Goldman boosted by Buffett

25 September 2008

Goldman Sachs has won an important ally in its battle against adverse market conditions - Warren Buffett.

The legendary investor has bought $5 billion of "perpetual preferred" stock in the bank, with the option of a further $5 billion of common stock at any time from now until 2013.

Moreover, the preferred stock comes with a ten per cent dividend.

Goldman has been looking for ways of raising capital, in order to avoid the fate of fellow securitisation firms Bear Stearns, Lehman Brothers and Merrill Lynch.

Along with Morgan Stanley, it also announced that it would become a bank holding company earlier this week - allowing it to take customer deposits and receive extra protection from the Federal Reserve.

Mr Buffett, 77, commented: "Goldman Sachs is an exceptional institution.

"It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance."

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