Keeping the Lights On in San Antonio: Goldman Sachs' First Public Utility IPO

Theme: Clients

In 1921, the firm co-lead manages its first utility company offering, approximately US$3.8 million in bonds for San Antonio Public Service Company. At the time, San Antonio is the largest city in Texas.

Formed in 1917, San Antonio Public Service Company provided electric light, power, gas and streetcars for what was then the largest city in Texas, with more than 160,000 inhabitants. Its predecessor entities—San Antonio Traction Company (which operated the city’s streetcar system) and San Antonio Gas & Electric Company—had operated under the same corporate umbrella since 1902. San Antonio Public Service began serving the Texan city at a transformative time, as skyscrapers replaced older Spanish and Mexican structures in the first decades of the twentieth century.

On December 29, 1921, Goldman Sachs was a lead manager, along with Halsey, Stuart & Co. and Lehman Brothers, of a 30-year six percent US$3.8 million bond offering, non-callable for ten years, for San Antonio Public Service Co. It was Goldman Sachs’ first offering for a utility company.

Despite its name, the utility company was not city-owned; in fact, it was controlled by New York-based American Light & Traction Company, which by the 1940s was a sub-holding unit of the United Light and Power Company. The City of San Antonio purchased the utility in October 1942 after United Light and Power was forced to divest it under the Public Utility Company Act of 1935. When San Antonio needed cash to complete the deal, the city turned to Goldman Sachs as one of a number of underwriters for bonds used to complete the purchase.

Known today as CPS Energy, the gas and electric utility now serves more than 80,000 electric and 34,000 gas customers in greater San Antonio. In 2009, GS served as sole book runner on CPS’s energy issue of US$375 million gas and electric revenue bonds under the Build America Bond provisions of the American Recovery and Reinvestment Act.