Wan, William Smiley, Gloria Check, Phyllis Luk

A Global Network of Leading Investors: Prada 2011 IPO
During the road show, we reached a global base of institutional investors, enabling Prada to raise $2.5 billion in its recordbreaking IPO.

Potential Investors Attendance at Road Shows by Geographic Location

Asia 26% U.S. 45% Europe 29%

$46.6B
Source: Thomson Reuters

In 2011, Goldman Sachs led 54 IPOs across 12 countries, totaling

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Making Connections

For Skype, when the future offered two paths, it was time

to prepare for both
In 2011, Skype, the Internet software company, faced a crucial decision. A strong and rapidly growing business, with more than 120 million monthly users, Skype had become one of the most recognizable brands on the Web. It had been acquired in November 2009 by an investment group led by Silver Lake and, after a year of focus on operations, product development, new monetization initiatives and strategic partnerships to further accelerate growth, was ready to go public.
With the help of Goldman Sachs, Skype was actively preparing for its IPO; at the same time, however, its brand and platform had attracted significant strategic interest and within weeks of the planned IPO, Microsoft made an offer. As a leader in technology mergers and acquisitions as well as capital markets, Goldman Sachs pivoted quickly from leading the IPO to advising on the sale. The transaction — at $8.5 billion — was one of the largest ever Internet sales — and benefited all parties involved. For Silver Lake and its investment partners, it was the realization of one of the most successful private equity investments in history. For Microsoft, it delivered Skype’s full range of mobile and desktop communications capabilities and a large and loyal community of users. For Skype, it was a major step toward achieving its vision of making the world a more connected place.

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Goldman Sachs 2011 Annual Report

Goldman Sachs San Francisco Skype Deal Team left to right: Sam Britton, George Lee, Nick Giovanni

leadership in technology investment banking
For Goldman Sachs’ technology investment banking team, 2011 was a busy year, as we advised and helped to execute many of the year’s most notable transactions.

Focus on...

#1 in Technology M&A
Source: Thomson Reuters

15 IPOs
Technology
Raised as active book runner for technology equity and debt transactions over

including Yandex Zynga Groupon Bankrate Fusion-io Jive Software Cornerstone OnDemand

$35B
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Goldman Sachs 2011 Annual Report

Providing Sound Advice

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Goldman Sachs 2011 Annual Report

For Drogasil, the moment was right to

leverage a combination of strengths
Fueled by an expanding middle class and a rapid rise in disposable income, Brazil had become the largest pharmaceutical market in all of Latin America. Although still fragmented, this market had begun to coalesce around larger competitors. In this environment, it was important for Drogasil, Brazil’s third-largest pharmaceutical retailer, to position itself for growth.
As it started assessing the best path forward, the company engaged Goldman Sachs as its financial advisor. We helped Drogasil on its merger with Droga Raia, the nation’s fourth-largest retail pharmaceutical chain at the time. While both companies originated in São Paulo, they had grown in different directions, with Raia expanding to Rio de Janeiro and the South, and Drogasil focusing its expansion towards the Southeast and Midwest of Brazil. Together, these areas comprise over 78 percent of the nation’s retail pharmacy market. A merger between the companies would create a true national leader. With its local knowledge and wealth of experience in mergers and acquisitions, the investment banking team from Goldman Sachs São Paulo helped forge a merger of equals. The new enterprise, Raia Drogasil S.A., became Brazil’s leading retail pharmacy, with nearly 800 stores, 18,000 employees and a territory extending across nine states.

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Goldman Sachs São Paulo Drogasil Deal Team left to right: Flavio Aidar, Fernanda Schahin, Marco Vianna, Cristiano Camargo

Focus on...

the promise of growth markets

Goldman Sachs Brazil: From foothold to full-service footprint in the heart of Latin America

1995 Established a presence in Brazil, focusing on M&A

2006 Received a local foreign exchange license

2007 Launched Goldman Sachs do Brasil Banco Múltiplo S.A.

2008 Launched Asset Management and were granted our equities broker-dealer license

2009 Launched Private Wealth Management

2011 Approximately 240 professionals based in São Paulo

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Goldman Sachs 2011 Annual Report

Providing Sound Advice

A Team Grows in São Paulo
Brazil, South America’s largest economy, represents an area of tremendous potential. Solid economic growth, the development of capital markets, the strong interest of international investors and local companies seeking to expand globally make it crucially important for Goldman Sachs. Because of this, Goldman Sachs has established a growing presence in Brazil, which enables us to provide clients — both onshore and offshore — with the products and services they need to achieve their objectives. Goldman Sachs first established a presence in Brazil in 1995, focusing initially on establishing our mergers and acquisitions advisory business. Since then, we have made a series of significant commitments to building a strong presence in Brazil and to being a full-service provider, following Investment Banking with Equities and Fixed Income, Currency and Commodities market making, Investment Management and Global Investment Research capabilities. We received a local foreign exchange license in 2006, and officially launched Goldman Sachs do Brasil Banco Múltiplo S.A. in 2007. In 2008, we launched Asset Management and were granted our equities broker-dealer license. In 2009, we launched Private Wealth Management. Today, Goldman Sachs has approximately 240 professionals supporting our businesses based in São Paulo and nearly 600 professionals around the world focused more broadly on Latin America.
Our São Paulo office is a diversified provider of products and services, giving clients access to local expertise and the global reach of Goldman Sachs, including:
Investment Banking and Capital Markets Market Making in Equities, Fixed Income, Currencies and Commodities Investment Management for Institutions and High-Net-Worth Individuals Investment Research

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Promoting Economic Stability

Martin Weber Gabriele Geist

For governments, now was the time to

Lars Humble

strengthen ties to capital markets

Edward Markham

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Goldman Sachs 2011 Annual Report

Providing governments, development banks and other public institutions with ready access to critical funds through capital markets has never been more important for global economic recovery. In 2011, amid market volatility, it was also a challenging task, making our role as a leading advisor and dealer in government securities all the more essential.

Among major transactions last year, one of the clear standouts was a €4 billion, 15-year benchmark offering executed for the European Union (EU). As a lead manager, we were able to draw upon resources from across the firm — from syndication, origination and market making — to achieve success at a critical moment. The offering enabled EU officials, under the European Financial Stabilisation Mechanism, to finance crucial loans to the governments of Ireland and Portugal. The transaction did more than raise long-dated funding for the EU’s stabilization program. At a difficult moment in the sovereign debt crisis, it confirmed investor support for European sovereign credit as a whole. Throughout 2011, roughly one-third of the capital we raised to support our European clients was for governments or public sector institutions. Goldman Sachs helped underwrite over 70 transactions for these public sector entities, including strategic benchmark offerings for the World Bank, the European Investment Bank, the United Kingdom, KfW (the German government’s development bank), and the Republics of Poland and Slovenia. In 2011, Goldman Sachs was a primary dealer in government securities for 13 European countries. Our sovereign debt franchise continues to expand into new markets.

Maud Casin

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Managing Investments

Goldman Sachs Team left to right: David Granson, Kate El-Hillow, Scott McDermott, Jeffrey Goldenberg, David Fox

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Goldman Sachs 2011 Annual Report

an important client segment
Foundations, endowments and other nonprofits are facing a challenging investment climate regardless of their level of assets. The economy has hampered donations, volatility has made returns uncertain and demands on their resources have remained or even grown. This complexity has stretched the capacity of small to mid-sized organizations and led the Investment Management business to create an Institutional Client Solutions platform specifically designed for them. Our client teams can provide ongoing market insights and expertise along with client-specific solutions — from advice on individual asset class or strategy mandates to fully outsourced investment management.
Drawing upon resources and expertise from across Investment Management, clients can get a level of advice and an investment experience that have traditionally been available only to the largest foundations and endowments. Our disciplined investment process begins with a clear understanding of the client’s objectives and spending constraints. Within their investment portfolios, clients can take advantage of our open architecture platform, which includes investment options from a rigorously evaluated group of external managers as well as from Goldman Sachs Asset Management. While we advise some clients who manage their portfolios internally, others choose our comprehensive portfolio outsourcing solution. This can include strategic analysis, institutional risk management and tactical asset allocation strategies. By using an outsourcing solution, investment committees can focus on policy-level decisions that help further the organization’s mission. We are now working with over 250 organizations across the U.S. and are expanding this service to additional countries.

An innovative approach to meeting the needs of

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