Goldman to exit firm owning sex advert site
NEW YORK - ReutersA private equity fund run by Goldman Sachs Group Inc, under fire over its business ethics, has agreed to sell back its stake in a media company that critics say facilitates sex trafficking.
GS Capital Partners III on March 30 signed a deal to sell its 16 percent stake in Village Voice Media, which owns the website Backpage.com, back to management, a Goldman spokeswoman said yesterday.
The divestiture is the latest development in a growing controversy over online adult advertising that has pitted celebrities, law enforcement officials, members of Congress and a New York Times columnist against Village Voice Media, a private media company that has the largest share of revenue in the United States from online advertising of adult services.
The fund began negotiations with Village Voice Media in March, after deciding in 2010 that it had grown “uncomfortable with the direction of the company,” and Goldman’s inability to influence its operations, said Andrea Raphael, a Goldman Sachs spokeswoman.
Fund loses big stake
Raphael said the fund invested $30 million in the Village Voice in 2000. The investment was converted into a 16 percent minority stake when the Village Voice merged with New Times Inc. in 2006. She declined to disclose the sale price, but said the fund lost the “vast majority” of its investment.
Elizabeth McDougall, general counsel for Village Voice Media, said the media company has no plans to shut down its adult advertising section of Backpage.com.
Some critics claim that Backpage.com facilitates the trafficking of underage prostitutes and sex slaves, although others question that.