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Goldman Sachs Reportedly Picked to Lead Coinbase IPO

By Eric Volkman - Dec 19, 2020 at 1:23AM

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This strongly suggests the cryptocurrency market operator is leaning toward a traditional issue rather than a direct sale.

Well, that was fast.

One day after cryptocurrency market operator Coinbase announced that it confidentially filed the regulatory paperwork with the Securities and Exchange Commission (SEC) for an initial public offering (IPO), a report indicates that the issue's leading banker will be Goldman Sachs ( GS -1.24% ).

An article published by Reuters on Friday and citing "a person familiar with the matter" said Goldman had been formally hired to bring the company to market. Presumably, this means that the storied investment bank will lead the syndicate of banks underwriting the deal, although few details were provided.

The initials IPO displayed in a set of colored blocks.

Image source: Getty Images.

In a typical IPO, the syndicate is the entity responsible for drumming up interest in the issue, with the aim of increasing demand for the shares being offered (and, oftentimes, the final IPO price).

In July, Reuters reported that Coinbase had begun planning for its debut on the stock market. At the time, though, the company seemed to be leaning more toward a direct listing rather than a traditional IPO involving a syndicate of underwriters.

Coinbase's timing is ideal in several ways. The stock market is frothy, and times of optimism are always good for IPOs, since investors are being asked to put their money in a company as yet untested by the public markets. Cryptocurrencies are also doing extremely well in this era of economic stress; the far and away crypto leader, bitcoin, is trading at all-time highs.

Goldman Sachs hasn't commented on its possible involvement in the Coinbase IPO. Outside of a tersely worded statement published Thursday about its SEC filing, Coinbase has so far provided almost no information about the issue.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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