Goldman completes $193m PIPE in student finance company

GS Capital Partners has provided $133m in cash equity to First Marblehead after buying $60m in preferred stock last year.

Goldman Sachs’ private equity arm has completed a $193 million (€131 million) investment in publicly-listed student lender First Marblehead.  

GS Capital Partners yesterday provided $133 million in cash equity to the Boston-based company, which has watched its stock price tumble 82 percent since December. That month, Goldman purchased roughly $60 million in First Marblehead convertible preferred stock.

Upon news of the completed equity infusion, First Marblehead’s share price leaped 71 percent, from $3.31 to begin trading to $5.14 at close.

Under the original terms of the deal reached last year, GSCP was to purchase $201 million in common stock. In a statement detailing the transaction, First Marblehead did not provide an explanation as to the change in deal terms.

In conjunction with the equity infusion, First Marblehead announced that co-founder Daniel Meyers will return to the company and assume the roles of chief executive officer and president. Current chief executive Jack Kopnisky has resigned and will leave First Marblehead at the end of the month.

Goldman’s investment First Marblehead is the latest in a long line of private equity sponsored investments in publicly listed financial companies. TPG’s and Warburg Pincus’ respective forays into the public markets— banking giant Washington Mutual and bond insurer MBIA—are currently deeply underwater.