Goldman to Hire Search Firm to Help IPOs’ Board Diversity

(Bloomberg) -- Goldman Sachs Group is said to be hiring a search firm to help its IPO clients meet a policy it announced last week to encourage diversity among corporate boards of directors.

Starting in July, the biggest underwriter of U.S. initial public offerings won’t take a company public without at least one director who is female or who improves the board’s diversity, with plans to expand the requirement to at least two directors next year. The bank is investing its own funds in the effort to hire a search firm, a person familiar with the matter said.

Among the IPOs underwritten by Goldman over the last two years in the U.S. and Europe, fewer than 10% currently have a board without a female director, the company said, referencing Dealogic and Capital IQ data. Of six Goldman-underwritten IPOs that have yet to begin trading on U.S. exchanges, two boards appear to have no women on their boards. That includes those of Arcutis Biotherapeutics Inc. and Fortis Minerals LLC.

“We will partner with our clients to achieve or surpass these targets by providing access and introductions to an extensive network of potential candidates and the ability to leverage our current and future diversity partnerships,” the company said in a statement.

Last year, women held more than a quarter of all board seats on S&P 500 companies for the first time ever. Goldman is focusing its efforts on the U.S. and Europe, and not yet including Asia, where all-male boards are more common. The bank said it will consider the region more closely as diversity awareness improves there.

To be sure, boards are not set in stone and could change at any time. Arcutis is expected to price its IPO on Jan. 30, while Fortis has yet to announce an IPO date. Fortis declined to comment, Arcutis Bio didn’t respond to a request for comment and Goldman declined to comment on the specific composition of the two boards.

Goldman said companies that begin trading before the diversity standard takes effect in July would be exempt from the new policy. The companies would be compliant with the benchmark if a director on their boards meets standards based on race, ethnicity, sexual orientation or gender identity -- qualities that can be difficult to confirm. Goldman may rely on companies to self-report inclusion on those counts.

Meanwhile, the other pending IPOs on Goldman’s books -- Reynolds Consumer Products Inc., 4D Molecular Therapeutics Inc., Casper Sleep Inc., and PPD Inc. -- appear to meet the threshold of having at least one female member on their respective boards.

To contact the reporter on this story: Crystal Kim in New York at ckim426@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Courtney Dentch, Scott Schnipper

©2020 Bloomberg L.P.