Trott Says Goldman Sought Sovereign Wealth Financing in 2008

  • Trott says second leg of Goldman financing deal never got done
  • Trott says talks focused on credit line from wealth fund

Byron Trott, the former Goldman Sachs Group Inc. banker who arranged a deal in 2008 for billionaire Warren Buffett to inject capital in the firm, said the bank also sought financing from a sovereign wealth fund at the depths of the credit crisis.

“There was a second leg of that deal that never got done,” Trott said Wednesday at an event in New York celebrating Buffett’s 50 years running Berkshire Hathaway Inc. “We were trying to get, actually, a sovereign wealth fund to write Goldman Sachs a $10 billion line of credit behind it."

Buffett agreed in 2008, as credit markets were drying up, to buy $5 billion of preferred stock in Goldman Sachs paying an annual dividend of 10 percent. He also got warrants, which he later used to get more than $2 billion of the bank’s stock in a cashless transaction.

Buffett was looking for a good investment, but also a statement to global investors that markets were safe, Trott said.

Trott, who subsequently founded BDT Capital Partners, didn’t identify the sovereign wealth fund that was involved in the Goldman talks. He said that the fund could have obtained $1 billion of a security that was similar, but not identical, to what Buffett got.

“We would not give anybody the same security” that Berkshire was given, Trott said.

Michael DuVally, a spokesman for New York-based Goldman Sachs, had no immediate comment.

Banks across the world tapped sovereign wealth funds for capital as they sought to cover losses created by writedowns of toxic mortgage assets. The Kuwait Investment
Authority made investments in Citigroup Inc. and Merrill Lynch & Co., the latter of which also raised money from Singapore’s Temasek Holdings Pte.

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