Goldman Sachs Advises the UK Government in the Country's Largest Privatization Yet

Theme: Clients

In 1986, Goldman Sachs advises the UK government and British Gas on selling shares in the United States of what is, at the time, the largest-ever privatization in the UK, at GB£5.6 billion

The 1980s saw a wave of privatization across many sectors of the economy in the United Kingdom. Prime Minister Margaret Thatcher and the ruling Conservative Party sought to make British capitalism competitive and curb the power of the country’s labor unions by placing many state-owned companies in the hands of public shareholders.

The first large-scale privatization, that of British Telecom, took place in 1984 under the leadership of the government’s advising merchant bank at the time, Kleinwort Benson. Investor interest was strong and the offering was oversubscribed. British Gas was next on the government’s list, and as it reviewed options for bankers, it was willing to consider American firms as well, believing that they may be able to contribute fresh thinking and techniques to structuring such a transaction.

Goldman Sachs was selected to manage the US portion of the British Gas common stock issue—the largest-ever global equity offering at the time, at US$8 billion—earning the firm a rank of seventh in Euromoney’s annual lead management table for international equities in 1986. The success of this high-profile assignment helped Goldman Sachs win later roles in other significant transactions in the UK, including selling British Gas’ first bond market issue, a US$400 million dual tranche Yankee issue, and the 1987 sale of the government’s remaining interest in British Petroleum, which, at US$12.4 billion, would surpass British Gas as Britain’s largest privatization.